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)