Dynamic Materials Stock Implodes after Analyst Downgrade

Shares of Dynamic Materials Inc. (BOOM) have blown up this morning, as traders have sent the stock down nearly 9% in reaction to the company's second-quarter earnings report and lackluster fiscal 2010 guidance. For the quarter, BOOM eared 23 cents per share, versus expectations for breakeven results. However, the company said that it sees 2010 sales down by about 5% compared to last year.

In addition to investor reactions, analysts at DA Davidson & Co. downgraded BOOM to "neutral" from "buy." However, DA Davidson was among only a scant few brokerage firms that rated the stock a "buy," as Zacks reports that six of the eight analysts following BOOM rate the equity a "hold," versus two "buys" and no "sells."

In fact, pretty much everyone is betting against the stock. BOOM's Schaeffer's put/call open interest ratio (SOIR) of 0.66 ranks above 74% of all those taken during the past year, while some 6% of the stock's float is currently sold short.

The one thing working in BOOM's favor is that the stock is perched on support in the $15 area. Though even this long-term support level could be called into question, as the shares are squeezed by resistance at their declining 10-week and 20-week moving averages. The bottom line is that BOOM has very little going for it at the moment, especially with the stock seemingly heading for yet another explosive move to the downside.

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