Navistar Shares Surge Ahead of Earnings

NAV's post-earnings price history has been mostly negative

by Jake Scott

Published on Jun 3, 2020 at 1:00 PM
Updated on Jun 24, 2020 at 10:16 AM

The shares Navistar International Corp (NYSE:NAV) are up 6.7%, to trade at $25.43 this afternoon, just ahead of the heavy machinery manufacturer's second-quarter earnings report, which is due out before Thursday's open. Below, we'll dig into how NAV has fared in the past, and see what post-earnings moves the options market is pricing in for the shares. 

Worth noting, Navistar stock last night received a downgrade to "neutral" at Longbow Research. Other analysts are also look to be cautiously approaching the equity. Of the eight in coverage, seven brokerages sport a tepid "hold," while one rates it a "strong buy." However, the security’s consensus 12-month price target of $28.33 is an elevated 11.3% premium to current levels.

Despite today's pop, NAV is still facing resistance to its rally from the 120-day moving average -- a trendline that the security has failed to close above since the mid-March broad-market selloff. Additionally, the stock sports a year-to-date deficit of 13.8%.

NAV Chart June 3

In the options pits, NAV's 50-day call/put volume ratio of 15.12 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the highest percentile of its annual range, suggesting a much healthier appetite for long calls of late. 

It's also worth noting that Navistar stock's Schaeffer's Volatility Index (SVI) of 64% ranks in the 24th percentile of its annual range. This means near-term options traders are pricing in relatively low volatility expectations -- a boon for premium buyers.

History shows that NAV has closed lower the day after reporting in five of the past eight quarters. Over the past two years the stock has averaged a swing of 7.7%, regardless of direction. This time around, the options pits are pricing in a staggering 30.8% shift, meaning all eyes will be on Navistar tomorrow morning.


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