Macy's Stock Soars on Surplus in Digital Sales

The equity is down 57% year-to-date, however

Digital Content Manager
Sep 2, 2020 at 12:22 PM
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The shares of Macy's Inc (NYSE: M) are up 2.1% at $7.16 at last check, after the apparel retailer reported a smaller-than-expected second-quarter loss of $0.81 per share, far better than Wall Street's estimated loss of $1.77 per share. In addition, the company also posted a revenue beat. The retail giant attributed the positive results to a 53% jump in digital sales, as customers stuck at home during the pandemic turned to online shopping.

On the charts, the security has been trading sideways for much of the past three months. Though shares attempted a rally to the $10 mark in early June with support from the 10-day moving average, those efforts quickly fell short. Now, the equity is fighting overhead pressure at the $8 level, which in combination with the 150-day moving average, is keeping a tight lid on the security. Year-to-date, Macy's stock sports a 58% deficit.

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Analysts were pessimistic towards M coming into today, with five of the 10 in coverage sporting a tepid "hold" rating, and the remaining five carrying a "sell" or worse. Plus, the stock's 12-month consensus price target of $6.38 is a 10.2% discount to current levels.

That sentiment is not reflected in the options pits, where there is an appetite for calls. The stock sports a 50-day call/put volume ratio of 3.37 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 99th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

As for today, options activity shows calls overwhelming puts. So far, 128,000 calls have crossed the tape --  six times the average intraday amount, and more than three times the number of puts traded. Most popular is the weekly 9/4 7-strike call, followed closely by the 8-strike call in the same series, with new positions currently being opened at both.

What's more, short interest is down 10.1% in the past two reporting periods, and the 129.18 million shares sold short make up roughly 42% of the stock's available float. In simpler terms, it would take 3.3 days for shorts to buy back their bearish bets, at the stocks average pace of daily trading.

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