Schaeffer's Trading Floor Blog

Analyst Update: DHT Holdings, Inc., NeoPhotonics Corporation, and Smith & Wesson Holding Corp

Analysts adjusted their ratings on DHT Holdings Inc (DHT), NeoPhotonics Corp (NPTN), and Smith & Wesson Holding Corp (SWHC)

by 3/4/2015 11:26 AM
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Analysts are weighing in today on crude oil transporter DHT Holdings Inc (NYSE:DHT), circuit maker NeoPhotonics Corp (NYSE:NPTN), and firearm concern Smith & Wesson Holding Corp (NASDAQ:SWHC). Here's a quick look at today's brokerage notes on DHT, NPTN, and SWHC.

  • Last night, DHT announced that Rolf Wikborg has stepped down from its board of directors. In response, GMP Securities initiated coverage on the equity with a $10 price target -- in territory not charted in almost three years -- and a "buy" rating. At last check, the shares were up 1.9% to hit $7.05, bring the stock's year-to-date loss to 3.6%. Despite DHT Holdings Inc's technical woes, the brokerage bunch is universally optimistic on the stock, as all four covering analysts have doled out a "strong buy" rating. What's more, DHT's consensus 12-month price target of $11.03 stands at a 56.5% premium to current trading levels.

  • NPTN released an upbeat fourth-quarter earnings report last night, prompting B. Riley and Piper Jaffray to hike their price targets to $7.75 and $5, respectively. Today, the shares are up 14.6% to hit $4.01, bringing the security's year-to-date gain to 18.6%. Accordingly, sentiment among the brokerage bunch is bullish, as 75% of covering analysts rate the stock a "strong buy," without a single "sell" or worse recommendation to be found. Furthermore, NeoPhotonics Corp's consensus 12-month price target of $6.13 is a 52.9% premium to its current price.

  • SWHC scored a fiscal third-quarter earnings beat and issued a better-than-expected guidance. Reacting were no fewer than three brokerage firms, which all lifted their price targets on the equity. Specifically, CRT Capital hiked its price target to $16, Wunderlich raised its price target to $17, and Cowen and Company increased its price target to $18 (all three firms reiterated "buy" or equivalent ratings). This morning, the shares of Smith & Wesson Holding Corp are up over 11% to reach $14.49, for an impressive 53% year-to-date gain. However, there are plenty of SWHC skeptics that could be spooked, as its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.12 sits in the 79th percentile of its annual range. Meanwhile, 18.6% of the equity's available float is sold short, which would take over 10 sessions to cover, at average daily trading volumes.

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Traders Active as American Eagle Outfitters, Inc. (AEO), Abercrombie & Fitch Co. (ANF) Diverge

American Eagles Outfitters (AEO), Abercrombie & Fitch Co. (ANF) head in different directions after earnings

by 3/4/2015 10:45 AM
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American Eagles Outfitters (NYSE:AEO) and Abercrombie & Fitch Co. (NYSE:ANF) are both moving sharply -- albeit in different directions -- after earlier reporting earnings. As such, options activity has ramped up on the two retail stocks.

Diving right in, AEO topped fourth-quarter estimates and offered encouraging first-quarter guidance, boosting the shares to an annual high of $16.27 out of the gate. At last check, the stock was up 8.3% at $16.05.

Meanwhile, AEO options are crossing at 12 times the expected intraday rate, with calls more than doubling puts. The March 15 call is seeing possible sell-to-close activity, as traders may be locking in paper profits on the now in-the-money contract. Also, it appears speculators are buying to open AEO's January 2017 15-strike call, in the hopes of additional upside over the long term.

On the other side of the ledger, ANF is crumbling on a poorly received earnings report, in which the company expressed concerns about the negative impact of a strong dollar and lackluster demand for logo-centric apparel. The shares are currently off 13.1% at $20.85 -- landing ANF on the short-sale restricted list -- and earlier hit a nearly six-year low of $20.76.

In options land, intraday volume is at eight times expected levels, with puts handily outpacing calls. Buy-to-open activity is detected at the weekly 3/6 20-, 21-, and 22-strike puts, as short-term traders roll the dice on additional downside through week's end, when the series expires.

From a longer-term perspective, American Eagle Outfitters (NYSE:AEO) and Abercrombie & Fitch Co. (NYSE:ANF) have both seen high levels of put buying recently. AEO's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 2.53 -- in the 91st percentile of its annual range. Similarly, ANF's 50-day ISE/CBOE/PHLX put/call volume ratio of 2.01 ranks just 8 percentage points from a 12-month high.


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Analyst Upgrades: Ambarella, Inc., Orexigen Therapeutics, Inc., and Target Corporation

Analysts upwardly revised their ratings on Ambarella Inc (AMBA), Orexigen Therapeutics, Inc. (OREX), and Target Corporation (TGT)

by 3/4/2015 9:21 AM
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Analysts are weighing in today on semiconductor concern Ambarella Inc (NASDAQ:AMBA), drugmaker Orexigen Therapeutics, Inc. (NASDAQ:OREX), and retailer Target Corporation (NYSE:TGT). Here's a quick roundup of today's bullish brokerage notes on AMBA, OREX, and TGT.

  • AMBA is up 8.3% in electronic trading -- and poised to hit a fresh record high -- after the company's better-than-expected fourth-quarter earnings and upwardly revised guidance was met with no fewer than six price-target hikes. Included in the bunch were Pacific Crest, which boosted its price target by $6 to $76, and Topeka Capital, which raised its target price by $13 to $75. Year-to-date, the shares have already tacked on an impressive 24.3% -- which hasn't gone unnoticed in the options pits -- and a continued surge could prompt another round of upbeat analyst notes. Currently, five out of nine covering analysts maintain a "hold" or worse suggestion toward Ambarella Inc, while the average 12-month price target of $59.17 stands at a discount to last night's close at $63.05.

  • Leerink upped its price target for OREX to $11 from $8 -- and underscored its "outperform" recommendation -- after yesterday's upbeat news regarding the firm's obesity drug, Contrave. Specifically, the brokerage firm said it sees signs of stronger reimbursement and sales for diet drugs if previous cardiovascular concerns continue to improve. Technically speaking, OREX has tacked on 26.1% in 2015 -- and hit a four-year peak of $9.37 yesterday -- to trade at $7.64. The stock is poised to extend this momentum today, which could shake some of the weaker bearish hands loose. Currently, around one-third of Orexigen Therapeutics, Inc.'s float is sold short, and it would take more than 30 sessions to cover these shorted shares, at average daily trading volumes.

  • TGT received upwardly revised price targets from Sterne Agee (to $71), Barclays (to $80), and J.P. Morgan Securities (to $79), after the company unveiled a new round of restructuring efforts yesterday. On the charts, TGT has been a technical standout, rallying more than 27% year-over-year, and based on last night's settlement at $78, the stock is within a chip-shot of its Feb. 25 all-time peak of $78.40. In light of this, there's plenty of room on TGT's bullish bandwagon. Of the 20 analysts covering Target Corporation, 70% maintain a "hold" or "strong sell" suggestion. Plus, the consensus 12-month price target of $74.68 stands at a discount to current trading levels.

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Analyst Downgrades: Bob Evans Farms, Inc., Alcoa Inc., and Morgan Stanley

Analysts downwardly revised their ratings on Bob Evans Farms Inc (BOBE), Alcoa Inc (AA), and Morgan Stanley (MS)

by 3/4/2015 9:20 AM
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Analysts are weighing in today on restaurant chain Bob Evans Farms Inc (NASDAQ:BOBE), aluminum giant Alcoa Inc (NYSE:AA), and financial behemoth Morgan Stanley (NYSE:MS). Here's a quick roundup of today's bearish brokerage notes on BOBE, AA, and MS.

  • BOBE is getting fried ahead of the bell, after reporting disappointing fiscal third-quarter profits and reducing its full-year forecast. The company also announced it is currently not interested in selling its food-products business, BEF Foods. Following this, Miller Tabak and Janney each cut the stock to the equivalent of "hold" from "buy." Bob Evans Farms Inc has previously been strong in 2015, adding 16.5% to close yesterday at $59.64. Still, speculators have been placing bearish bets at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The equity's 50-day put/call volume ratio across these exchanges is 2.89, in the 92nd percentile of its annual range. Ahead of the opening bell, BOBE is off 20.3%.

  • AA is down 2.5% in electronic trading, after BofA-Merrill Lynch downgraded the security to "neutral" from "buy," and slashed its price target to $17 from $20, citing a lower aluminum price forecast. Recently, Alcoa Inc has been weak, on a technical basis. With its close at $15.18 yesterday, the stock has now underperformed the S&P 500 Index (SPX) by over 13 percentage points in the past three months. In the options pits, though, traders have preferred calls over puts, among options expiring in three months of less. AA's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.57, in the 29th percentile of its annual range, meaning near-term speculators are more call-skewed than normal -- a dramatic shift from how things were in mid-January, leading into earnings season.

  • J.P. Morgan Securities cut its price target on MS to $33 from $34, and kept its "neutral" opinion. Still, six of 15 covering brokerage firms say Morgan Stanley is a "strong buy." Yet, on the charts, the shares have struggled since hitting a multi-year high of $39.19 on Dec. 31, losing 8.6% to land at $35.82 at yesterday's close. MS could see additional bearish analyst attention, should its losing streak continue.

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Buzz Stocks: Novogen Limited, Amarin Corporation plc, and Lumber Liquidators Holdings, Inc.

Today's stocks to watch in the news include Novogen Limited (ADR) (NVGN), Amarin Corporation plc (ADR) (AMRN), and Lumber Liquidators Holdings Inc (LL)

by 3/4/2015 9:17 AM
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U.S. benchmarks will likely drop out of the gate, following lackluster pre-payrolls jobs data. In company news, today's stocks to watch include pharmaceutical firms Novogen Limited (ADR) (NASDAQ:NVGN) and Amarin Corporation plc (ADR) (NASDAQ:AMRN), as well as hardwood flooring seller Lumber Liquidators Holdings Inc (NYSE:LL).

  • NVGN is ready to soar at the open, following a promising pre-clinical study of its brain cancer drug Trilexium. The company is aiming to launch a phase 1 clinical trial early next year. Ahead of the bell, Novogen Limited is perched nearly 46% higher, after closing Tuesday at $2.51. A bull gap could pressure additional short sellers to hit the exits. During the most recent reporting period, short interest on NVGN dropped 19.1%.

  • AMRN is 9.1% higher in electronic trading, after reporting a slimmer-than-expected fourth-quarter loss. "Amarin made broad and significant progress in 2014 overcoming first quarter 2014 restructuring issues and starting 2015 with significant positive momentum," said CEO John Thero. Technically speaking, it's already been a great year for Amarin Corporation plc, which has added 57.1% to trade at $1.54. As such, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been placing bullish bets over bearish in recent weeks. During the last 10 sessions, 2,137 AMRN calls have been bought to open, versus just three puts.

  • LL, which got hammered earlier this week following a damning "60 Minutes" report, announced it will host a conference call on March 12 to provide a business update. Traders are reacting positively ahead of the bell, with the shares up 1.5%. Lumber Liquidators Holdings Inc closed yesterday at $40.78 -- just off Monday's two-year low of $38.19, and down 38.5% in 2015. Amid this technical tumult, short selling has picked up. LL's short interest rose almost 28% during the two most recent reporting periods, and now makes up close to 30% of its float -- which would take three weeks to cover, at the stock's average trading volume.

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