Home Depot Stock Toppled by Weak Guidance

Home Depot's 2020 sales growth forecast fell below analysts' estimates

Home Depot Inc (NYSE:HD) has taken quite a tumble off its late-November record high of $239.30, thanks in part to a disappointing earnings report,and it doesn't look much better for the retailer today. In fact, the security is down 2% in pre-market trading, after the firm projected between 3.5% and 4% sales growth for 2020, which missed the 4.3% in growth expected by analysts.

With this price action, HD stock is on pace for its lowest close since late August. Since its record high, HD has shed 11.1%, and though it still maintains a roughly 25% gain for the year, it's set to give up support at the 200-day moving average.

The brokerage bunch, so far, has been quiet on the update, but the door is wide open for plenty of downgrades, should this negative price action continue. Ten of those in coverage call HD a "buy" or better, while 10 say "hold," and there isn't a single "sell" to be seen. What's more, the consensus 12-month price target of $238.07 sits just south of its record highs, and holds a 10.3% premium to last night's close.

Drilling down, the options pits have been incredibly bullish of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 3.11 long calls have been picked up for every put during the last 10 days. This ratio sits higher than 97% of all other readings from this past year, indicating a much healthier-than-usual appetite for these types of contracts.