Zoe's Kitchen Stock Crumbles After Earnings

ZOES stock hit a record low earlier

Managing Editor
May 25, 2018 at 10:28 AM
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Zoe's Kitchen Inc (NYSE:ZOES) is down 32% to trade at $9.84, and earlier touched a new record low of $9.80, after the restaurant chain reported a larger-than-expected first-quarter earnings loss, lower revenue and same-store sales, and slashed its full-year guidance. In response, Maxim downgraded the stock to "hold" from "buy," and issued a price-target cut to $12 from $20. The analyst in coverage noted that "future profitability will be challenged by strategic initiatives." Jefferies chimed in, as well, cutting its price target to $14 from $17.

ZOES stock is one of the worst on the New York Stock Exchange (NYSE) today. The equity has now shed 41% in 2018, and is heading toward its toward its worst day ever. More analysts could soon follow in Maxim's footsteps. Of the eight brokerages covering ZOES, half rate it a "strong buy." Additional downgrades could pressure the stock even lower. 

Although the stock finds itself on the short-sale restricted list this morning, short sellers are likely cheering the collapse. Short interest increased by 9% in the two most recent reporting periods to 5.59 million shares, the most since July. This represents a a hefty 32% of ZOES' total available float, and almost six times the average trading volume. 

Options traders have piled on the beleaguered stock in early trading. At last check, over 9,000 options have changed hands, a whopping 177 times the intraday volume and pacing in the 100th annual percentile. New positions are being initiated at the stock's June 10 put -- the most active option today.

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