Kohl's Stock Kicks Higher After Board Nominations

The investors have a combined 9.5% stake in the retailer

Deputy Editor
Feb 22, 2021 at 12:43 PM
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Kohl's Corporation (NYSE:KSS) is in the spotlight today, after a group of investors nominated nine independent directors to the company's board. The group of private-equity firms -- which includes Macellum Advisors, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital -- has a combined 9.5% stake in the department store giant. The group is attempting to make changes within the business to push shares higher, such as reducing inventory. In response, UBS raised its price target to $50 from $42. 

At last check, today's update has KSS up 9.2% to trade at $57.52, or its highest level since 2019. On its way up since November, the stock has also had help from its 30-day moving average, and just broke through overhead pressure at the $42 mark. Year-to-date, the security is up 42.1%.

Meanwhile, there is still plenty of room for optimism amongst the brokerage bunch. Coming into today, five of the 11 analysts in question carried a tepid "hold" or worse rating. Plus, the 12-month consensus price target of $48.33 is a 16.4% discount to the equity's current perch. Short sellers keep hitting the exits, too, with short interest down 10.3% in the last two reporting periods. Yet, the 13.61 million shares sold short still make up 8.8% of the stock's available float.

The situation is different in the options pits, where 5.67 calls have been bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) over the past 10 days. This ratio stands higher than 92% of its annual readings, indicating calls are being picked up at a faster-than-usual pace. 

These premiums are reasonably priced at the moment, too, per the stock's Schaeffer's Volatility Index (SVI) of 69%, which sits in the 16th percentile of readings from the past year. This implies that options players are currently pricing in relatively low volatility expectations.


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