Hanesbrands Stock Slips After Stifel Bear Note

The equity is historically one of the worst to own in December

Digital Content Manager
Dec 14, 2020 at 10:52 AM
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The shares of Hanesbrands Inc. (NYSE:HBI) are down 0.6% at $13.87 at last check, after Stifel downgraded the apparel retailer to "hold" from "buy," and cut its price target to $15 from $17. The analyst in question is taking a wait-and-see approach, noting that the company's incoming CEO Stephen Bratspies will use 2021 as an investment year and to "rebase the financials" toward improvement. In addition, the stock is historically one of the worst to own in December.

Digging deeper, the security had been slowly climbing up the charts after dropping to an April 3, eight-year low of $6.96. However, a November bear gap knocked the stock on its side again, even after shares more than doubled in value to hit an Oct. 23 annual high of $17.73. Now, the equity is struggling with overhead pressure at the $14.50 mark, and is down 12% this quarter.

Analysts were split toward Hanesbrands stock coming into today, with five of the nine in coverage sporting a "buy" or better rating, and the remaining four carrying a tepid "hold" or worse. However, the 12-month consensus target of $15.07 is an 8.8% premium to current levels.

Meanwhile, shorts are hitting the exits. Short interest fell 5.1% in the last two reporting periods, yet the 27.81 million shares sold short still account for a significant 8.1% of the stock's available float, which translates to over a week's worth of pent-up buying power.

In the options pits, calls are popular. This is per HBI's 50-day call/put volume ratio of 4.70 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 78% of readings from the past 12 months. In other words, calls are being picked up at a quicker-than-usual pace.  

Now could be the ideal time to take advantage of the stock's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 41% sits in the particularly low 11th percentile of its annual range. This means HBI currently sports attractively priced premiums.

 

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