TSCO Wheels Higher on Upbeat Forecast

The company is also making an app and relaunching their website

Deputy Editor
May 27, 2020 at 10:12 AM
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The shares of Tractor Supply Co (NASDAQ:TSCO) are up 4.3% at $115.92 at last check, and earlier hit a new record high of $115.99, after the farm equipment company provided a second-quarter forecast that topped analyst expectations. Along with the upbeat forecast, TSCO also announced a mobile app and a website relaunch featuring new capabilities such as zero-contact curbside pickup.

After this news came no fewer than 14 price target hikes, the highest from Telsey Advisory Group to $140 from $110.  Analysts had been on the fence about Tractor Supply coming into today, with nine out of 16 in coverage sporting a "buy" or better and the remaining seven at a lukewarm "hold." Meanwhile, the consensus 12-month price target of $119.30 is a slim 5% premium to TSCO's current perch, implying even more bull notes could be on the horizon.

TSCO has nearly doubled since its two-year bottom of $63.95 on March 17. Now up 21% in 2020, the shares have found consistent support from their ascending 10-day moving average the last three months. 

In the options pits, calls have picked up in popularity. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.57 calls have been bought for every put in the past 10 days. This ratio sits in the 76th percentile of its annual range, suggesting the appetite for calls is higher than usual. 

Now looks like a good time to weigh in on TSCO options, as the stock's Schaeffer's Volatility Index (SVI) of 30% sits in the 11th percentile of its annual range, implying that near-term options traders are pricing in relatively low volatility expectations, and premiums are more attractively priced than usual. 

 

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