WBA stock just had its worst week since August 2014
Brokerage firm Mizuho this morning downgraded new Dow component Walgreens Boots Alliance Inc (NASDAQ:WBA) to "neutral" from "buy," and dropped its price target to $64 from $77. The bear note was all about Amazon's (AMZN) push into the pharmacy space following last week's PillPack purchase. For example, Mizuho believes the growing threat of Amazon will keep weighing on valuation and sentiment, and while it sees the downside risk rather limited for WBA shares, it doesn't see much upside potential, either.
Mizuho's downgrade is just the latest in a string of bear notes that were a big reason for Walgreens' 11.2% sell-off last week -- its worst week since August 2014. The shares were last seen 0.5% lower at $59.73 to kick off the third quarter, leaving them pennies from last week's three-year low of $59.07 as they try to avoid a sixth straight quarterly loss.
Options traders have remained committed to calls, though. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows WBA with a 10-day call/put volume ratio of 2.22, which ranks in the 86th annual percentile. And in Friday's session, new positions were opened at the July 60 call -- the most popular option overall.
However, some recent call buying is likely connected to rising short interest levels on Walgreens Boots Alliance, as bears try to hedge against a sharp uptick from the shares. For instance, short interest increased almost 21% in the last two reporting periods on the security, though it still represents just about 2% of the overall float.
Taking a quick peak in early trading today, put options are actually holding the advantage over calls. But the most popular put by far is the August 55 strike, and data suggests traders could be selling to open positions here, which would mean they're betting on the $55 level holding as near-term technical support, at least for a few weeks.