Discount retail stock Dollar Tree Inc (NASDAQ:DLTR) was last seen down 2.4% to trade at $85.61, after a downgrade from Jefferies to "underperform" from "hold," with a price-target cut to $70 from $110. The firm also cut its earnings forecast far below Wall Street's expectations, citing "mounting execution risk," management decisions, as well as margins, tariff, and inflation concerns.
On the charts, DLTR has been moving lower since its early September post-earnings bear gap, now trading at its lowest levels since May. In fact, if today's price action holds, the equity will mark its fifth-straight drop. Since the start of the year, however, the shares have added 14%.
For those betting on a bounce, Dollar Tree stock's 14-day relative strength index (RSI) of 25.6 ranks firmly in "oversold" territory. Plus, short interest has been building, and now represents 8.5% of the equity's available float.
An unwinding of pessimism from options traders could also give the stock a lift. DLTR's 10-day put/call volume ratio of 2.06 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 98% of readings from the past year.
These options are reasonably priced at the moment, too. The security's Schaeffer's Volatility Index (SVI) of 42% ranks in the low 23rd percentile of its annual range, meaning options traders are pricing in low volatility expectations.
