Nucor Stock Set to Snap 6-Day Rally Ahead of Earnings

Analysts and options traders remain bearish

Deputy Editor
Apr 20, 2022 at 12:04 PM
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Steel concern Nucor Corporation (NYSE:NUE) is down 1.8% at $168.71 today, pacing for its first daily loss in seven, as investors prepare themselves for the company's first-quarter earnings report, due out before the open tomorrow, April 21. During the past two years, Nucor stock's post-earnings reactions have been mixed. The stock settled higher after four of these past eight reports, averaging a 2.4% swing regardless of direction. This time around, the options pits are pricing in a 5.6% swing for NUE. 

Speaking of options pits, Nucor's are relatively quiet today, though a longer term look shows a preference for puts of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NUE sports a 10-day put/call volume ratio of 1.11, which stands higher than 91% of readings from the past 12 months. In other words, puts have rarely been more popular during this timeframe. 

Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.94 sits higher than all other annual readings. This means short-term options traders haven't been more put-biased in the past year. 

Analysts have also taken a bearish stance. Just one of the six in coverage calls NUE a "strong buy," while five say "hold." Additionally, short sellers have been piling on, up 8.7% in the last reporting period. Plus, the 12-month consensus price target of $132.94 is a 21.5% discount to current levels. 

This is surprising considering NUE's jaw-dropping 115.5% year-over-year lead, and recent jag of record highs, including one today at $173.00. The 20-day moving average has provided unwavering support for the equity's rally off its late-January lows, and sits well below Nucor's current share price. Plus, in 2022, NUE has added 48.2%. 

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