The company's earnings and revenue both came in below analysts' expecations.
Petco Health and Wellness Company Inc (NASDAQ:WOOF) is sinking today, last seen down 6.6% at $14.70 following the pet supply retailer's second-quarter earnings report. Petco posted profits of 19 cents per share on $1.48 billion in revenue, and though revenue saw a 3.2% pop, both numbers missed expectations. The firm also cut its full-year sales and adjusted profit outlook, noting higher costs.
Prior to today's bear gap, WOOF was running right into its 100-day moving average. This trendline has worked as a rejection level since early May, snuffing out Petco stock's most recent rally off its July 27 record low of $12.88. Year-to-date, the security is down more than 23%.
Analysts have yet to chime in, but the sentiment heading into today was mostly bullish, which makes the stock vulnerable to bear notes in the future. Of the 10 in coverage, seven said "buy" or better, compared to just three "hold" ratings. Plus, the 12-month consensus price target of $20.08 is a 27.7% premium to last night's close.
Options traders, on the other hand, have been much more bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WOOF sports a 50-day put/call volume ratio of 1.15, which sits higher than 96% of readings from the past year. In other words, options traders have had an unusually healthy appetite for long puts of late.
A look at today's options activity shows 2,684 calls and 2,302 puts exchanged so far -- four times the intraday average. The most popular position is the weekly 8/26 15.50-strike call, followed by the weekly 9/2 12-strike put, with positions being opened at both.