WBA options have been very popular
Walgreens Boots Alliance Inc (NASDAQ:WBA) shares have been getting hammered, shedding nearly 10% in yesterday's session alone after Amazon scooped up online pharmacy PillPack for a reported $1 billion in cash. WBA stock touched a more than three-year low of $59.07 before closing at $59.70, bringing its year-to-date deficit to 17.8% -- even though Walgreens CEO Stefano Pessina assured investors he's "not particularly worried" about Amazon during the company's post-earnings conference call yesterday. By the way, the pharmacy operator topped top- and bottom-line estimates in its fiscal third quarter, and raised its dividend.
Still, analysts are lowering their outlooks on the new Dow component. Leerink, Baird, SunTrust Robinson, Loop Capital, and Jefferies all weighed in bearishly since yesterday's close, with the latter firm downgrading WBA to "hold" from "buy," and slashing its price target by $20 to $65. Most analysts in coverage still recommend buying the equity, however, and the average 12-month price target of $75.23 represents a 26% premium to Thursday's close.
Taking a quick peek into WBA's options pits, the January 2019 87.50-strike call is the top open interest position, followed by the January 2019 85-strike call, and close behind these LEAPS is the front-month July 90 call. Not surprisingly, it's become pricey to speculate on the security with near-term options, as its current 30-day at-the-money implied volatility of 27.4% ranks in the high 80th annual percentile -- pointing to elevated volatility expectations.
Meanwhile, Walgreens stock is trying to bounce back today. The shares are edging up 0.9% in early trading, last quoted at $60.21. Options action is already taking off, too, with more than 4,400 contracts traded within the first half hour.