Top-performing retail stocks get long-awaited upgrade

Abercrombie and Fitch ANF Stock News and Analysis

ANF ​​​​was upgraded to “overweight” by JPMorgan Securities

Clothes salesman Abercrombie & Fitch Co. (NYSE:ANF) is up 5% to trade at $166.42 this morning after JPMorgan Securities upgraded the stock to overweight from “neutral” and raised its price target to $194 from $167. The covering analyst is optimistic about demand for the brand following recent marketing improvements.

Today, ANF was up 336.3% over the past 12 months. Despite this massive outperformance, six of the eight covering brokers still rated the stock a lukewarm “hold,” leaving room for the bullish bandwagon. The stock also appears to be in danger of a short squeeze. Short interest has fallen 21.3% over the last two reporting periods, but the 3.96 million shares sold short now represent 7.9% of Abercrombie & Fitch’s available float.

ANF ​​hit a record high of $196.99 on May 29 but lost 8.5% last week amid the broad market correction. The pullback ended at $150, a level that coincides with the stock’s 80-day moving average. Year to date, the shares are still up nearly 80% through 2024 and officially joined the S&P 400 Midcap 400 at today’s open.

This looks like a great opportunity to bet on ANF’s next move with options. The Schaeffer’s Volatility Index (SVI) of 49% of equity is in the 15th percentile of the 12-month range. Simply put, options players are pricing in low volatility expectations right now. Moreover, the Schaeffer’s Volatility Scorecard (SVS) A score of 83 out of 100 means that the security has exceeded volatility expectations over the past year.