Schaeffer's Trading Floor Blog

Earnings Preview: BlackBerry Limited, Carnival Corporation, and GameStop Corp.

Analyzing recent option activity on BlackBerry Ltd (BBRY), Carnival Corp (CCL), and GameStop Corp. (GME)

by 3/26/2015 1:03 PM
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Among the stocks gearing up to report earnings are mobile device concern BlackBerry Ltd (NASDAQ:BBRY), cruise line Carnival Corp (NYSE:CCL), and video game retailer GameStop Corp. (NYSE:GME). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on BBRY, CCL, and GME.

  • Nomura cut its price target on BBRY to $9.70 from $10.30 ahead of tomorrow morning's earnings release, sending the shares down 0.4% to hit $9.24. Short sellers have been active, as nearly 20% of BlackBerry Ltd's available float is sold short, which would take about 8.5 sessions to buy back, at average trading volumes. Meanwhile, in the session immediately following its last six earnings reports, BBRY has gained an average of 3.8%, including a 9.7% bump last June. Should the stock once again enjoy post-earnings upside, a short squeeze could help BBRY rebound off support in the $9 region. Near-term options are available for historically expensive prices, as the stock's 30-day at-the-money (ATM) implied volatility (IV) of 64.2% stands in the 93rd percentile of its annual range.

  • CCL has been in recovery mode, with the shares up roughly 34.6% since notching an annual low of $33.11 on Oct. 15 to linger near $44.56. However, sentiment in the options pits has been bearish ahead of tomorrow morning's earnings release, as Carnival Corp's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.29 ranks higher than 96% of all equivalent readings taken over the past year. Traders banking on a post-earnings slide have history on their side -- in the session immediately following its last four earnings reports, CCL has shed an average of 1.7%. Short-term options are available for middling prices, as CCL's Schaeffer's Volatility Index (SVI) of 32% sits in the 47th percentile of all similar readings taken over the last 12 months..

  • GME has been trending upwards as well, with the shares gaining about 23.7% from their Jan. 12 annual low of $31.69 to reach $39.19. Today, though, the shares are down about 1.6% ahead of tonight's earnings release. Sentiment in the options pits has been bullish, as GameStop Corp.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 2.54 stands higher than 85% of all equivalent readings taken over the past year. Nearly 45% of GME's available float is sold short, and it would take traders over 47 sessions to cover these bets, at average daily volumes. Looking elsewhere, in the session immediately following its last four earnings reports, GME has lost an average of 1.7%. Speculators are paying above-average prices for their bets on the security, as GME's 30-day ATM IV of 47.6% reads in the 76th percentile of its annual range.

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3 Reasons to Like the NFL's Online Streaming Experiment

CBS Corporation (CBS) and DIRECTV (DTV) have largely been denied broadcasting rights to the Bills-Jags game

by 3/26/2015 12:09 PM
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The NFL made headlines earlier this week when it announced the 2015 season will feature the first-ever game streamed strictly online. Participating in the historic matchup are the Buffalo Bills and Jacksonville Jaguars, with the contest to be played in London on Sunday, Oct. 25.

Of course, there is one exception to the all-digital broadcast. CBS Corporation (NYSE:CBS) will still have TV broadcasting rights in the teams' home markets. So if you live in Buffalo or Jacksonville, you can tune in on your flat screen. However, DIRECTV (NASDAQ:DTV) has been entirely locked out of the deal, meaning the Bills-Jags tilt won't be shown on NFL Sunday Ticket.

To most, the matchup leaves something to be desired. The Jacksonville Jaguars are perhaps the worst franchise in the NFL. For years, the team tarped thousands of seats it wasn't able to sell for home games -- a necessity to avoid regional blackouts, triggered by low attendance. Eventually, Jags ownership had a stroke of genius, and decided to convert 9,500 seats to pools and cabanas to reduce the number of people required to fill EverBank Field.

The Buffalo Bills, meanwhile, haven't made the playoffs in 15 years. No other current NFL squad has suffered such a long drought.

Regardless, I have several reasons to be really excited about this game. For one, I don't own a TV, so it doesn't matter if CBS and DTV go AWOL. In fact, I already watch NFL games almost exclusively online -- every Monday morning, via NFL Game Rewind. So whether the league sells online broadcasting rights to Facebook Inc (NASDAQ:FB), YouTube, or some other Internet company -- the details haven't been worked out yet -- matters little. Internet broadcasting is the future, so this is a positive step for the NFL.

Second -- and full disclosure here -- I'm a Bills fan. And this is actually a game the Bills should win. Heading into the season, the team is solid at almost every position, save quarterback. But against the Jaguars -- whose starter Blake Bortles posted an anemic 69.5 passer rating last year -- the position's a wash.

Bills Jaguars Game Online

Finally, this will be a revenge game between Buffalo and former head coach Doug Marrone. In case you missed it, Marrone opted out of his contract with the Bills after two seasons -- presumably seeking greener pastures elsewhere. After weeks of waiting, he ended up as the "Assistant Head Coach-Offense/Offensive Line Coach" of a 3-13 Jaguars team, reporting to a guy named Gus Bradley.

So while football purists moan and groan about the changing of the NFL, and others lament the international spotlight being shined on two league laughingstocks, I plan on cheering my Bills to victory. And watching Doug Marrone lose.


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Analyst Update: Five Below, Inc., Myriad Genetics, Inc., and Charles Schwab Corp

Analysts adjusted their ratings on Five Below Inc (FIVE), Myriad Genetics, Inc. (MYGN), and Charles Schwab Corp (SCHW)

by 3/26/2015 11:30 AM
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Analysts are weighing in today on retailer Five Below Inc (NASDAQ:FIVE), molecular diagnostics firm Myriad Genetics, Inc. (NASDAQ:MYGN), and savings-and-loan issue Charles Schwab Corp (NYSE:SCHW). Here's a quick look at today's brokerage notes on FIVE, MYGN, and SCHW.

  • Following last night's fourth-quarter earnings beat, the shares of FIVE are up nearly 11% to reach $35.75, reducing their year-to-date deficit to 12.4%. In response, no fewer than five brokerage firms revised their price targets on the equity, with the loftiest hike coming from Dougherty & Company, which raised its price target by $4 to $40. Meanwhile, Deutsche Bank Securities upped its target by $1 to $40, underscored a "buy" rating, and waxed optimistic on FIVE's new management team and long-term store growth potential. The largest cut came from Credit Suisse, which lowered its price target by $7 to $38. Looking back, the shares of Five Below Inc have been in recovery mode, up 25.4% from their March 10 two-year low of $28.51. Accordingly, calls have been popular in the options pits, as FIVE's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.92 ranks higher than 90% of all equivalent readings taken over the past year. Meanwhile, approximately 18.7% of the stock's available float is sold short, which would take nearly seven sessions to buy back, at average trading volumes.

  • MYGN is following sector peer EXACT Sciences Corporation (NASDAQ:EXAS) lower this morning, after Goldman Sachs cut its rating to "sell" from "neutral" while lowering its price target by $6 to $25 -- in annual-low territory. At last check, the shares of Myriad Genetics, Inc. were down 3.1% to hit $35.06, reducing their year-to-date lead to 2.9%. Short sellers have taken a shine to MYGN, as roughly 45.7% of the stock's available float is sold short. What's more, it would take these speculators over 54 sessions to cover their bets, at the stock's average pace of trading.

  • Barclays upgraded SCHW to "overweight" from "underweight" while raising its price target by $9 to $34 -- in terrain not charted in more than a decade -- sending the shares up 1.7% to reach $29.70. On the charts, Charles Schwab Corp has been trending upwards, with the shares gaining 27.2% since notching an annual low of $23.35 on Oct. 15. Additionally, the stock is presently spitting distance from its 14-year high of $31.73, tagged earlier this month. A good portion of the brokerage bunch is bearish on SCHW, though, as 62% of covering analysts rate the stock a "hold" or worse. Furthermore, the stock's average 12-month price target of $32.18 represents just an 8.4% premium to current trading levels. More upbeat analyst attention could propel SCHW even higher.


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Buzz Stocks: Lululemon Athletica inc., ConAgra Foods, Inc., and Conatus Pharmaceuticals Inc.

Today's stocks to watch include Lululemon Athletica inc. (LULU), ConAgra Foods Inc (CAG), and Conatus Pharmaceuticals Inc (CNAT)

by 3/26/2015 9:30 AM
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With futures pointed lower, Wall Street is poised to extend yesterday's losses. Among the equities in focus are yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU), packaged food company ConAgra Foods Inc (NYSE:CAG), and biotech name Conatus Pharmaceuticals Inc (NASDAQ:CNAT).

  • LULU is set to drop 2% at the open, after the company's disappointing current-quarter forecast overshadowed strong fiscal fourth-quarter numbers. Many investors are likely cheering the dip in share price. For instance, put buying has been popular in Lululemon Athletica inc.'s options pits during the past two weeks, as the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.10 is only 4 percentage points from an annual high. Elsewhere, over 10% of LULU's float is sold short, a figure that equates to seven days' worth of trading, at normal daily volumes. The security has had a decent run on the charts in 2015 -- recently boosted by unconfirmed buyout rumors -- picking up 9.3% year-to-date to close yesterday at $60.96.

  • A strong third-quarter earnings report and upbeat outlook have CAG 1.6% higher in electronic trading. The shares have hit a rough patch lately, underperforming the S&P 500 Index (SPX) by more than 8 percentage points in the past two months, finishing yesterday at $34.94. However, ConAgra Foods Inc is still trading above its average 12-month price target of $34.80, as analysts are bearish on the equity. Also, seven of eight covering brokerage firms rate CAG a "hold" or worse. Speculators, on the other hand, have expressed a differing opinion. The security's 50-day ISE/CBOE/PHLX call/put volume ratio comes in at 7.85 -- 8 percentage points from an annual peak.

  • Ahead of the bell, CNAT has popped 49%, after the company announced successful top-line results for its non-alcoholic fatty liver disease drug, emricasan, in a phase 2 clinical trial. The pre-market surge has the shares ready to enter the black on a year-to-date basis, despite a current deficit of 17.7% as of yesterday's close at $5.76. Most analysts have high hopes for Conatus Pharmaceuticals Inc, with four of five covering brokerage firms issuing "strong buy" recommendations, compared to one "hold" and not a single "sell." Plus, CNAT's consensus 12-month price target of $13.17 is more than double current trading levels, and sits in territory not explored since March 2014.

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Analyst Downgrades: SanDisk Corporation, Exact Sciences Corporation, and Royal Caribbean Cruises Ltd.

Analysts downwardly revised their ratings on SanDisk Corporation (SNDK), EXACT Sciences Corporation (EXAS), and Royal Caribbean Cruises Ltd (RCL)

by 3/26/2015 9:27 AM
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Analysts are weighing in on data solutions specialist SanDisk Corporation (NASDAQ:SNDK), molecular diagnostics firm EXACT Sciences Corporation (NASDAQ:EXAS), and cruise line Royal Caribbean Cruises Ltd (NYSE:RCL). Here's a quick roundup of today's bearish brokerage notes on SNDK, EXAS, and RCL.

  • SNDK lowered its revenue guidance for the current quarter and fiscal year, due to weak sales, product delays, and lower prices, with CEO Sanjay Mehrotra saying, "We are disappointed with our financial outlook." In response, Stifel cut its price target on SanDisk Corporation by $6 to $84 while reiterating its "buy" opinion, while BTIG cut its rating to "neutral" from "buy." Today, the shares are pointed 14.1% lower in electronic trading, which will steepen SNDK's 17.2% year-to-date loss. On the flip side, the brokerage bunch is bullish on the equity, as 72% of covering analysts rate the stock a "buy" or better, with no "sell" or worse recommendations to be found. Additional downgrades could create headwinds for SNDK, which settled at $81.17 yesterday.

  • Goldman Sachs downgraded EXAS to "neutral" from "buy" late last night, with the brokerage firm also lowering its price target on the equity by $5 to $24. As a result, EXACT Sciences Corporation -- which closed at $23.06 last night -- is down 5% in pre-market trading, which will add to a roughly 16% year-to-date deficit. Sentiment in the options pits has been bullish, as EXAS' 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 7.93 ranks higher than 95% of all equivalent readings taken over the past year. Meanwhile, a staggering 32.9% of the security's available float is sold short, which would take 12.5 sessions to cover, at average trading volumes.

  • RCL is pointed 1.9% lower ahead of the bell, after Deutsche Bank cut its price target by $2 to $95 while underscoring its "buy" opinion. The revision mirrors Royal Caribbean Cruises Ltd's recent price action, as the shares are down about 8.7% year-to-date to close yesterday at $75.30. However, calls have been prevalent in the options pits, as RCL's 10-day ISE/CBOE/PHLX call/put volume ratio of 6.11 sits in the 91st percentile of its annual range. The brokerage bunch is mostly bullish on the stock as well, considering that 77% of covering analysts rate the stock a "buy" or better, with no "sell" or worse ratings in sight.

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