Retailer Michaels (MIK) experienced an almost 60% rise in its stock value following an upgrade by JPMorgan. This new positive outlook is impressive as the firm looks to bounce back from months of losses.
Market performances can be attributed to several factors including investors’ perception and valuation by analysts. Any positive indices pointing to any publicly listed firm has the potential of positively stirring the company’s stock. This is the current case with retailer Michaels Companies Inc (NASDAQ: MIK) whose astonishing market moves surprised analysts. Michaels (MIK) stock jumped 58.62% on Monday, closing at $8.74. This market move comes as a result of an upgrade of the company’s stocks by JPMorgan analysts. The unprecedented rise is covering up months of low valuation of the company.
Meanwhile, today in the pre-market, Michaels stock is down. It has lost 3.89% to trade at $8.40.
About the Michaels Business Model
The Michaels Companies Inc (MIK) is an American company that is North America’s largest provider of arts, crafts, framing, floral & wall décor, and merchandise for Makers and do-it-yourself home decorators. The company is a well-known brand for its offering and got publicly listed in June 2014 on Nasdaq under the symbol MIK and raised about $472 million in its initial public offering.
The company offers what most homes need, making them an essential art and home decor retailer in North America, it has a backlog of debts. As of August 4, 2018, The Michaels Companies operated 1,251 Michaels stores in 49 out of 50 states in the U.S. and recorded annual revenue of $5.072 Billion in 2019.
Michaels (MIK) Stock Performance Spike and Significance
As reported by CNBC, Micheals stock experienced its biggest one day jump on record wiping out all of the beaten-down retailer’s losses for the year. JPMorgan upgraded shares of Michaels to overweight from neutral, saying the retailer has an attractive valuation based on an expected re-rating to the price-to-earnings ratio on 2021 earnings.
Christopher Horvers, JPMorgan analyst has this to say:
“Given increased optimism around the pace of economic recovery and a wide divide in valuation of haves (essential retailers) and have nots (value/just reopening/levered names), we looked at our universe for upgrade opportunities and believe MIK represents the best upside potential at current prices.”
Horvers set the share price of MIK to $13, up from a previous $7 target. This huge projection will represent a great turning point for investors.
From the recent turn of events, the coronavirus pandemic has placed most companies in a position of uncertainty in terms of the performance index. While some companies are reeling for the economic downturn of the pandemic, others, as seen in MIK are using it as a springboard to turn their books around. In all, much will yet be unraveled in the market as companies look to bounce back.
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