Schaeffer's Trading Floor Blog

Analyst Update: Alibaba Group Holding Ltd, IBM Corp., and Under Armour Inc

Analysts adjusted their ratings on BABA, IBM, and UA

by 10/24/2014 1:45 PM
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Analysts are weighing in today on e-commerce site Alibaba Group Holding Ltd (NYSE:BABA), blue chip International Business Machines Corp. (NYSE:IBM), and athletic apparel company Under Armour Inc (NYSE:UA). Here's a quick look at today's brokerage notes on BABA, IBM, and UA.

  • BABA has rallied 2.5% to $96.81, boosted by an "outperform" initiation and $110 price target at BMO. This positive analyst attention is par for the course for the Wall Street newcomer. All six brokerage firms covering Alibaba Group Holding Ltd have assigned it a "strong buy" rating. What's more, just 2.1% of BABA's float is sold short, which would take less than one session to buy back, at the equity's typical daily trading volumes.

  • IBM is off 0.3% at $161.67, following a price-target cut to $180 from $190 at Cowen -- which also reiterated its "market perform" assessment. This is just the latest in a series of bearish brokerage notes doled out on the shares since the company's disappointing earnings report earlier this week. Technically, International Business Machines Corp. is now sitting on a year-to-date loss of 13.8%, and has underperformed the broader S&P 500 Index (SPX) by more than 13 percentage points over the last month. As alluded to, the Street is decisively skeptical of the tech stock. IBM has received just four "buy" or better ratings from analysts, relative to 14 "hold" or worse ratings. Plus, the stock's consensus 12-month price target of $170.57 stands at a slim 5.5% premium to current trading levels.

  • UA is down 0.5% this afternoon at $64.04 -- but remains nearly 47% higher year-to-date -- after the latest round of analyst updates. Specifically, Goldman Sachs and Keybanc boosted their respective price targets to $62 (from $60) and $45 (from $41), respectively, while maintaining their "neutral" and "underweight" ratings. On the flip side, UBS cut its outlook to $68 from $70, while highlighting its "neutral" assessment of the shares. Taking a step back, there's plenty of room for Under Armour Inc to benefit from additional bullish brokerage notes. Twelve out of the 23 analysts covering the equity have handed out "hold" or worse ratings. Plus, UA's consensus 12-month price target of $70.60 stands just 10% above the current share price.

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Stocks On the Move: Gigamon Inc, Gilead Sciences, Inc., and GoPro Inc

GIMO, GILD, and GPRO are moving sharply in Friday's trading

by 10/24/2014 12:55 PM
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U.S. stocks are solidly higher this afternoon, as earnings from Microsoft Corporation (NASDAQ:MSFT) and Procter & Gamble Co (NYSE:PG) overshadow escalating concerns about Ebola. Among the equities making notable moves are IT concern Gigamon Inc (NYSE:GIMO), biopharmaceutical issue Gilead Sciences, Inc. (NASDAQ:GILD), and mobile camera maker GoPro Inc (NASDAQ:GPRO). Here's a quick look at how GIMO, GILD, and GPRO are faring on the charts today.

  • GIMO is the biggest advancer on the Big Board thus far, up 18.5% at $13.73. The company last night reported stronger-than-expected quarterly earnings, triggering bullish brokerage notes from D.A. Davidson and Goldman Sachs. The former upped its price target on GIMO to $14, while the latter hiked its price target to $14.50 from $13; both firms reiterated "neutral" opinions. The post-earnings rally likely took a few bears by surprise. Short interest accounts for 14.7% of Gigamon Inc's total available float, representing nearly nine sessions' worth of pent-up buying demand, at the equity's average pace of trading. Likewise, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.38 sits just 2 percentage points from an annual high, suggesting short-term options players have rarely been more put-heavy during the past year.

  • GILD is up 3.2% at $110.59, and earlier notched a record high of $111.47. Ahead of Gilead Sciences, Inc.'s turn in the earnings confessional next Tuesday night, an analyst at UBS waxed optimistic on the firm's just-released hepatitis C treatment, which is "off to the races," according to Barron's. Furthermore, the brokerage firm underscored a "buy" endorsement and a price target of $125 -- representing even higher highs for GILD. Option buyers, meanwhile, are less bullish toward GILD, despite the stock's ascent. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.49 registers in the 77th percentile of its annual range. In other words, traders have bought to open GILD puts over calls at a faster-than-usual pace of late.

  • GPRO is bucking the broad-market trend higher, down 9.4% due to a negative analyst note. Specifically, Oppenheimer last night started coverage of the stock with an "underperform" rating and a price target of $45 -- representing a significant discount to the stock's current perch of $71.59, as well as the equity's consensus 12-month price target of $82.88. The analysts attributed the bearish view to escalating competition with the smartphone, and said they "expect several new entrants to the capture market that will result in lost wallet share or lower gross margins, and ultimately missed expectations." GoPro Inc has more than doubled since its debut in June, but has dropped 27.3% since peaking at $98.47 earlier this month.

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Analyst Downgrades: Amazon.com, Inc., Microsoft Corporation, and Pandora Media Inc

Analysts issued bearish notes on AMZN, MSFT, and P

by 10/24/2014 9:30 AM
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Analysts are downwardly revising their ratings on e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN), software specialist Microsoft Corporation (NASDAQ:MSFT), and streaming issue Pandora Media Inc (NYSE:P). Here's a quick look at today's bearish brokerage notes on AMZN, MSFT, and P.

  • AMZN is bracing for a 10% drop right out of the gate, after last night's third-quarter earnings miss was met with a round of bearish brokerage notes. Among those weighing in on the stock was UBS, which slashed its price target to $315 from $360. Additionally, Janney cut its rating on the stock to "neutral" from "buy," reduced its fair value on AMZN to $315 from $400, and lowered its 2015 revenue growth outlook for the company to 18% from 22%. Ahead of today's session, the security was already struggling, down 21.5% year-to-date to trade at $313.18, yet 68% of covering analysts maintain a "buy" or "strong buy" recommendation toward the shares. Should Amazon.com, Inc. (NASDAQ:AMZN) continue to spiral, an additional round of downwardly revised ratings could translate into more selling pressure for the shares.

  • MSFT, meanwhile, is pointed nearly 5% higher ahead of the bell, as last night's stronger-than-forecast fiscal first-quarter earnings results overshadow a price-target cut to $53 from $54 at RBC -- although the brokerage firm did underscore its "outperform" rating. (Not all analysts took the skeptical route, with MSFT receiving at least three price-target hikes, including one to $55 from $50 at Credit Suisse.) Today's projected price move is just more of the same for a stock that's up 20.3% year-to-date to trade at $45.02, yet option traders have been extremely bearish toward the shares in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MSFT's 10-day put/call volume ratio of 0.97 ranks 8 percentage points from a 52-week peak. As Microsoft Corporation continues to gain ground on the charts, an unwinding of the hedges related to these bearish bets could help propel the shares higher.

  • It's not looking too hot for P this morning -- to the dismay of short-term option bulls -- with the shares down almost 7% ahead of the bell, after a smaller-than-expected rise in listener growth in the third quarter prompted no fewer than nine price-target cuts. CRT Capital, for example, cut its price target to $26 from $32, and underlined its "fair value" rating. Raymond James, meanwhile, reduced its price target to $28 from $31, but maintained its "outperform" recommendation. On the charts, Pandora Media Inc has surrendered nearly 43% since hitting an all-time high of $40.44 on March 5, with the shares last seen at $23.12. However, the consensus 12-month price target of $34.31 stands at a 48% premium to current trading levels, leaving the door wide open for another round of price-target reductions, which could create headwinds for the shares down the road.

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Buzz Stocks: Tekmira Pharmaceuticals Corporation, Procter & Gamble Co, and Tesla Motors Inc (TSLA)

Today's stocks to watch in the news include TKMR, PG, and TSLA

by 10/24/2014 9:28 AM
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U.S. stocks are poised to pare some of yesterday's gains, as traders weigh news of a confirmed Ebola case in New York City. One stock set to benefit from the escalating jitters is drugmaker Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR), while blue-chip conglomerate Procter & Gamble Co (NYSE:PG) and electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA) are garnering early attention for their own reasons.

  • TKMR is headed 3% higher in pre-market action, after landing at $19.82 on Thursday. Earlier this week, the company said it started limited manufacturing of its Ebola drug, which is expected to be available in early December. On the charts, Tekmira Pharmaceuticals Corporation has soared more than 148% in 2014, and recently bounced off support at its 80-day moving average. Analysts are in the bulls' camp, as four out of six have doled out "buy" or better ratings, and not one considers TKMR a "sell." Option buyers, meanwhile, have preferred calls over puts, as the equity's 10-day call/put volume ratio sits at 1.68 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

  • PG is pointed 2.5% higher, as traders digest the company's quarterly earnings report, as well as plans to spin off its Duracell unit into a separate company. Technically speaking, PG has blazed a slow and steady trail higher since early 2009, settling at $83.23 on Thursday. What's more, the stock boasts a year-to-date gain of 2.2%, compared to the Dow's gain of 0.6%. Nevertheless, option buyers were upping the bearish ante ahead of today's earnings release, as the security's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.36 stands just 1 percentage point shy of an annual pessimistic peak. Short-term speculators were paying a pretty penny, too, as the stock's Schaeffer's Volatility Index (SVI) of 15% stands higher than two-thirds of all other readings from the past year, suggesting Procter & Gamble Co's short-term options are expensive right now, relatively speaking.

  • Finally, TSLA is slightly lower ahead of the bell, after Toyota Motor Corp (ADR) (NYSE:TM) confirmed reports that it cut its stake in the electric automaker. Still, the shares of Tesla Motors Inc are up 56% on a year-to-date basis, and have outperformed the broader S&P 500 Index (SPX) during the past three months. Plus, a mass exodus of option bears or short sellers could help TSLA resume its long-term ascent. The security's Schaeffer's put/call open interest ratio (SOIR) rests at a 12-month high of 1.63, indicating a bigger-than-usual put bias among near-term options players. Meanwhile, short interest represents nearly 24% of the stock's total available float.

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Analyst Upgrades: Bank of America Corp, Citigroup Inc, and JPMorgan Chase & Co.

Analysts issued bullish notes on BAC, C, and JPM

by 10/24/2014 9:22 AM
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Oppenheimer upwardly revising its ratings on a number of big financial firms today, including Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), and JPMorgan Chase & Co. (NYSE:JPM). Here's a quick look at today's bullish brokerage notes on BAC, C, and JPM.

  • BAC -- which has seen optimism emerge from all corners of the Street this week -- saw its price target lifted to $19 from $18 at Oppenheimer, which also underscored its "outperform" rating on the shares. However, with Bank of America Corp sporting an impressive year-over-year advance of 17.1%, there's still plenty of room for the brokerage bunch to up their outlooks. At present, 45% of covering analysts maintain a "hold" or "strong sell" suggestion toward BAC, and the consensus 12-month price target of $18.11 stands at a slim 9% premium to the stock's current perch at $16.60.

  • Since taking a strong bounce off its 200-day moving average last Wednesday, Oct. 15, C has rallied nearly 7% -- and reclaimed the round-number $50 mark in the process. Oppenheimer thinks there's more room to run, and raised its price target on the shares to $67 from $64 -- while underlining its "outperform" rating -- representing expected upside of 30.3% to Citigroup Inc's present price of $51.41. The stock could get an additional boost, should option bears capitulate to C's recent uptrend. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.53 ranks in the 72nd annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip of late.

  • JPM has also been in rebound mode since unveiling a poorly received earnings report last week, with the shares up 4.6% from their Oct. 15 close at $55.53 to trade at $58.06. As such, Oppenheimer boosted its price target on the stock to $72 from $69 -- record-high territory for JPM -- and reiterated its "outperform" rating. On the sentiment front, option traders have taken the bearish route, as evidenced by JPM's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.16, which ranks higher than 92% of similar readings taken in the past year. Outside of the options pits, though, short interest accounts for less than 1% of JPMorgan Chase & Co.'s available float, and would take just over two days to cover, at JPM's average daily pace of trading.

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