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Soup Stock Poised for Sixth-Straight Loss Despite Earnings Beat

Options traders are taking an interest in the stock today

Deputy Editor
Dec 9, 2020 at 10:38 AM
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Campbell Soup Company (NYSE:CPB) stepped into the earnings confessional this morning and reported fiscal first-quarter profits of $1.02 on revenue of $2.34 billion, both of which came in higher than analysts' estimates. Additionally, the food producer raised its quarterly dividend by 6%, or 37 cents per share. Despite this, the shares of CPB are down 2.7% to trade at $46.96 this morning.

Today's negative price action has Campbell stock pacing for its sixth-consecutive loss, with pressure emerging from the equity's 40-day moving average-- a trendline that's acted as support for the better part of a month. Longer term, the security has taken a 4.1% haircut year-to-date.

In the wake of this upbeat earnings report, 2,186 calls and 1,254 puts have changed hands today so far -- 10 times the average intraday amount, with volume running in the 99th percentile of its annual range. Leading the charge is the December 47 call, followed closely by the 48.50 call from the same series, with positions being opened at the former.

Lastly, there could be a chance for tailwinds thanks to a shift in analyst sentiment, with the majority of analysts in coverage sporting “hold” or worse ratings. The equity is also ripe for a short squeeze. Short interest increased by 7.5% in the two most recent reporting periods, and the 19.25 million shares sold short account for 9.6% of CPB's total available float. At the stock’s average pace of trading, it would take shorts over a week to buy back their bearish bets.


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