Hostess Stock Gets Slammed on Earnings Miss, Weak Guidance

The Twinkie parent disappointed with last night's quarterly earnings report

Aug 8, 2018 at 9:37 AM
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Shares of Hostess Brands Inc (NASDAQ:TWNK) are getting hammered this morning, down 16.3% at $11.67 in early trading after last night's second-quarter earnings report. The company banked an adjusted quarterly profit of 14 cents per share on $215.8 million in revenue, falling short of Wall Street's forecast for earnings of 16 cents per share on $221.3 million in revenue.

What's more, TWNK slashed its full-year adjusted earnings forecast to a range between 52 cents and 58 cents per share, down sharply from the earlier outlook of 65 cents to 70 cents per share. A Hostess press release attributed the reduced guidance to "expected headwinds in the second half of 2018 from reduced promotional support from one of its largest retail partners and inflationary pressures."

Analysts have piled on with bearish notes in response. RBC downgraded the stock to "sector perform" from "outperform" and lowered its price target to $14 from $18, while SunTrust Robinson cut its rating to "hold" from "buy" and dropped its price target all the way to $12 from $20. Morgan Stanley also chimed in with a price-target cut to $12 from $13.

Today's early losses pushed TWNK back below its 200-day moving average, which supported yesterday's session lows. However, the stock was already struggling ahead of the earnings miss. Since early March, TWNK's rally attempts have been consistently capped in the neighborhood of its year-to-date breakeven point at $14.81.

While the stock has landed on the short-sale restricted list today, bears will no doubt be pleased with the drastic move lower in Hostess stock. Short interest accounts for a steep 19% of the equity's float, or 27.2 times its average daily trading volume.


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