Whirlpool Stock Circles the Drain After Downgrade

The majority of analysts were bearish on WHR coming into today

Deputy Editor
Oct 25, 2021 at 9:35 AM
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The shares of home appliance concern Whirlpool Corporation (NYSE:WHR) are down 2.7% at $208.57 at last check, after RBC Capital downgraded the stock to "underperform" from "sector perform." The analyst also slashed its price target to $190 from $209 -- roughly a 9% discount to its current levels -- citing a number of factors, most notably the company's loss of market share in North America. 

The firm is joining a skeptical brokerage bunch, with four of the five in coverage recommending a tepid "hold" rating, coming into today. Amongst short sellers, there's similar sentiment, as short interest has climbed 4.2% over the last month. The 4.50 million shares sold short make up 8.8% of WHR's available float, accounting for over nine day's worth of pent-up buying power, at the stock's average pace of trading.
 
Options traders have been unusually bearish over the last 10 weeks, too. This is per Whirlpool stock's 50-day put/call volume ratio of 1.38 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 74th percentile of its annual range. This indicates puts have been more popular than usual of late.
 
Now seems like an ideal time to weigh in on WHR's next move higher with options. The stock's Schaeffer's Volatility Index (SVI) of 27% sits in the 15th percentile of readings from the past 12 months, meaning options players are pricing in low volatility expectations.
 
Whirlpool stock has now had two rallies thwarted by the $215 level over the last month. Pressure from multiple long-term trendlines of support has also emerged, while the descending 50-day moving average is emerging as resistance as well. Today's losses also have WHR facing off with its year-to-date breakeven level. 

 

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