Schaeffer's Trading Floor Blog

Stocks On the Move: Express, Inc., Sturm, Ruger & Company, and Level 3 Communications, Inc.

EXPR, RGR, and LVLT are moving sharply in Wednesday's trading

by 8/27/2014 1:59 PM
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U.S. stocks are just barely north of breakeven this afternoon, with the major equity indexes taking a mid-week breather. Among the names making notable moves are apparel retailer Express, Inc. (NYSE:EXPR), firearm firm Sturm, Ruger & Company (NYSE:RGR), and telecom services specialist Level 3 Communications, Inc. (NYSE:LVLT). Here's a quick look at how EXPR, RGR, and LVLT are faring on the charts today.

  • EXPR has surged nearly 14% to trade at $16.61, paring its year-to-date loss to 11%. The stock is capitalizing on a well-received earnings report, with Express, Inc. swinging to a surprise profit and topping second-quarter revenue expectations. The equity is likely benefiting from some short-covering activity today, as 6.8% of its available float is sold short -- representing 4.1 times EXPR's average daily trading volume.

  • Following a dismal outlook from its sector peer, RGR has tumbled 3.9% to $49.05. Early this morning, CRT Capital downgraded the stock to "fair value" from "buy," and simultaneously lowered its price target to $55 from $75. Shares of Sturm, Ruger & Company have shed roughly one-third of their value in 2014, significantly underperforming the broader equities market. There could be more negative analyst notes in store, as the average 12-month price target for RGR stands at $59.00 -- a 20.3% premium to the equity's current price.

  • LVLT has rallied 3.7% to trade at $44.58, thanks to an upgrade to "outperform" at Macquarie, as well as a price-target hike to $51 from $49. It's a rare bullish endorsement for Level 3 Communications, Inc., as only 17% of analysts tracking the shares have handed out a "strong buy" recommendation -- even though LVLT has notched a market-beating gain of 34.4% year-to-date. Meanwhile, a capitulation by the shorts could help the security extend its climb; currently, no less than 8.3% of LVLT's float is sold short.

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Analyst Update: Caesars Entertainment Corp, Tiffany & Co., and Trina Solar Limited (ADR)

Analysts adjusted their ratings on CZR, TIF, and TSL

by 8/27/2014 1:21 PM
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Analysts are weighing in today on casino king Caesars Entertainment Corp (NASDAQ:CZR), jewelry merchant Tiffany & Co. (NYSE:TIF), and alternative energy specialist Trina Solar Limited (ADR) (NYSE:TSL). Here's a quick look at today's brokerage notes on CZR, TIF, and TSL.

  • CZR is down 2.5% this afternoon to trade at $13.37, following a price-target reduction to $9 from $17 at Imperial Capital. Longer term, it's been a rough year for the shares, which have shed nearly 38% in 2014. As such, short interest on Caesars Entertainment Corp is on the rise, growing 13.3% during the two most recent reporting periods to 29.5% of the equity's float. At the stock's typical daily trading rate, it would take almost three weeks to cover these bearish bets.

  • TIF is fresh off a record high of $105.66, after announcing strong second-quarter results and forward guidance. The news was met with price-target hikes from no fewer than four brokerage firms -- including Sterne Agee, which boosted its target to $110 from $108. Additional upward revisions may be in the cards, too, considering Tiffany & Co.'s consensus 12-month price target of $105.05 is just a stone's throw away from the stock's current perch. The shares were last seen 1.5% higher at $102.28.

  • TSL has partially recovered from yesterday's earnings-induced sell-off, up 2.2% this afternoon at $12.57. This, despite the stock seeing its price target lowered to $18 from $21 at Cowen. Taking a step back, shares of Trina Solar Limited (ADR) are off nearly 8% on a year-to-date basis. Not surprisingly, short sellers have taken a liking to the security, as 22.6% of its float is sold short -- a quantity that would take more than a week to buy back, at TSL's average daily trading volume.

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Analyst Downgrades: Facebook Inc (FB), Sprint Corporation, and Splunk Inc

Analysts downwardly revised their ratings on FB, S, and SPLK

by 8/27/2014 9:14 AM
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Analysts are weighing in today on social network Facebook Inc (NASDAQ:FB), wireless issue Sprint Corporation (NYSE:S), and data analysis name Splunk Inc (NASDAQ:SPLK). Here's a quick roundup of today's bearish brokerage notes on FB, S, and SPLK.

  • Despite rallying 39% in 2014 to trade at $75.96 -- and drawing near its all-time high of $76.74 from late July -- FB saw its rating dropped to "neutral" from "buy" at Janney. As might be expected, this is a relatively rare bearish note for the Mark Zuckerberg brainchild. In fact, of the 33 brokerage firms covering Facebook Inc, 31 have doled out "buy" or "strong buy" endorsements, versus just two "holds."

  • Technical underperformer S got hit with more negative analyst attention overnight. Specifically, Canaccord Genuity slashed its price target on the stock to $5.75 from $7.50 and affirmed its "hold" rating, while Barclays reduced its target to $6 from $9, to go along with an "equal weight" opinion. On the options front, put buying on Sprint Corporation has picked up at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). In fact, the equity's 50-day put/call volume ratio across this trio of exchanges checks in at 0.91 -- in the 84th percentile of its annual range. This isn't entirely surprising, given Sprint's 46.3% year-to-date deficit to hover near $5.77.

  • Finally, ahead of tomorrow night's earnings report, SPLK saw its price target cut to $83 from $99 at Cantor. On the charts, meanwhile, the stock has been tumbling since notching a record high of $106.15 in late February, off 56.5% to rest at $46.22. That said, additional price-target reductions could still be on the way. Splunk Inc's average 12-month price target checks in at $66.69 -- a more than 44% premium to the equity's current perch. Downgrades are also possible, as 14 out of 19 covering analysts have doled out a "strong buy" recommendation on the technical laggard, compared to just five "holds" and not a single "sell" opinion.

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U.S. stock futures are comfortably higher this morning, with the major equity indexes looking to extend their run to new highs. In company news, today's stocks to watch include online retailer Amazon.com, Inc. (NASDAQ:AMZN), cable and Internet provider Time Warner Cable Inc (NYSE:TWC), financial services firm Charles Schwab Corp (NYSE:SCHW), and firearm manufacturer Smith & Wesson Holding Corp (NASDAQ:SWHC).

  • A close look at the data suggests Amazon.com, Inc. (NASDAQ:AMZN) has likely sold no more than 35,000 of its Fire Phones since the device's July launch. Adding insult to injury, another report includes a slew of unfavorable comparisons for AMZN's apparently unpopular phone -- including the fact that former Smiths frontman Morrissey sold 35,000 copies of his autobiography within the first week of its release last year. (The Guardian; MarketWatch)

  • Time Warner Cable Inc (NYSE:TWC) customers experienced major outages to their cable and Internet services this morning, with reports popping up across North America and Europe. The service interruptions come just a day after TWC paid $1.1 million to settle a Federal Communications Commission (FCC) investigation into the company's improper reporting procedures for network outages. (The Wire; Reuters)

  • Charles Schwab Corp (NYSE:SCHW) suffered a significant defeat, after a Financial Industry Regulatory Authority (FINRA) panel struck down the company's $15 million arbitration case against Morgan Stanley (NYSE:MS). However, the regulators ordered MS -- which SCHW accused of "raiding" brokers from its San Francisco outpost -- to pay $72,000 in sanctions. (CNBC)

  • Sources indicate that Snapchat is close to securing a round of funding that would value the company at $10 billion. Last year, CEO Evan Spiegel turned down a bid from Facebook Inc (NASDAQ:FB) to acquire Snapchat for $3 billion. (Bloomberg)

  • Smith & Wesson Holding Corp (NASDAQ:SWHC) is down 11% in pre-market trading this morning, after the gun company drastically lowered its full-year sales guidance. SWHC also reported weaker-than-forecast revenue for its fiscal first quarter, driven by weak demand for long guns. (Business Insider)

  • In other earnings news, TiVo Inc. (NASDAQ:TIVO), Tiffany & Co. (NYSE:TIF), and Express, Inc. (NYSE:EXPR) will be in focus today after reporting their latest quarterly results. (MarketWatch)

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Analyst Upgrades: Aruba Networks, Inc., Best Buy Co Inc, and MannKind Corporation

Analysts upwardly revised their ratings on ARUN, BBY, and MNKD

by 8/27/2014 8:51 AM
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Analysts are weighing in today on network access firm Aruba Networks, Inc. (NASDAQ:ARUN), electronics retailer Best Buy Co Inc (NYSE:BBY), and biopharmaceutical issue MannKind Corporation (NASDAQ:MNKD). Here's a quick roundup of today's bullish brokerage notes on ARUN, BBY, and MNKD.

  • Last night, ARUN posted a fiscal fourth-quarter earnings beat, raised its profit outlook, and announced workforce reduction plans to optimize the company's administrative costs. Subsequently, the shares were met with price-target hikes at no fewer than seven brokerage firms, and upgrades to "buy" from "neutral" at UBS and to "neutral" from "underweight" at J.P. Morgan Securities. In the wake of this positive attention, Aruba Networks, Inc. -- which closed yesterday at $20.24 -- is sitting about 8% higher ahead of the bell. This is bad news for short sellers. Currently, 11.9% of ARUN's float is sold short, which would take nearly eight sessions to buy back, at the stock's average daily trading pace.

  • BBY saw its price target upwardly revised to $37 from $35 at J.P. Morgan Securities and to $36 from $34 at RBC, despite the retailer's mixed turn in the earnings confessional Tuesday morning. On the charts, the stock has been in rally mode since hitting an annual low of $22.15 in late January, up 34.5% to trade at $29.80. Nevertheless, short interest on Best Buy Co Inc represents 8.5% of its float, which would take more than a week to cover, at the stock's typical trading levels. In other words, should the shares rise in the wake of the aforementioned brokerage notes, there's plenty of sideline cash available to fuel additional gains.

  • Finally, MNKD was initiated with a "buy" rating and $10 price target at Jefferies. This seems appropriate, given the stock's more than 41% year-to-date gain to rest at $7.34. More recently, the shares could be found bouncing from their 200-day moving average, following a pullback from a nearly five-year high of $11.48 in late June. As with ARUN and BBY, MannKind Corporation has been a popular target among short sellers. Specifically, 30% of the equity's float is sold short, which represents close to two weeks' worth of pent-up buying demand, at the stock's average daily trading volume.

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