Bullish options flow was detected in HOME stock on December 5, 2019, after the stock took a big dump on guidance cut and downgrade.
This is some shrewd options traders betting investors in HOME stock overreacted. Here’s what happened.
On December 4, 2019, At Home Group reported Q3 adjusted EPS of 0c, versus the consensus of (2c). The company reported Q3 revenue of $318.7M, versus the consensus $314.86M. Comparable store sales decreased 2% compared to an increase of 5.2% in the third quarter of fiscal 2019, primarily driven by unfavorable customer response in certain categories to tariff-related strategic price increases.
At Home Group cuts FY20 EPS view to 51c-56c from 67c-74c, the consensus was for 68c. The company cut FY20 revenue to $1.352B-$1.36B from $1.3725B-$1.3875B, consensus $1.38B. At Home Group cut FY20 SSS growth view to (2.6%)-(2%) from (1.5%)-0.5%.
On December 5, 2019, William Blair analyst Daniel Hofkin downgraded At Home Group to Market Perform from Outperform citing “limited visibility” following the company’s guidance cut. The company reduced its Q4 and full-year guidance substantially for comp sales, margins, and earnings, Hofkin tells investors in a research note. At Home Group slashed prices 25% in its Christmas assortment and also plans price cuts in furniture, the analyst adds. He believes that while the moves are intended to drive greater competitiveness and clear merchandise, they will “clearly pressure” both sales and margins, at least in the near term.
On the gap down open on December 5, 2019, options traders stepped in and bought calls, betting that investors overreacted.