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Michaels (MIK) Soars 22.2%: Is Further Upside Left in the Stock?

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Michaels shares rallied 22.2% in the last trading session to close at $22.02. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 24.2% gain over the past four weeks.

Michaels’ agreement to be acquired and taken private by Apollo Global Management, Inc. for an equity value of $3.3 billion (transaction value of $5 billion), drove the stock higher. The buyout offer values Michaels’ shares at $22 per share, representing a 47% premium from the closing price on Feb 26, 2021. The merger, expected to be concluded by the first half of fiscal 2021, will support the retail and digital expansion plans of Michaels. The company currently operates more than 1,275 stores in the United States and Canada.

Price and Consensus

Price Consensus Chart for Michaels

This arts and crafts store operator is expected to post quarterly earnings of $1.57 per share in its upcoming report, which represents a year-over-year change of +24.6%. Revenues are expected to be $1.86 billion, up 8.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Michaels, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on MIK going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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