Forecast Sinks FedEx Stock, Option Traders Active

Options volume has already hit a 52-week high

Deputy Editor
Dec 18, 2019 at 10:53 AM
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Shipping name FedEx Corporation (NYSE:FDX) is selling off this morning, following the firm's fiscal second-quarter earnings report. Specifically, the company posted profits of $2.13 per share and a 2.8% drop in revenue to $17.3 billion -- missing analysts' estimates. On top of that, FedEx slashed its 2020 profit outlook, citing weak global trade and rising ground delivery costs. The stock is down 9.6% at $147.47, at last check. 

A round of analysts bear notes has no doubt applied pressure on the charts. So far, no less than five analysts have issued price-target cuts -- including BMO, which cut its estimate to a street low of $160 from $165. Meanwhile, Oppenheimer downgraded the stock to "perform" from "outperform." The shipping name did receive one bull note from Credit Suisse, which lifted its price target to $170 from $168. Now, the consensus 12-month target price sits at $170.84, still at a healthy 15% premium to current levels. 

The dip has created a rumble in the options pits, too. So far, 33,000 calls and 39,000 puts have crossed the tape -- 19 times the intraday average -- with volume already at a 52-week high. Right out of the gate, traders have attached themselves to the December 150 put, along with the 155 call from the same series. 

Puts were more popular than normal on FDX before today. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) the equity sports a 10-day put/call volume ratio of 0.95, which sits higher than 88% of all other readings from the last year. 

Considering FDX's recent behavior on the charts, this pessimistic attitude shouldn't come as a surprise. The security has been chopping lower for the better part of the year, with several attempts to break out from these lower lows thwarted by the descending 200-day moving average. The $152 region, which happens to coincide with the stock's year-to-date breakeven level, emerged as support in recent months, but now, FDX is trading south of here, eyeing its lowest close since mid-October. 

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