Mall Stock Brushes Off Earnings Whiff, Eyes Key Trendline

The equity is on track to topple its 200-day moving average

Digital Content Manager
Nov 10, 2020 at 11:16 AM
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The shares of Simon Property Group Inc (NYSE:SPG) are up 4.8% at $82.90 this morning, despite the mall giant reporting third-quarter earnings of $0.74 per share -- much lower than Wall Street's estimates of $0.90 per share -- as well as a revenue miss. The company attributed the disappointing results to retailers ravaged by the coronavirus pandemic paying lower rent, or delaying payments altogether due to bankruptcy woes. However, positive vaccine news from Pfizer (PFE) could be powering today's pop, as reopening stocks continue their miniature revival.

On the charts, SPG has been struggling to recover from an April 2, 11-year low of $42.25. After a June rally to the $95 mark quickly fizzled out, the security spent several months consolidating around the $65 level. But now, the equity is experiencing another surge, and is on track to close above its 200-day moving average for the first time since May 2019.

Given SPG's 46% 2020 deficit, it's no surprise analysts are still hesitant toward the security. Eight of the 11 in coverage carry a tepid "hold" rating, and the remaining three sport a "strong buy." Meanwhile, the 12-month consensus target price of $81.13 is a 3.7% discount to current levels. 

Digging deeper, shorts seem to be hitting the exits, though there is plenty of pessimism left to be unwound. Short interest dropped 5.2% in the most recent reporting period, yet the 27.12 million shares sold short account for a substantial 9% of the stock's available float. It would take over a week to buy back these bearish bets, at the equity's average pace of trading.  

The options pits also lean more optimistic, with calls popular. This is per the stock's 10-day call/put volume ratio of 4.12 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 92nd percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

That optimism still rings true today, despite SPG's earnings miss. So far, 12,000 calls have crossed the tape -- four times the average intraday amount, and more than twice the number of puts traded. The January, 2021 90-strike call is the most popular, followed by the 80 strike-call in the same series.

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