Ping An Deal Puts Autohome Inc (ATHM) Bears on Notice

Insurance giant Ping An is buying a 48% stake in Autohome Inc (ADR) (NYSE:ATHM) for $1.6 billion

Apr 15, 2016 at 10:29 AM
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China-based automobile website Autohome Inc (ADR) (NYSE:ATHM) is outperforming the broader market this morning, up 1.2% at $30.52. The stock is gaining on news that Chinese insurance giant Ping An is buying a 48% stake in the company from Telstra for $1.6 billion. Looking back, this technical strength is the continuation of a recent trend for ATHM. 

Specifically, the shares fell to an all-time low of $21.53 in early February, but have since gained nearly 42%, hitting their highest point in over three months this morning. Looking at the stock's run differently, it has topped the S&P 500 Index's (SPX) two-month performance by 14 percentage points. However, ATHM's 200-day moving average -- a level the stock hasn't topped since July -- has so far contained today's rally, and the shares remain well below their annual high $56.59 from last April.  

On the options front, ATHM doesn't see much attention. For instance, just 344 options have traded so far in today's session, yet this represents three times the volume the stock usually sees at this point in the day. 

ATHM is popular among short sellers, though. Roughly 10% of the stock's float is controlled by short sellers, and at its average daily volumes, it'd take these bears more than six sessions to cover. Suffice it to say, this crowd can't be pleased with today's price action. 

Analysts, meanwhile, have mixed feelings toward Autohome Inc (ADR) (NYSE:ATHM). Three brokerage firms recommend buying the stock, while the two others deem it a "hold" and "sell." In any case, today's pop puts ATHM above its consensus 12-month price target of $29.40. Theoretically, the stock could benefit from price-target hikes and/or short covering, if it can overcome its 200-day moving average and extend its recent rally. 

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