Party City Stock Slides Following Lackluster Q4 Earnings

The brokerage bunch is hesitant towards the security

Assistant Editor
Mar 11, 2021 at 10:40 AM
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The shares of Party City Holdco Inc (NYSE:PRTY) are tumbling this morning, last seen down 7.1% at $7.15, after the party supply retailer reported fourth-quarter earnings of 25 cents per share, well below Wall Street's estimates of 31 cents per share. The company also saw a larger-than-expected decline in same-store sales, which fell 5.9%, and came short of analysts' revenue predictions.

On the charts, Party City stock just hit a Feb. 8, two-year high of $9.21, but quickly pulled back to face resistance at the $8.80 level. Over the last few days, the security has also been getting pressured by the 20-day moving average, after spending the past several months trading above this trendline. Year-over-year, PRTY still boasts a 574.3% lead.

Analysts are on the fence when it comes to the equity, with all three in coverage carrying a tepid "hold" rating. The 12-month consensus price target of $7.67, however, is a 9.7% premium to current levels, which could pave the way for price-target cuts should the stock continue to fall.

Meanwhile, short sellers are building their positions. Short interest is up 6.5% in the most recent reporting period, and the 6.72 million shares sold short already make up 7.2% of the stock's available float.

The options pits are seeing a flurry of bearish activity in response to the lackluster quarterly report. In just the first hour of trading, 2,172 puts have exchanged hands, which is 15 times what's typically seen at this point, compared to 2,892 calls. The March 8 call is the most popular, followed by the April 7 call, with new positions being opened at the latter.

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 86 out of 100, suggesting the security has exceeded volatility expectations during the past year.

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