Andrea Kramer (akramer@sir-inc.com) China Lodging Group, Ltd. (HTHT) stepped into the earnings confessional last night, with the hotel hotshot reporting a substantial jump in third-quarter profit thanks to sharp revenue growth. What's more, the Shanghai-based company lifted its full-year forecast for net revenue growth to a range of 38% to 39%, from its previously announced range of 35% to 37%.
Regardless of the upwardly revised guidance, though, the shares of HTHT have ticked lower in early trading. Nevertheless, it appears a plethora of near-term options speculators are betting on the shares to remain north of round-number support. So far today, the stock's November 20 call has seen more than 900 contracts change hands ? 98% of which have traded at the ask price, suggesting they were bought. However, with 939 calls already open at the November 20 strike, we can't yet tell for certain how much of the volume will translate into freshly purchased bullish bets.
Meanwhile, even taking into account today's post-earnings pullback, it appears the brokerage bunch's expectations for HTHT are extremely muted. According to Thomson Reuters, the consensus 12-month price target on the security stands at only $19.09, representing a discount of 17% to HTHT's closing price of $23.05 on Monday. Likewise, short sellers have ramped up their bearish exposure lately, with short interest advancing by more than 18% during the most recent reporting period.
Technically speaking, the shares of HTHT have given up 1.9% so far today, with the equity exploring the $22.60 neighborhood at last check. From a longer-term perspective, the stock has been a broad-market laggard lately, underperforming the S&P 500 Index (SPX) by 13% during the past 40 sessions, and finishing last week south of its 10-week trendline for the first time in four months. However, the equity's Relative Strength Index (RSI) now rests at 35 ? just a hair's breadth from oversold territory.
Should HTHT stage a post-earnings rebound on the charts, the widespread skepticism on the Street could actually work to the stock's advantage. A bout of bullish brokerage attention, or a short-squeeze situation, could help the shares climb back atop trendline support.
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