The Bank of New York Mellon Corporation (BK - 20.33) followed its sector peers into the earnings confessional this morning. For the fourth quarter, BK recorded a profit of $505 million, or 42 cents per share, a 26% year-over-year decline from $679 million, or 54 cents per share. The results include a restructuring charge amounting to 6 cents per share. Revenue also lost some ground, falling 5.6% to $3.54 billion. The figures came in much lower than expected, as analysts were calling for earnings of 53 cents per share on $3.75 billion in sales. BK commented on the outcome, explaining it was "a challenging revenue quarter, as general uncertainty in the financial markets resulted in lower-than-normal levels of client activity."
Against this backdrop of "general uncertainty," sentiment surrounding the banking concern has remained mixed. To begin with, Zacks reports that 10 out of 19 analysts maintain a "hold" or worse rating toward the stock. Elsewhere, the consensus 12-month price target of $25.26 -- as calculated by Thomson Reuters -- represents a respectable 25% premium to today's low of $20.16.
Things have taken a decidedly darker tone in the options arena, where BK's Schaeffer's put/call open interest ratio (SOIR) stands at 1.31. This ratio ranks just 13 percentage points from a 52-week peak, showing that short-term speculators have rarely been more pessimistically skewed toward the stock.
Echoing this bearish bias is the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.92. This ratio ranks higher than 83% of similar readings taken in the last year, indicating that puts have been bought to open over calls at a faster clip than usual in the previous 10 weeks.
Furthermore, during the course of yesterday's session, traders on the ISE, CBOE, and PHLX bought to open 1,010 puts, compared to 643 calls -- bringing the stock's single-day put/call volume ratio to 1.6.
Options traders are picking up puts with a passion in today's session, as well. In fact, roughly 10,000 put contracts have crossed the tape, representing four times their average intraday volume.
Like a number of stocks in the financial sector, BK has struggled on the charts during the last 52 weeks, losing more than 33% of its value. The stock has added around 4.5% to that deficit in today's session. This post-earnings plunge pushes BK back below its 30-week moving average -- a trendline that has been conquered only once on a weekly closing basis since April 2011.
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