The optical components stock is now testing a key moving average
Lumentum Holdings Inc (NASDAQ:LITE) stock is down 5% to trade at $58.05, after Chief Financial Officer (CFO) Aaron Tachibana resigned last night. Tachibana will remain with the company through August in a transitory role. An analyst at Needham viewed the change as positive, noting, "We think this is a move from a position of strength and indicative of the strong trajectory of Lumentum," considering a growing company calls for "a more seasoned CFO."
Looking closer at the charts, LITE stock raced to a record high of $74.40 back in March, before pulling back all the way to the $50 level amid concerns about a ban on selling to China's ZTE Corp. However, the security regained some ground after an earnings-induced bull gap in early May, as well as encouraging ZTE developments, and is now testing a foothold atop its 200-day moving average.
Echoing Needham's comments, analysts remain entrenched in the bullish camp. Of the 15 brokerages covering LITE, 13 rate the shares a "strong buy," with not a single "sell" on the books. In addition, the security's consensus 12-month price target of $82.60 is a more than 40% premium to its current perch.
There's plenty of optimism in the options pits too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 6.91 ranks in the elevated 79th annual percentile, meaning Lumentum calls have been bought to open at a quicker-than-usual clip -- albeit amid relatively low absolute volume.
Those looking to bet on LITE stock's short-term price action may want to consider doing so with options. The equity's Schaeffer's Volatility Index (SVI) of 46% ranks in the 10th annual percentile, meaning low volatility expectations are being priced into short-term contracts -- a boon to potential premium buyers.