Stock Traders Purchase High Volume of Red Cat Call Options (NASDAQ:RCAT)

Key Points

• Red Cat call-option activity surged: Investors purchased 52,096 call options, about 92% above the stock’s typical daily call volume. Shares rose 7.9% to $9.94 during Monday trading.
• Analysts remain broadly bullish, with a consensus “Buy” rating and a $20.40 price target, despite Red Cat missing quarterly earnings and revenue estimates and continuing to report substantial losses.
• Institutional ownership increased: BlackRock initiated a stake worth roughly $119.6 million, while State Street, Vanguard and Geode also raised holdings. Separately, director Paul Funk II sold 165,028 shares for approximately $1.9 million.

Red Cat Holdings, Inc. (NASDAQ:RCAT - Get Free Report) saw some unusual options trading on Monday. Investors bought 52,096 call options on the stock. This is an increase of approximately 92% compared to the typical daily volume of 27,070 call options.

Red Cat Trading Up 7.9%

Shares of NASDAQ:RCAT traded up $0.73 during trading on Monday, reaching $9.94. The stock had a trading volume of 12,885,134 shares, compared to its average volume of 13,952,330. Red Cat has a one year low of $5.77 and a one year high of $18.78. The company has a market capitalization of $1.22 billion, a P/E ratio of -12.24 and a beta of 1.32. The firm's 50-day simple moving average is $9.89 and its 200 day simple moving average is $11.82.

Red Cat (NASDAQ:RCAT - Get Free Report) last posted its quarterly earnings data on Thursday, August 6th. The company reported ($0.26) EPS for the quarter, missing the consensus estimate of ($0.21) by ($0.05). The firm had revenue of $20.20 million for the quarter, compared to the consensus estimate of $22.65 million. Red Cat had a negative return on equity of 39.64% and a negative net margin of 136.26%. Equities research analysts forecast that Red Cat will post -0.68 earnings per share for the current fiscal year.

Analyst Upgrades and Downgrades

A number of research firms have recently issued reports on RCAT. Clear Str raised Red Cat to a "strong-buy" rating in a research report on Wednesday, April 29th. LADENBURG THALM/SH SH raised shares of Red Cat to a "strong-buy" rating in a research report on Wednesday, May 6th. UBS Group assumed coverage on shares of Red Cat in a report on Wednesday, May 27th. They issued a "buy" rating for the company. HC Wainwright reiterated a "buy" rating and set a $20.00 price objective on shares of Red Cat in a research note on Friday. Finally, Roth Capital initiated coverage on Red Cat in a research report on Monday, June 1st. They set a "buy" rating and a $25.00 target price on the stock. Two research analysts have rated the stock with a Strong Buy rating, four have given a Buy rating and one has issued a Sell rating to the company. According to MarketBeat.com, the company has a consensus rating of "Buy" and a consensus price target of $20.40.

Insider Buying and Selling

In related news, Director Paul Funk II sold 165,028 shares of the firm's stock in a transaction dated Thursday, June 11th. The shares were sold at an average price of $11.50, for a total value of $1,897,822.00. The transaction was disclosed in a filing with the SEC, which is accessible through this link. 12.50% of the stock is owned by company insiders.

Institutional Inflows and Outflows

A number of hedge funds have recently modified their holdings of the company. BlackRock Inc. purchased a new stake in Red Cat during the second quarter worth $119,610,000. State Street Corp raised its position in shares of Red Cat by 136.4% in the fourth quarter. State Street Corp now owns 6,612,153 shares of the company's stock worth $52,434,000 after acquiring an additional 3,815,310 shares during the period. Vanguard Group Inc. boosted its stake in shares of Red Cat by 9.0% during the 4th quarter. Vanguard Group Inc. now owns 6,000,037 shares of the company's stock worth $47,580,000 after acquiring an additional 493,660 shares in the last quarter. Geode Capital Management LLC boosted its stake in shares of Red Cat by 13.4% during the 4th quarter. Geode Capital Management LLC now owns 2,520,524 shares of the company's stock worth $19,991,000 after acquiring an additional 297,967 shares in the last quarter. Finally, Davidson Kempner Capital Management LP acquired a new stake in shares of Red Cat during the 3rd quarter valued at about $17,286,000. 37.97% of the stock is owned by institutional investors and hedge funds.

Red Cat Company Profile

Red Cat Holdings, Inc NASDAQ: RCAT is a technology holding company that develops and delivers advanced robotics, autonomy, and sensing solutions for defense, national security, public safety and commercial customers. Headquartered in American Fork, Utah, the company brings together a portfolio of specialized operating businesses focused on unmanned aerial systems (UAS), mission management software, precision mapping sensors and engineering services.

Through its UAS segment, Red Cat designs and manufactures small to medium-sized fixed-wing and vertical-takeoff drones that support intelligence, surveillance and reconnaissance (ISR) missions.

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