NEW YORK, Nov 4 (Reuters) – Whole Foods Market Inc
shares are expected to swing about 10 percent following its
fourth-quarter earnings report on Wednesday, options activity
indicates, signaling more volatility for a stock that has lost
half its value since the start of the year.
Options in the Austin, Texas-based natural and organic goods
seller showed Whole Foods shares could make a run toward $34 by
week’s end and recover some of its recent losses, or dive below
$28, towards a four-year low.
The stock was trading down 1.4 percent at $30.84 by noon ET
(1700 GMT) on Wednesday.
Options activity was largely bearish with near-term put
options, which convey the right to sell the shares at a fixed
price in the future, trading in heavy volume. Puts betting on
the shares dipping below $30.50 by Nov. 20 was among the most-
active contracts.
Expectations for a large move in the shares are running
high. The 30-day at-the-money implied volatility, a gauge of the
risk of large moves in the shares, is at 53.1 percent, or higher
than 99 percent of readings in the last 52 weeks, according to
options analytics firm Trade Alert.
Wall Street analysts have largely kept to the sidelines.
Some have expressed skepticism about Whole Foods in recent
months due to the store’s high prices and growing competition
from retailers like Costco Wholesale Corp and Wal-Mart
Stories Inc that are starting to sell organic and
natural products.
Out of 32 analysts covering Whole Foods, 23 have a hold
rating on the shares, according to Thomson Reuters data.
Investors have also raised their short bets on the company’s
shares over the last eight months. The number of shares sold
short has jumped to 29 million, up by two-thirds.
However, sentiment on social media which tracks a broader
audience including average consumers of Whole Foods, indicate
otherwise.
The Thomson Reuters social media sentiment analysis index
showed a score of 48 for Whole Foods, indicating that overall
sentiment is positive, although it has fallen from 90 in early
October. The index went slightly below 0, indicating a negative
sentiment, just once in the last nine months.
The Thomson Reuters social media sentiment analysis tool
tracks and aggregates positive, neutral and negative tweets on a
company to generate a sentiment score.
Analysts on average are expecting earnings per shares of 34
cents on revenue of $3.47 billion for the fourth-quarter,
according to Thomson Reuters I/B/E/S.
(Reporting by Angela Moon and Saqib Iqbal Ahmed; Editing by
Alan Crosby)
