What Happened?
Shares of department store chain Kohl’s (NYSE: KSS) jumped 4.4% in the morning session after analysts raised their price targets for the company, signaling a more optimistic valuation outlook.
Baird lifted its price target to $17.00 from $15.00, though it maintained a Neutral rating on the shares. In a more dramatic move, Morgan Stanley boosted its target by 80% to $9.00 from a prior $5.00. However, Morgan Stanley kept its cautious 'Underweight' rating, suggesting that while the firm saw a higher potential price, underlying business concerns remained. The stock was also flagged as a "meme stock mover," which pointed to heightened interest from retail traders possibly fueling some of the buying pressure.
After the initial pop the shares cooled down to $17.99, up 4.3% from previous close.
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What Is The Market Telling Us
Kohl’s shares are extremely volatile and have had 47 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 4.5% after the company was identified as an emerging 'meme stock' by JPMorgan. The investment bank noted that Kohl's is seeing high levels of social media mentions and retail buying, alongside significant short interest from hedge funds. This creates a classic 'meme stock' scenario where retail investors and institutional short sellers are on opposite sides of the trade, often leading to sharp price swings.
JPMorgan warned that such stocks 'may experience unexpected flows in case of increased activity.' The decline suggests that selling pressure is currently outweighing the buying from individual investors, highlighting the inherent volatility associated with this classification.
Kohl's is up 28.2% since the beginning of the year, but at $17.99 per share, it is still trading 14.8% below its 52-week high of $21.10 from September 2024. Investors who bought $1,000 worth of Kohl’s shares 5 years ago would now be looking at an investment worth $768.67.
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