FE Eyes Eighth Straight Amid Recovery Moves

Icahn is looking to help push the stock past its recent scandal

Deputy Editor
Mar 17, 2021 at 9:51 AM
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Ohio-based FirstEnergy Corporation (NYSE:FE) has made plenty of headlines this past year, thanks to a state bribery scandal that led to the firing of CEO Charles Jones along with two other executives. However, the utility company officially named Steven Strah its new CEO this month, and stakeholder Carl Icahn expressed interest in acquiring even more shares. Today, it was revealed that two members Icahn's firm will being joining FirstEnergy's board, looking to help the electricity name charge forward. At last check, FE was up 0.4% to trade at $35.70. 

On the charts, a July 22 bear gap sent the equity to a record low of $22.85, and FirstEnergy stock has been struggling recover those losses ever since. However, the 40-day moving average carried the security higher since December, and the stock certainly seems to have found some momentum lately -- currently eyeing its eighth-straight daily win. Though, it's worth noting that the stock's 14-day Relative Strength Index (RSI) of 71 sits just in "overbought" territory, indicating a short-term breather may be in the cards. 

Analysts are split on FE, with six of the 13 in coverage at a "buy" or better rating, and the remaining seven a "hold" or worse. Meanwhile, the 12-month consensus price target of $37.13 is a 4.4% premium to last night's close. 

Options traders, on the other hand, are more bullish. In fact, the past 10 weeks saw 9.96 calls bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 82% of readings from the past year, showing long calls being picked up at a relatively faster-than-usual pace. 

Now looks like the perfect time to weigh in on these options, too. The stock's Schaeffer's Volatility Index (SVI) of 26% sits in the lowest percentile of its annual range, implying that options players are pricing in low volatility expectations at the moment -- a boon for premium buyers.


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