Costco Stock Moves Lower on Comparable Sales Drop

Option bears are blasting COST in response

Digital Content Manager
Apr 6, 2023 at 10:48 AM
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Costco Wholesale Corporation (NASDAQ:COST) is down 3.6% to trade at $479.31 at last check, after the retailer's total comparable sales for March fell 1.1% year-over-year amid higher gas prices and the impact of foreign exchanges. Additionally, e-commerce comparable sales dropped 12.7%, but net sales rose 0.5% o 21.71 billion.

Overall options volume is today running at eight times the intraday average, with 21,000 puts and 13,000 calls exchanged so far. Most popular is the 4/6 475-strike put, followed by the 480-strike put in that weekly series, with positions opening at both. This indicates investors expect additional downside for COST by today's close, when these contracts expire.

Options are affordably priced at the moment, making now an opportune time to weigh in the stock's next moves. This is per its Schaeffer's Volatility Index (SVI) of 21% that sits higher than just 3% of annual readings. What's more, COST's Schaeffer's Volatility Scorecard (SVS) tally of 84 suggests it usually outperforms volatility expectations. 

The brokerage bunch leans bullish, leaving plenty of room for downgrades and/or price-target hikes going forward, which could pressure COST even lower. In fact, 19 of the 25 analysts in coverage call Costco stock a "buy" or better, while the 12-month consensus target of $547.58 is a 14.2% premium to current levels.

Costco stock is slipping below its 20-day moving average, which had been acting as a level of support since mid-March. The equity's latest rally off a familiar floor at the $468 level lost steam at the $504 region, and today's drop is contributing to an 18.1% year-over-year deficit.
 

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