Dean Foods Stock Finds New Lows After Downgrade

J.P. Morgan Securities cut DF to "underweight" from "neutral"

Managing Editor
Aug 17, 2018 at 10:15 AM
facebook X logo linkedin


Dean Foods Co (NYSE:DF) stock is down 9.8% to trade at $7.87 this morning, and earlier touched a new seven-year low of $7.69, after J.P. Morgan Securities downgraded the food & beverage name to "underweight" from "neutral," while slashing its price target to $6 from $9. The analyst in coverage cited a possible third-quarter earnings miss, and the higher cost of raw milk, for the downgrade and new target, which stands in uncharted territory for DF stock.

Today's drop makes Dean Foods the third-worst stock on the New York Stock Exchange (NYSE) this morning. From a longer-term perspective, the shares have now shed 33% in 2018, after being turned away at the $11 level in early July, and gapping lower earlier this month following a subpar earnings report and lowered full-year forecast.

In terms of options data, buyers have been targeting calls, albeit amid light absolute volume. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows 1,102 DF calls bought to open in the past 10 days, compared to just 255 puts. However, given that short interest increased in the most recent reporting period to its highest point in over a year, it's possible some of this call buying -- particularly at out-of-the-money strikes -- could have been shorts seeking an options hedge ahead of earnings. 

Whatever the motive, near-term volatility expectations being priced into Dean Foods options are near extreme lows following the company's earnings report last week. This is based on the stock's Schaeffer's Volatility Index (SVI) of 32% -- just 8 percentage points from a 12-month low. 
 
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI