Downgrade Drives Dillard's Stock Lower

Options volume is accelerated on DDS and SPOT today

Apr 22, 2019 at 2:19 PM
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Dillard's, Inc. (NYSE:DDS) is trading down 9.2% today at $67.10, following a downgrade to "underperform" from "neutral" at Wedbush, which kept its $65 price target. Wedbush analyst Jen Redding noted concern over Dillard's quarterly performance being be weighed down by an increase in promotional activity, and said that the stock is trading at a premium compared to its peers. The bearish outlook mirrors the broader sentiment seen on Wall Street, where no analysts recommend buying the shares, and short interest is extremely high.

DDS is not a name that sees much options trading, but today calls are crossing at an accelerated pace. By the numbers, almost 1,200 have been traded, compared to a daily average of 110. The May 72.50 call is most active, while other traders may be selling to open the weekly 4/26 69-strike call.

The security is pacing for its lowest close in almost two months, and has breached the 50-day moving average for the first time in three. The $70 area in general could be notable for DDS shares, since it's roughly half their 2015 highs.

dds stock chart

Another stock hurting from negative analyst attention is Spotify Technology SA (NYSE:SPOT), down 2.5% at $136.09, after Buckingham Research dropped its price target to $165 from $174. SPOT shares had already been struggling following the now-confirmed news that Amazon.com (AMZN) is launching a free music streaming service.

In the meantime, call options are trading at a higher-than-expected rate today, with a ton of activity at the weekly 5/3 143-strike call, where new positions are being opened. These traders are likely looking for a rebound in Spotify stock, back atop $143, over the next two weeks.

spot stock chart

 

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