Blue Chip Drags Dow with Dismal Outlook, Withheld Guidance

CAT is up over 55% year-over-year, though

Digital Content Manager
Jul 30, 2021 at 10:06 AM
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The shares Caterpillar Inc. (NYSE:CAT) are down 2.3% at $207.60 at last check, the worst Dow stock today, despite the machinery company reporting better-than-expected second-quarter profits of $2.60 per share, as opposed to the $2.40 per share analysts anticipated. A recovery in global economic activity from pandemic lows contributed to the strong results, driving up sales across all regions and businesses. However, the blue chip noted it expects margin growth to moderate in the coming months, and chose to withhold its full-year guidance.

Over the last month, Caterpillar stock has pulled back nearly 16% from its June 4, all-time high of $246.58. The shares seem to have found a footing at the $205 mark, as well as their 200-day moving average, though. Year-over-year, CAT remains up 55.5%.

The brokerage bunch is rather pessimistic towards Caterpillar stock, despite its blue-chip status. Of the 14 analysts in coverage , nine call it a tepid "hold" or worse, while the 12-moth consensus target price of $238.45 is a 12.2% premium to current levels.

The options pits lean toward calls. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.66, which stands higher than just 16% of readings from the past year. This means  short-term options traders have rarely been more call-biased.  

Drilling down to today's activity, 6,023 calls and 3,366 puts have already crossed the tape, which is twice what is typically seen at this point. Most popular is the weekly 7/30 220-strike call, followed by the 202.50-strike put in the same series, both of which expire at the end of today's close.

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