Analyst: Take a "Cautious Approach" Toward This Retail Stock

LOW is up 13% and has bounced back from an October trough

Deputy Editor
Dec 20, 2023 at 9:12 AM
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Lowe's Companies Inc (NYSE:LOW) stock is 1.3% lower before the open, after Stifel downgraded the home-improvement retailer to "hold" from "buy" and cut its price target to $240 from $235. The Wall Street brokerage is taking a "more cautious approach" to the company in 2024 and questioned its ability to "contend with a more anemic category." 

On the charts, Lowe's stock has added 24% off its late-October, 13-month lows near $182. After a 4.7% bull gap on Dec. 14, the shares have spent recent sessions consolidating around $225. Year-to-date, LOW is up 13%. 

Options traders remain call-focused. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Lowe's stock sports a 10-day call/put volume ratio of 1.37, which stands higher than 94% of readings from the past 12 months. This suggests calls are being picked up at a much quicker-than-usual clip. 

When speculating on the equity's next move, options look like a reasonable way to go. The stock's Schaeffer's Volatility Index (SVI) of 19% ranks in the 17th percentile of its annual range, meaning options traders are pricing in low volatility expectations at the moment. Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.89 ranks in the 8th percentile of its annual range.


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