HRB Dips Lower Despite Post-Earnings Bull Notes

The stock is seeing four times the usual volume in the options pits

Deputy Editor
Mar 10, 2021 at 10:41 AM
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The shares of H&R Block Inc (NYSE:HRB) are down 0.3% to trade at $19.70 at last check, after the company's fiscal third-quarter report. The tax services name announced losses of $1.17 per share, which were narrower than expected, in addition to a revenue miss. In response, Morgan Stanley and Barrington Research raised their price targets to $19 and $24, respectively. 

Since bouncing off the $15 level in late-December, HRB has been climbing up the charts. The equity got close to reaching pre-pandemic levels during a Jan. 27 pop to $20.75, and is now attempting to consolidate above the $20 level. Year-to-date, the equity remains up 26.4%.

Despite the positive price action, analysts are cautious towards H&R Block stock. Of the six in coverage, four carry a tepid "hold rating." Meanwhile, short sellers have been quick to pile on. Short interest is up 10.2% in the most recent reporting period, and the 16.35 million shares sold short account for 9% of the stock's available float. In other words, it would take nearly six days to buy back these bearish bets, at HRB's average pace of trading. 

Over in the options pits, the security saw a surge in calls over the past 10 weeks, per HRB's 50-day call/put volume ratio of 14.27 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 88% of readings from the past year, indicating a penchant for long calls over this time period. 

As far as today's options activity, 1,903 calls and 767 puts have crossed the tape so far, which is four times what is typically seen at this point. The March 20 call is by far the most popular, followed by the April 19 call. 

 

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