2 Retail Stocks Downgraded by Citi

Most analysts already have skeptical views on TIF and LB

Jul 15, 2019 at 10:21 AM
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The shares of Tiffany & Co. (NYSE:TIF) and L Brands Inc (NYSE:LB) are trading in the red this morning due to bearish analyst attention at Citigroup. Let's take a quick look at the bear note and how TIF and LB stocks are trading.

For TIF, Citi downgraded its opinion to "neutral" from "buy" and cut its price target to $100 from $115. The brokerage firm said it doesn't expect the company's second quarter turnaround to go as planned, even though it faces easy comparables from a year ago.

The equity has opened down 1% at $93.70. Year-over-year, it's down more than 28%, and the 200-day moving average looks set to act as resistance again, like it did in April and May, while the 50-day trendline is also bearing down overhead.

Recent options traders have been betting on more downside, based on data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The 10-day put/call volume ratio there comes in at 1.58, which ranks in the 82nd annual percentile, meaning put buying has been more popular than normal. Also on the sentiment front, other analysts are split on their opinions, with half saying to buy the shares, and the others handing out just "hold" recommendations.

LB stock, meanwhile, is trading down 0.9% at $26.26, after it too was downgraded to "neutral" from "buy," while Citi also cut its price target to $27 from $35. The brokerage firm said it may be too late for the company's struggling Victoria's Secret business to turn itself around.

This bear note comes after L Brands was just rejected by the 200-day moving average, and the stock is now testing its year-to-date breakeven level. Meanwhile, Citi's not the only one growing bearish on the shares, as short interest popped more than 26% in the last two reporting periods. Most other analysts are already bearish on the retailer, with 12 of 17 firms handing out "hold" or "sell" recommendations.

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