The shares of Dell Technologies Inc (NYSE:DELL) are down 10.1% to trade at $124.65 this morning, on track for their worst day since April 3 as the company's weak third-quarter profit forecast overshadowed a second-quarter earnings and revenue beat. As AI demand grew and server costs increased, Dell prioritized fulfilling orders over protecting margins, leaving it at risk of supply chain disruptions.
Despite its negative post-earnings shift, no fewer than nine analysts raised their price targets on DELL, the highest from Melius Research to $172. Heading into today, analysts were extremely bullish, with 15 of the 20 in coverage sporting a "buy" or better rating and the average 12-month price of $144.92 a 20% premium to current levels.
DELL has been working to distance itself further from its April 7, 52-week low of $66.24, up roughly 27% in the last six months. The ascending 50-day moving average had been a leg of support for the shares, recently capturing its seven-day losing streak, but is faltering today.
Contrary to analyst sentiment, short-term options traders lean bearish. This is per DELL's Schaeffer's put/call open interest ratio (SOIR) of 1.06, which ranks in the 89th percentile of annual readings.
Drilling down to today's options activity, 40,000 calls and 39,000 puts have crossed the tape, which is 7 times the volume typically seen at this point. Most popular is the weekly 8/29 120-strike put.
