Lannett Company, Inc. (LCI) Put Volume Nears Extreme

Lannett Company, Inc. (NYSE:LCI) hit a two-year low after losing a key customer

by Josh Selway

Published on Mar 14, 2016 at 11:38 AM
Updated on Jun 24, 2020 at 10:16 AM

Pharmaceutical stock Lannett Company, Inc. (NYSE:LCI) is selling off today after the company announced it would be reviewing its sales forecast for the year amid "unanticipated market softness" and the loss of a key customer. It will release updated guidance next week, should its outlook change. Against this backdrop, the shares hit a two-year low of $19.41 earlier, and were last seen 9.8% lower at $20.21. With the stock short-sale restricted (SSR), a rare batch of option traders have come forward. 

Specifically, LCI's option volume is relatively low on an absolute basis -- with the stock's average daily volume resting at 550 -- but the SSR designation has left bears no other choice. Thus, puts are crossing at 11 times the average intraday rate, and volume could possibly hit an annual high before day's end. 

It looks like plenty of bears made their move before today, though. Despite a 22.6% decline over the past two reporting periods, short interest still represents more than one-fourth of the stock's float. At average daily volumes, it'd take these bears more than eight sessions to cover their short positions. 

On the other hand, analysts are bullish on LCI. For starters, 80% consider the stock at least a "buy." Plus, the shares' average 12-month price target is $35.60 -- a 76% premium to current levels. 

Today's drop is just more of the same from Lannett Company, Inc. (NYSE:LCI). The stock has been moving lower since hitting an all-time high of $72.44 in April. In fact, LCI is set to notch its lowest daily close since October 2013.

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