Itron Plunges 10.01%, What's Driving This Sharp Selloff in a High-Margin Utility Tech Giant?

Summary
• Itron (ITRI) reports Q2 revenue in line with estimates but cuts Q3 guidance 7.5% below expectations
• Stock plummets 10.01% to $124.565, hitting 52-week low of $122.89
• 52-week high of $140.04 now 11% below current price as bearish options volume spikes
• Technical indicators show bearish divergence in MACD and overbought RSI reversal
The utility metering sector faces a seismic shift as Itron's stock collapses post-earnings. While the company delivered a 21.6% EPS beat, its Q3 revenue forecast sent shockwaves through the market. With the stock trading near its intraday low and bearish options activity accelerating, investors are scrambling to decipher whether this is a buying opportunity or a warning sign in a sector poised for AI-driven growth.

Guidance Cut and Sector Weakness Fuel Itron's Sharp Decline
Itron's 10% plunge stems from a combination of bearish guidance and sector-wide headwinds. While the company exceeded EPS estimates by 21.6%, its Q3 revenue forecast of $577.5 million fell 7.5% below analyst expectations. This guidance cut came against a backdrop of weak sector performance, as competitors like Eaton (ETN) also posted declines. The bearish sentiment was exacerbated by management's warning of a 6.2% year-on-year sales decline next quarter, raising concerns about demand sustainability in the energy transition market.

Electrical Equipment Sector Mixed as Itron Leads Sell-Off
The Electrical Equipment sector (XLK) showed mixed momentum with Eaton (ETN) down 0.86% despite Itron's sharper decline. While Itron's margin expansion (12.6% operating margin) outperformed peers, its bearish guidance created a vacuum in the sector. Competitors like BorgWarner (BWA) showed relative strength in new EV contracts, but Itron's 52-week low highlights investor skepticism about its ability to maintain profitability in a softening demand environment.

Bearish Options and ETF Plays in a Volatile Utility Tech Trade
• 200-day MA: $112.77 (well below) • RSI: 62.05 (neutral) • MACD: 2.54 (bearish divergence) • Bollinger Bands: $133.24-$137.87 (current price at lower band)
The technical setup suggests a continuation of the bearish trend. ITRI is trading near key support levels at $133.24 and $105.03. With 3.22% turnover rate and high volatility (IV at 64.84%), the stock presents high-risk/high-reward options opportunities. Two contracts stand out:
• ITRI20250815C130 (Call Option): Strike $130, Expiry 2025-08-15
- IV: 17.12% (moderate) • Leverage: 149.70% • Delta: 0.299 • Theta: -0.151 • Gamma: 0.076 • Turnover: 85
- High leverage with moderate directional sensitivity makes this ideal for a breakout above $135.55 (200-day MA)
- 5% downside scenario payoff: $2.44 (max(0, 118.33 - 130))
• ITRI20250815C135 (Call Option): Strike $135, Expiry 2025-08-15
- IV: 35.47% (high) • Leverage: 103.45% • Delta: 0.232 • Theta: -0.167 • Gamma: 0.032 • Turnover: 246
- Strong gamma sensitivity to price swings makes this ideal for short-term volatility plays
- 5% downside scenario payoff: $0.00 (max(0, 118.33 - 135))
Given the bearish divergence in MACD and overbought RSI reversal, aggressive bears may consider ITRI20250815P120 into a breakdown below $124.57. The 200-day MA at $112.77 serves as critical support to watch.

Backtest Itron Stock Performance
The backtest of Intraday Trading Range Index (ITRI) after a -10% intraday plunge shows favorable performance, with win rates increasing significantly across various time frames. The 3-Day win rate is 52.27%, the 10-Day win rate is 54.45%, and the 30-Day win rate is 58.82%. This indicates that ITRI tends to recover positively after a substantial intraday dip.

Watch for $112.77 Support Breakdown as Sector Rotation Begins
The sharp selloff in Itron reflects a combination of bearish guidance and sector rotation out of utility tech. With operating margins at 12.6% and a 21.8% CAGR in EPS growth, the fundamentals remain strong, but near-term execution risks are now in focus. Investors should monitor the 200-day MA at $112.77 as a critical inflection point - a break below could trigger a test of the 52-week low at $122.89. In the broader sector, Eaton's -0.86% decline underscores the mixed momentum. For those seeking directional exposure, the ITRI20250815C130 call offers high leverage for a potential rebound above $135.55. This is a pivotal moment for Itron - the next 48 hours could determine whether this is a buying opportunity or a cautionary bearish signal.