2 Retail Stocks Getting The Boot From UBS

UBS just downgraded Macy's and Kohl's to "sell"

Deputy Editor
Jul 22, 2020 at 10:33 AM
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UBS this morning downgraded two department store staples Macy's Inc (NYSE:M) and Kohl's Corporation (NYSE:KSS) to "sell" from "neutral." The analyst questioned the relevancy of the two companies as the COVID-19 pandemic drives even more customers to online channels, a trend it predicts will continue post-pandemic. UBS also predicted a 13% decline in department store sales in North America by 2024. 

The two retailers have already seen their fair share of struggles on the charts, and today is no different. M is down 4% at $6.49, while KSS has dropped 6.8% to trade at $20.95 so far. The two stocks' downward trajectory has looked about the same, with both struggling underneath their respective 120-day moving averages for the past two months. Macy's stock is now off over 60% in 2020, and Kohl's stock is staring down a 56% year-to-date deficit. 

Considering this, it's no surprise most analysts in coverage are already hesitant. Coming into today, seven called M a "hold," while four said "sell" or worse. Meanwhile, two holdouts still considered KSS a "strong buy," while 10 said "hold" or worse. 

Surprisingly, options bulls are still eyeing Kohl's stock. This is per the equity's 50-day call/put volume ratio of 3.03 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 92% of readings from the last year. 

Options players lean bullish on Macy's too. At the ISE, CBOE, PHLX, 5.4 calls have been picked up for every put during the last 10 days. This ratio sits in the 98th percentile of its annual range, suggesting a much healthier-than-usual appetite for long calls of late.

 

 

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