Schaeffer's Trading Floor Blog
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Around midday, three of the top market movers are beauty supplies retailer Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), alternative energy name Trina Solar Limited (ADR) (NYSE:TSL), and oil-and-gas concern Seadrill Ltd (NYSE:SDRL). Here's a quick roundup of how ULTA, TSL, and SDRL are performing on the charts so far.

  • ULTA is soaring -- up more than 20% at $117.39 -- following a stellar turn in the earnings confessional and subsequent round of bullish brokerage notes. The upward move has taken the shares solidly into the green on a year-to-date basis, and above the $115 level for the first time this year. In the options pits, traders are betting bearishly on Ulta Salon, Cosmetics & Fragrance, Inc. The stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.35 is higher than 94% of all other readings from the previous year.


  • Amid a sector-wide rally, TSL has jumped 3.5% to hover near $14.51, bringing its year-over-year advance to nearly 24%. What's more, it appears the solar stock recently found a layer of support at its 50-week moving average. That hasn't stopped short sellers from setting their sights on Trina Solar Limited (ADR). During the two most recent reporting periods, short interest swelled by roughly 25%, and now comprises nearly 31% of TSL's float.


  • SDRL is tumbling as we approach midday, down more than 5% at $31.16, and fresh off a three-year low of $31.09. From a wider perspective, the equity has shed nearly one-quarter of its value in 2014, and is on pace for a weekly loss of more than 10%, after Chief Financial Officer Rune Magnus Lundetrae said the rig market will "be worse next year." Options traders have been betting on additional downside, too, per Seadrill Ltd's 50-day put/call volume ratio of 2.34 at the ISE, CBOE, and PHLX. Not only does this reading indicate long puts have more than doubled long calls during the past 10 weeks, it also ranks in the bearishly skewed 91st percentile of its annual range.

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Analyst Update: T-Mobile US Inc, Carnival Corporation, and Lululemon Athletica inc.

Analysts adjusted their ratings on TMUS, CCL, and LULU

by 9/12/2014 11:44 AM
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Analysts are weighing in today on telecom firm T-Mobile US Inc (NYSE:TMUS), cruise line Carnival Corporation (NYSE:CCL), and yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU). Here's a quick look at today's brokerage notes on TMUS, CCL, and LULU.

  • Argus raised its rating for TMUS to "buy" from "hold." Currently, the shares are trading at $30.98, up 2% for the session. Most other analysts are already bullish on T-Mobile US Inc, with 10 "buy" or better ratings, compared to six "holds" and not a single "sell." Elsewhere, however, TMUS's Schaeffer's put/call open interest ratio (SOIR) of 0.78 stands just 11 percentage points from an annual high. In other words, short-term options traders have rarely been more put-skewed during the past year. TMUS is down nearly 8% year-to-date, but recently bounced from support at its 320-day moving average.

  • CCL was upgraded by Shore today to "buy" from "hold." Nevertheless, the stock is off 0.1% to sit at $39.23, bringing its year-to-date loss to 2.3%. Analysts covering Carnival Corporation are skewing their notes to the bearish end of the spectrum, with nine "hold" or "sell" recommendations outnumbering four "strong buys." 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 1.94 stands higher than 90% of all other readings from the past year, pointing to a healthier-than-usual appetite for bearish bets over bullish during the past two weeks.

  • Target prices for LULU have been raised by no fewer than six brokerage firms, with ISI Group, Deutsche Bank, Mizuho, Citigroup, BMO, and J.P. Morgan Securities all upwardly revising their estimates. J.P. Morgan has the loftiest expectations for LULU, with the firm adjusting its price target up to $46. The post-earnings rally for Lululemon Athletica inc. continues today, as the stock has bounced 3.2% to $45.11. There's plenty of room for more bullish notes, as analysts have handed out 18 "hold" or worse ratings and only seven "buy" or better ratings. LULU could also benefit from an exodus of short sellers, as short interest represents more than 12 days' worth of pent-up buying demand, at the security's average pace of trading.

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Analyst Downgrades: Alliance Data Systems Corporation, Yum! Brands, Inc., and Chesapeake Energy Corporation

Analysts downwardly revised their ratings on ADS, YUM, and CHK

by 9/12/2014 9:23 AM
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Analysts are weighing in today on database marketing concern Alliance Data Systems Corporation (NYSE:ADS), fast food firm Yum! Brands, Inc. (NYSE:YUM), and oil-and-gas issue Chesapeake Energy Corporation (NYSE:CHK). Here's a quick roundup of today's bearish brokerage notes on ADS, YUM, and CHK.

  • ADS last night announced that it will buy Conversant Inc (NASDAQ:CNVR) for $2.3 billion in cash and stock. Baird weighed in on the deal by cutting its price target on ADS to $275 from $287, compared to the stock's closing price of $252.87 on Thursday. Most analysts are in the bulls' camp, though, as Alliance Data Systems Corporation boasts 12 "buy" or better ratings, compared to five lukewarm "holds" and not one "sell." On the charts, ADS has surrendered 3.8% in 2014, and is on pace to end the week south of its 50-week moving average for the first time since late 2010.


  • J.P. Morgan Securities cut its price target on YUM to $71 from $80, and offered up a "neutral" rating on the shares. Since tagging a record high of $83.58 in mid-July, YUM has dropped more than 13% in the wake of the "expired meat" scandal, landing at $72.59 on Thursday. Nevertheless, nine out of 19 analysts maintain "strong buy" opinions on Yum! Brands, Inc. On the flip side, option players have been upping the bearish ante. 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 0.98 stands higher than two-thirds of all other readings from the past year.


  • Finally, Oppenheimer shaved its price target on CHK by $5 to $30, but maintained an "outperform" suggestion. The shares of Chesapeake Energy Corporation are currently perched at $25.35, and the options crowd is betting on the stock to resume its longer-term uptrend. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 6.29 sits just 17 percentage points from an annual peak, pointing to a healthier-than-usual appetite for long calls over puts of late.

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Buzz Stocks: Tesla Motors Inc (TSLA), Newmont Mining Corp, and Yahoo! Inc.

Today's stocks to watch in the news include TSLA, NEM, and YHOO

by 9/12/2014 9:07 AM
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U.S. stocks are churning near breakeven in pre-market trading, with a raft of economic data due out this morning. In company news, today's stocks to watch include electric automaker Tesla Motors Inc (NASDAQ:TSLA), gold producer Newmont Mining Corp (NYSE:NEM), and Internet mogul Yahoo! Inc. (NASDAQ:YHOO).

  • TSLA will receive nearly $1.3 billion in tax breaks from Nevada for building its $5 billion Gigafactory in the Silver State. Lawmakers also passed three pieces of related legislation, providing the car manufacturer with discounted electricity, allowing it to sell directly to consumers, and ending tax breaks for insurance companies based out of Nevada. On the charts, Tesla Motors Inc has been a success story, running 86.3% higher in 2014 to trade at $280.31, and hitting a record high of $291.42 last week. Nevertheless, a brow-raising 23.8% of the stock's float is sold short, which would take more than a week to buy back, at average daily trading levels. If TSLA continues its quest for higher highs, a short-covering rally could ensue.

  • NEM has agreed to sell its 44% stake in a Mexico-based gold mine to Fresnillo Plc for $450 million in cash. The two had been engaged in a joint venture at the mine (dubbed "Penmont"), but Newmont Mining Corp is selling assets to help finance other operations. Meanwhile, NEM shares have rallied about 11% in 2014, and have been consolidating in the $25-$26 area lately, closing Thursday's session at $25.59. Elsewhere, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have expressed a greater interest in put buying (relative to call buying) in recent months. The equity's 50-day put/call volume ratio at these exchanges checks in at 0.54 -- just 6 percentage points from an annual bearish high.

  • Finally, YHOO is being sued by two Mexican companies in a federal court for allegedly conspiring to avoid a $2.7 billion judgment issued in Mexico two years ago. Also, Yahoo! Inc. revealed yesterday that the U.S. government threatened it with a $250,000-per-day fine for not complying with the National Security Agency's (NSA) requests for user data. Moving along, shares of the Internet giant have advanced more than 39% year-over-year, and touched a fresh eight-year high of $42.06 on Tuesday. Short-term options traders, meanwhile, have gravitated toward YHOO calls over puts, per the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.43. More significantly, this reading ranks in the low 16th percentile of its 12-month range.

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Analyst Upgrades: Dollar General Corp., Netflix, Inc., and Ulta Salon, Cosmetics & Fragrance, Inc.

Analysts upwardly revised their ratings on DG, NFLX, and ULTA

by 9/12/2014 8:55 AM
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Analysts are weighing in today on discount retailer Dollar General Corp. (NYSE:DG), streaming video titan Netflix, Inc. (NASDAQ:NFLX), and beauty retailer Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA). Here's a quick roundup of today's bullish brokerage notes on DG, NFLX, and ULTA.

  • DG is pointed 1.1% higher ahead of the bell, after UBS initiated coverage with a "buy" rating and $81 price target -- in record-high territory for DG, and representing expected upside of 27% from the stock's current perch at $63.77. Earlier this week, Dollar General Corp. announced plans to go hostile with its bid for Family Dollar Stores, Inc. (NYSE:FDO), but option players remain wary. 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 1.06 stands higher than 86% of all other readings from the past year, pointing to a healthier-than-usual appetite for bearish bets over bullish during the past two weeks.


  • NFLX could resume its recent quest for record highs today, with the shares pointed north on the heels of an upgrade to "equal weight" from "underweight" at Barclays. The brokerage firm also hiked its price target on NFLX to $480 from $420. The shares of Netflix, Inc. touched an all-time peak of $489.29 earlier this week, and settled at $481.56 yesterday. The stock has tacked on nearly 31% in 2014, and while option players are hopeful, there's still plenty of room on the bullish bandwagon. In fact, 13 out of 28 analysts maintain "hold" or worse opinions, leaving the door wide open for additional upgrades to fuel NFLX higher.


  • Finally, ULTA -- which finished at $97.48 on Thursday -- is headed for triple-digit territory out of the gate, with the shares poised to jump 16%. Traders are applauding a stronger-than-expected quarterly earnings report and upwardly revised guidance from Ulta Salon, Cosmetics & Fragrance, Inc., and analysts are also waxing optimistic. No fewer than eight brokerage firms have upped their price targets on ULTA, including Sterne Agee and Baird, which both lifted their targets to $125. Citigroup, meanwhile, increased its price target to $130 from $118, and offered up a "buy" endorsement. ULTA could also benefit from an exodus of short sellers, as short interest represents a week's worth of pent-up buying demand, at the security's average pace of trading.

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