Campbell Soup Stock Takes a Breather Despite Earnings Beat

The COVID-19 pandemic has done little to diminish the stock's value

Assistant Editor
Jun 3, 2020 at 10:21 AM
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Campbell Soup Company (NYSE:CPB) threw its hat into the earnings ring this morning, reporting fiscal third-quarter profits of 83 cents on revenue of $2.24 billion, both of which came in higher than analysts' estimates. Additionally, the food producer raised its full-year guidance, and saw an increase in demand across all of its brands amid the coronavirus pandemic. Despite this, the shares of CPB are down 2.6% to trade at $50.67 this morning.

During the broader market's mid-March pullback, Campbell Soup's shares fell to their lowest levels in about a year, bottoming out just below $41. The stock has added around 28% since then, but today's breather is set to halt a five-day win streak. And despite the rally from those March lows, CPB is still battling its year-to-date breakeven. 

Currently, analysts are rather skittish about Campbell Soup stock. Of the 13 in coverage, 10 sport a "hold" or worse rating. Plus, the 12-month consensus price target of $51.94 is a razor-thin 0.1% discount to current levels, and could signal some small price-target hikes in the near future that could provide additional tailwinds.

In the wake of this upbeat earnings report, 6,415 calls and 1,353 puts have changed hands today so far -- eight times the average intraday amount, with volume running in the highest percentile of its annual range. Leading the charge is the weekly 6/5 52-strike call, followed closely by the 51-strike call from the same series.

Meanwhile, this preference for calls has been a consistent theme in the options pits. CPB's 50-day call/put volume ratio of 3.86 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 98th percentile of its annual readings. This means that there is a ravenous appetite for long calls among traders.

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.32 sits in the bottom percentile of other readings from the past year. This suggests short-term option players have rarely been more call-biased in the past 12 months.

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