Campbell Soup Earnings Lift Some of Stock's Surrounding Pessimism

Calls are running at eight times the intraday average volume

Deputy Editor
Jun 8, 2022 at 11:13 AM
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Campbell Soup Company (NYSE:CPB) announced a strong fiscal third-quarter report and raised its sales forecast before the bell this morning, amid easing supply-chain issues and steady demand for its soups and sauces. The stock is pulling back from its early-morning gains, however. Previously as high as $48.24, CPB is currently down 0.5% to trade at $46.36 as it flip-flops above and below breakeven.

This $48 level appears to be emerging as a ceiling, as it rejected the stock several times at the end of May, with help from the 20-day moving average. Though the stock is struggling to climb back toward its May 9 one-year high of $51.94, the $45 level and 120-day trendline linger below as support. Year-to-date, the equity is up 6.6%. 

Plenty of pessimism has surrounded CPB amongst analysts and options traders. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day put/call volume ratio of 1.43, which is higher than 92% of readings from the past year. 

Plus, all 10 analysts in coverage are bearish, with eight sporting a tepid "hold" rating and two a "sell" or worse. Their 12-month consensus price target of $44.45 is also a 4.5% discount to current levels.

Though analysts have yet to chime in with any bull notes, options bulls seem to be emerging today. So far, 3,124 calls and 2,458 puts have crossed the tape, with calls running at eight times the intraday average. The weekly 6/10 46-strike put and 50-strike call are the most popular, with new positions opening at the latter. 

Meanwhile, though short interest has been unraveling, it still represents 8% of the stock's available float. In other words, it would take over six days to buy back these bearish bets, at Campbell Soup stock's average pace of daily trading. 

 

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