Michaels Stock Hits New Low After Weak Sales Update

The stock hit brand new lows as a result

Deputy Editor
Jun 6, 2019 at 9:53 AM
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First quarter results from craft retailer Michaels Companies Inc (NASDAQ:MIK) has sparked some serious selling this morning. The firm reported a 2.9% decline in same-store sales for the period, and revenue that came in lower than analyst expectations. The company also predicted a potential 1.5% drop in comparable sales for its second quarter, compared to hopes for an increase in the metric, with the company citing headwinds from tariffs. The stock is down 9.7% at $8.43 as a result, and touched a record low of $7.85 already.

The equity has been on a downward path since a second-quarter earnings report last August sent it spiraling. It has made several attempts at a rally since, but each was met with stiff resistance at the declining 80-day moving average. Now, MIK is down roughly 42% year-to-date, and looking to notch its fourth straight weekly loss. 

Analysts have been quiet on Michaels this morning, but the door is wide open for a round of downgrades. While the majority of the 10 analysts following MIK give it a "hold" or worse rating, three holdouts still call it a "strong buy." Plus, the lofty consensus 12-month target price of $14.82 is at a whopping 81% premium to current levels. 

Plus, MIK still remains heavily shorted, with the 16.43 million shares sold short representing a solid 15.7% of the stock's available float, or roughly six days of trading at MIK's average pace. Options traders have shown an unusual interest in bearish bets, too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) Michaels sports a 10-day put/call volume ratio of 1.31. This ratio sits in the 90th annual percentile, showing strange demand for long puts. 

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