PNC Hits 3-Year Highs Ahead of Q4 Earnings Report

The security is set for its highest close since March 2018

Deputy Editor
Jan 12, 2021 at 1:31 PM
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The shares of PNC Financial Services Group Inc (NYSE:PNC) are up 1.4% at $161.67 this afternoon, ahead of the banking giant's fourth-quarter earnings report, which is due out before the open on Friday, Jan. 15. Several analysts are chiming in with bull notes ahead of the event. UBS just lifted its price target to $142 from $122, while Citigroup lifted its price estimate to $179 from $140, and upgraded the equity to "buy" from "neutral."

Should the security keep climbing, it could spark even more members of the brokerage bunch to boost their positions. Coming into today, just four in coverage considered PNC a "strong buy," compared to 10 "hold" ratings. Similarly, the 12-month consensus price target of $156.65 is a 3.1% discount to current levels. 

PNC has enjoyed an impressive run higher during the past several months, with a Jan. 6 bull gap sending the stock back near its pre-pandemic peak. Now, the equity is set to close just below its March 2018 record high. What's more, the financial services concern has added nearly 63% over the last nine months, with the 20-day moving average serving as a layer of support since early November.  

PNC Chart January 12

A look at the equity's history of post-earnings reactions over the past two years shows a generally positive response. During its last eight reports, five of these next-day sessions were higher, including an 2.8% rise in July 2020. However, the equity did experience a 2.4% fall after earnings in October of 2020. PNC averaged a post-earnings swing of 2.5% during the last eight quarters, regardless of direction. This time around, the options market is pricing in a slightly larger move of 4.3%.

Meanwhile, short-term speculators are more put-biased than usual, per the equity's top-heavy Schaeffer's put/call ratio (SOIR) of 1.19, which stands in the 97th annual percentile. An unwinding of the hedges related to these near-term bets could translate into options-related support for a stock.

Lastly, options are relatively affordable right now. This is per the equity's Schaeffer's Volatility Index (SVI) of 32% which stands higher than just 15% of readings from the past 12 months, indicating option players are pricing in relatively low volatility expectations at the moment. What's more, PNC's Schaeffer's Volatility Scorecard (SVS) stands at a high 92 out of 100. In other words, the equity has exceeded option traders' volatility expectations during the past year -- a boon for options buyers.


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