Needham hiked its price target on Luckin to $40 from $27
China-based coffee giant Luckin Coffee Inc (NASDAQ:LK) is recuperating some of its coronavirus-induced losses this morning, after Needham lifted its price target to $40 from $27 -- a 27% premium to last night's close. The analyst said that the Starbucks (SBUX) competitor's growing tea unit looks promising, valuing the business at $10 per share. Also helping the equity is an effort from China's central bank to bolster the economy as the coronavirus continues to stir up anxieties. At last check, LK is up 6.2% to trade at $33.30, set to snap its five-day skid.
Digging deeper, it looks as if LK has found its footing atop its 80-day moving average, after an intraday dip below the trendline late last week. The stock has added 63% in the last three months, but is off roughly 53% from its Jan. 17 all-time high near the $51 level.
Coming in to today, analysts were mostly bullish, with two of the three in coverage calling LK a "buy" or better, with not a sell to be seen. Plus, the consensus 12-month price target of $49.92 is an almost 60% premium to last night's close.
On the other hand, short sellers have bombarded the stock. Short interest has shot up 20.9% in the last two reporting periods, and now the 25.7 million shares sold short represent a hefty 69.7% of the stock's available float. Echoing this, the options pits have had a tendency towards puts, with 85,808 of these contracts exchanged in the last 10 days, compared to 75,607 million call contracts.