Wells Fargo believes Hanesbrands issues are out of management's control
Shares of Hanesbrands Inc. (NYSE:HBI) are breaking down this morning, after a double-downgrade from Wells Fargo to "underweight" from "overweight." The analyst in coverage slashed its price target to $5 from $13, citing the company's debt position and business as headwinds that are outside of management's control. Out of the gate this morning, Hanesbrands stock is down 7.2% to trade at $6.68.
HBI is now trading at its lowest level since 2012. Shorter-term, the shares' 20-day moving average is starting to flatten above the $8 level overhead. The equity now sports a 64% year-over-year deficit.
HBI options traders are overwhelmingly bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Hanesbrands stock sports a 10-day put/call volume ratio of 3.55, which stands higher than 93% of readings from the past year. This means puts are being picked up at a much quicker-than-usual pace.
It's also worth pointing out that the equity ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just eight out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.