Auto parts supplier Adient (ADNT) was hit with some negative analyst attention today. RBC downgraded the shares to “underperform” from “sector perform,” and slashed its price target by $1 to $16. Likewise, J.P. Morgan Securities trimmed its price target on ADNT to $20 from $26. As such, the stock is in the red today — and if recent history is any indicator, the sell-off may not be over.
After touching an all-time low of $14.52 on Jan. 7, ADNT staged a rebound, bouncing as high as $19.90 on Jan. 18. However, the security is back within one standard deviation of its 40-day moving average, after several weeks south of this trendline. Over the past three years, there have been seven similar signals with the 40-day, after which ADNT was lower one month later the majority of the time, averaging a loss of 9.03%, per data from Schaeffer’s Senior Quantitative Analyst Rocky White.
Adient shares were last seen trading around $17.70, down 5.1% on the day. Another 9% dip from current levels would put ADNT around $16.10 in mid-to-late February — which encompasses the company’s next earnings release on Thursday, Feb. 7.
For some added history, the stock moved lower after six of the last eight earnings reports, and dropped more than 25% in one session after Adient reported in November, per Trade-Alert. Just last week, in fact, the company cut its quarterly revenue estimates and warned of softer demand in fiscal-year 2019, with the industry pressured by Brexit uncertainty and the trade war with China, among other things.
While short-term option premiums are relatively pricey ahead of a known volatility catalyst like earnings, ADNT has tended to exceed volatility expectations in the past year. The security’s Schaeffer’s Volatility Scorecard (SVS) stands at an impressive 93 out of a possible 100 — a boon for would-be premium buyers looking to speculate on the stock’s near-term trajectory.