Bull Notes Galore for SFIX After Earnings Beat, Upbeat Outlook

Year-over-year, the equity is already up more than 164%

Digital Content Manager
Jun 8, 2021 at 10:56 AM
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The shares of Stitch Fix Inc (NASDAQ:SFIX) are up 10.8% to trade at $64.22 at last check, after the online personal styling name reported smaller-than-expected fiscal third-quarter losses of 18 cents per share. The company attributed the positive results to a roughly 20% rise in active clients to 4.1 million, and raised its 2021 revenue outlook beyond analysts' expectations.

The brokerage bunch is responding with optimism. The security earned no fewer than nine price-target hikes this morning, including a lofty one from Truist Securities to $77 from $60. There is still plenty of room for additional price-target hikes and/or upgrades going forward, though, as 10 of the 16 analysts in coverage carry a tepid "hold" rating. Plus, the 12-month consensus target price of $62.14 is a 2.7% discount to its current perch.

Digging deeper, Stitch Fix stock started to pivot higher earlier in May, after pulling back to the $37 level from a Jan. 27, all-time high of $113.75. Shares have also regained the support of the 10-day moving average, and currently sport a 164.3% year-over-year lead. 

The security looks ripe for a short squeeze, too. Short interest rose 25.8% over the last two reporting periods, and the 12.66 million shares sold short now make up a whopping 25.4% of the Stitch Fix stock's available float, or over a week's worth of pent-up buying power.

Additional tailwinds could come from a shift in the options pits, which lean bearish. This is per SFIX's Schaeffer's put/call open interest ratio (SOIR) of 2.08, which stands higher than all readings from the past year. In other words, short-term option traders haven't been more put-biased.   

Drilling down to today's options activity, 18,000 calls and 18,000 puts have crossed the tape so far, which is 11 times the intraday average. Most popular is the 6/11 70-strike call, followed by the 65-strike call in the same weekly series, with new positions being opened at both.

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) ranks at a high 86 out of 100. This is great news for options buyers, as it implies the stock tends to outperform volatility expectations. 

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