La-Z-Boy Leans Back Ahead of Earnings

Raymond James lowered its price target

Deputy Editor
Jun 18, 2020 at 1:25 PM
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Armchair manufacturer La-Z-Boy Incorporated (NYSE:LZB) is gearing up for its fiscal fourth-quarter earnings report, due out after the close on Tuesday, June 23, with the shares taking a breather ahead of the event. At last check, LZB is down 1.5% to trade at $27.95. A broader look shows the equity's mid-March to early-June rally -- led higher by its 30-day moving average -- running out of steam at the 320-day moving average. This trendline is keeping LZB at an 11.3% deficit for the year, and well below its pre-coronavirus levels near the $32 mark. 

Raymond James isn't too keen on LZB ahead of its quarterly report, either. The analyst slashed its price target to $32 from $36, putting the consensus 12-month price target at $28.67 -- just a 2.7% premium to current levels. Meanwhile, sentiment is split on the recliner concern, with two calling it a "buy" or better, and two saying "hold." 

Options players have taken a much more bearish stance. In the last 10 weeks, 5.28 puts were picked up for every call at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 92% of readings from the past year, suggesting a much healthier-than-usual appetite for long puts of late. 

Echoing this is La-Z-Boy's Schaeffer's open interest ratio (SOIR) of 3.24, which stands in the 87th percentile of its annual range. This implies that short-term options players have rarely been more put-heavy. 

Looking back, LZB saw positive next-day returns after five of its last eight earnings reports, averaging a swing of 7.2% regardless of direction. This includes an 11.8% pop in February 2019, though it should be noted that the equity dropped 14.6% the day after its quarterly report that November. 

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