Earnings Put Coca-Cola Stock on Track for Best Week Since 2016

By Karee Venema / February 16, 2018 / www.schaeffersresearch.com / Article Link

The Coca-Cola Co (NYSE:KO) stock has shot 2.4% higher in electronic trading, after the beverage giant reported fourth-quarter adjusted earnings of 39 cents per share on $7.5 billion in revenue -- better than analysts were expecting. This marks the eighth quarter in a row Coke has beat on the top and bottom lines, with the latest results reflecting higher sales of teas, coffees, and vitamin waters.

The Dow stock's technical backdrop echoes a familiar theme on Wall Street. Specifically, KO shares topped out at a record high of $48.62 in late January, before selling off sharply amid the stock market correction. The equity has now retraced roughly 38.2% of its two-week plunge, closing last night at $44.78. What's more, today's pre-market upside could put Coca-Cola stock on track for its best week since December 2016.

Options traders were loading up on long calls over puts at a faster-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KO's 10-day call/put volume ratio of 2.80 ranks in the 70th annual percentile.

The stock's March 45 call saw the biggest rise in open interest over this time frame, with more than 12,400 contracts initiated. Most of this action occurred yesterday, when one options trader apparently rolled her long March 48 calls down three strikes.

KO shares appear ready to take out $45 in early trading today, and should they extend their post-earnings momentum, a round of upgrades could add fuel to the fire. Of the 15 analysts covering Coca-Cola stock, nine maintain a lukewarm "hold" recommendation.

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