Schaeffer's Trading Floor Blog

Biggest Movers: Family Dollar Stores, Inc., Dollar General Corp., and Pharmacyclics, Inc.

FDO, DG, and PCYC are moving sharply in Monday's trading

by 6/9/2014 11:44 AM
Stocks quoted in this article:

As we near midday, three of the top market movers are discount retailers Family Dollar Stores, Inc. (NYSE:FDO) and Dollar General Corp. (NYSE:DG), as well as biopharmaceutical issue Pharmacyclics, Inc. (NASDAQ:PCYC). Here's a quick roundup of how this trio of names is performing on the charts so far.

  • FDO has rallied more than 14% this morning to $69.07, following a number of fundamental developments. Specifically, activist investor Carl Icahn reported a roughly 9.4% stake in the company last Friday, and remarked that he may push for a merger with DG. In response, Family Dollar Stores, Inc. adopted a one-year poison pill provision, which be triggered if any unapproved investor accumulates a stake of 10% or higher. On the charts, FDO is finally in the green on a year-to-date basis, after today's bold move to the upside. Meanwhile, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), bearish betting has really picked up on the stock. The equity's 10-day put/call volume ratio across those three exchanges checks in at 3.05, higher than 94% of all comparable readings taken in the past 12 months.

  • Like its sector peer, DG is soaring today, up 11.2% to trade at $64.50; it also touched a fresh record peak of $65.99 earlier. The shares are up on the aforementioned Icahn news, as well as an upgrade to "buy" from "hold" at Jefferies. Unlike FDO, Dollar General Corp. is a long-term outperformer, gaining more than 25% year-over-year. Nevertheless, the stock's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.07 ranks just 2 percentage points from an annual bearish acme. If DG can sustain its positive momentum, a capitulation among these pessimistic options players could create tailwinds for the shares.

  • Lastly, PCYC is up 7.2% today to trade north of the century mark, at $100.21. Earlier, the Food and Drug Administration (FDA) accepted the firm's drug application for leukemia treatment Imbruvica, and granted it priority review status. Still, the shares remain in the red on a year-to-date basis, which could spell trouble ahead, given all of the optimism toward Pharmacyclics, Inc. on Wall Street. Specifically, nine out of 16 covering analysts have handed the stock a "strong buy" rating (versus seven "holds" and not a single "sell" rating), and the equity's consensus 12-month price target sits at an astronomical $149.13. In other words, PCYC could be in danger of getting hit with a round of downgrades and/or price-target reductions, should it resume its longer-term downtrend.

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