The retail stock's 40-day moving average could help it reclaim higher 2018 levels
The shares of L Brands Inc (NYSE:LB) are up 1% at $32.25 this afternoon, earlier landing a price-target hike to $38 from $33 at B. Riley. And while the fashion retail stock is just cooling down from a nearly two-year high of $33.62 on Oct. 8, the security has gained an impressive 153.1% in the last six months. Better yet, this recent pullback has LB near a historically bullish trendline, which could help the equity surge even higher in the near future.
Specifically, L Brands stock just came within one standard deviation of its 40-day moving average, after spending the past several months soaring above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, three similar signals have occurred during the past three years. Half of the time, LB enjoyed positive returns one month after each signal, averaging a roughly 4.8% gain. From its current perch, a move of similar magnitude would put the security just below the $34 -- back near a two-year peak.
A slim majority of analysts covering LB are already bullish, but there is still plenty of room for upgrades and price-target hikes going forward, which could propel the equity higher. Of the 17 in coverage, eight carry a tepid "hold" or worse. Plus, the 12-month consensus price target of $31.54 is an underwhelming 1.6% discount to current levels.
For those wanting to take advantage of L Brands stock's next leg higher, options may be an intriguing play. The stock's Schaeffer's Volatility Index (SVI) of 68% sits higher than just 11% of readings in its annual range, suggesting short-term options are pricing in relatively low volatility expectations.