Schaeffer's Trading Floor Blog

Earnings Preview: Goodrich Petroleum Corporation, Isis Pharmaceuticals, Inc., and JinkoSolar Holding Co., Ltd.

Analyzing recent option activity on Goodrich Petroleum Corporation (GDP), ISIS Pharmaceuticals, Inc. (ISIS), and JinkoSolar Holding Co., Ltd. (JKS)

by 2/26/2015 1:35 PM
Stocks quoted in this article:

Among the stocks gearing up to report earnings in the next two trading days are oil-and-gas firm Goodrich Petroleum Corporation (NYSE:GDP), drugmaker ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS), and alternative energy issue JinkoSolar Holding Co., Ltd. (NYSE:JKS). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on GDP, ISIS, and JKS.

  • GDP, which will release its fourth-quarter earnings report tomorrow morning, has been a technical laggard, with the shares down 65.6% year-over-year -- including a 5.5% drop so far today amid a resumed downtrend in oil -- to reach $4.45. Meanwhile, put activity in the equity's short-term options pits is nearing an annual peak, as Goodrich Petroleum Corporation's Schaeffer's put/call open interest ratio (SOIR) of 0.81 sits just 2 percentage points away from the highest reading taken over the past year. What's more, short interest accounts for over half of the equity's available float. Traders betting on additional downside for GDP have history on their side -- in the session following its last eight earnings reports, the shares of GDP have fallen an average of 4.2%. Traders are paying relatively cheap prices for their near-term bets on the stock, as its Schaeffer's Volatility Index (SVI) of 108% sits in the 36th percentile of all similar readings taken over the past year.

  • ISIS, which will also report fourth-quarter earnings tomorrow morning, has been sliding over the past month, with the shares down over 10.3% since notching an all-time high of $75.24 on Jan. 13 to hit $67.47. Accordingly, bearish sentiment in the options pits is ramping up, as ISIS Pharmaceuticals, Inc.'s 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.47 sits in the 80th percentile of its annual range. Additionally, in the session following its last four earnings reports, ISIS has lost an average of 2.8%, including a 9.5% drop in February of last year. Near-term options for the security are available for bottom-of-the-barrel prices, as its SVI of 56% sits in the 13th percentile of its annual range.

  • Since hitting an annual low of $16.10 on Jan. 20, JKS has been in recovery mode, with the shares advancing 35.7% to reach $21.84. In the options pits, put activity has been extremely prevalent ahead Monday morning's scheduled fourth-quarter earnings release. Specifically, JinkoSolar Holding Co., Ltd.'s SOIR of 1.68 sits in the 99th percentile of its annual range, showing that short-term speculators have rarely been this put-skewed over the past year. Meanwhile, in the session following its last four earnings reports, JKS has lost an average of 3.4%, with the equity failing to have a positive post-earnings session since Nov. 18, 2013. Historically speaking, speculators are paying inexpensive prices for their bets on the stock, as its SVI of 67% sits in the 28th percentile of all similar readings taken over the past year.

permanent link

Analyst Update: Avago Technologies Limited, American Express Company, and Town Sports International Holdings, Inc.

Analysts adjusted their ratings on Avago Technologies Ltd (AVGO), American Express Company (AXP), and Town Sports International Holdings, Inc. (CLUB)

by 2/26/2015 12:06 PM
Stocks quoted in this article:

Analysts are weighing in today on semiconductor firm Avago Technologies Ltd (NASDAQ:AVGO), blue chip American Express Company (NYSE:AXP), and fitness club operator Town Sports International Holdings, Inc. (NASDAQ:CLUB). Here's a quick look at today's brokerage notes on AVGO, AXP, and CLUB.

  • Last night, AVGO announced it is acquiring Emulex Corporation (NYSE:ELX) for $8 per share in cash (or more than $600 million total), and released an earnings report highlighted by impressive second-quarter profits and triple-digit revenue growth. In response, no fewer than 16 brokerage firms upped their price targets on Avago Technologies Ltd, boosting the shares to a fresh all-time high of $129.25 before settling at $127.82, for a 13.4% gain so far on the day. Drilling down, the loftiest price target came from RBC, which hiked its target to $150, followed by Morgan Stanley, Brean Capital, Sterne Agee, and Canaccord Genuity, which all lifted their price targets to $145. AVGO has advanced about 27.1% so far in 2015, and accordingly, calls are popular in the stock's options pits -- over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 4.13 AVGO calls have been bought to open for every put.

  • Yesterday, a spokeswoman for AXP said the company has raised interest rates on several credit card accounts by an average of 2.5 percentage points, prompting Deutsche Bank to lift its price target on the security to $90 from $88, and its rating to "buy" from "hold." On the charts, the shares are up nearly 1.2% this morning to trade at $83.11, chipping away at a 10.7% year-to-date deficit. Despite American Express Company's recent technical woes, bullish sentiment is popular in the stock's options pits. Specifically, AXP's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.54 sits just 7 percentage points away from the highest similar reading taken over the past year.

  • CLUB also had a big day in the news yesterday, as the company released a disappointing fourth-quarter earnings report and announced that it might put itself up for sale. Reacting was Craig-Hallum, which upped its price target to $6 while reiterating a "hold" opinion, sending the shares up 6.4% to reach $7.18. Looking back, Town Sports International Holdings, Inc. has been in recovery mode, with the shares up 79% since hitting a multi-year low of $4.01 on Aug. 12. Not surprisingly, call activity has reached fever pitch in the options pits, as CLUB's Schaeffer's put/call open interest ratio (SOIR) of 0.11 is its lowest reading taken over the past year. Simply stated, near-term speculators have never been more call-skewed over the past 12 months.

permanent link

Buzz Stocks: BlackBerry Limited, Cyberonics, Inc., and Aruba Networks, Inc.

Today's stocks to watch include BlackBerry Ltd (BBRY), Cyberonics, Inc. (CYBX), and Aruba Networks, Inc. (ARUN)

by 2/26/2015 9:42 AM
Stocks quoted in this article:

U.S. stocks are modestly higher out of the gate. Among the equities in focus are tech issue BlackBerry Ltd (NASDAQ:BBRY), medical device maker Cyberonics, Inc. (NASDAQ:CYBX) and network solutions provider Aruba Networks, Inc. (NASDAQ:ARUN).

  • BBRY is up 1.5% in early trading at $10.70, after announcing a new partnership with Google Inc (NASDAQ:GOOGL). Technically speaking, BlackBerry Ltd has been pushing forward recently, gaining 5.4% month-to-date. Regardless, one-fifth of the equity's float remains sold short. What's more, these bearish bets represent more than a week's worth of pent-up buying power, at typical trading levels. Changing direction, analysts have taken a wait-and-see approach toward the shares. Three brokerage firms currently rate BBRY a "buy" or better, with 12 deeming it a "hold," and four others handing out "sell" or worse recommendations. If the security can extend its recent rally, there's potential for an exodus of shorts, and a shift in analyst sentiment, to boost the stock.

  • CYBX is booming today, adding 24%, after announcing a merger with fellow medical device maker Sorin, and posting an earnings beat. Not that the shares needed a stimulus, having already added over 55.4% since hitting an annual low of $48.19 on Nov. 20, last seen at $74.87. What's interesting is, like BBRY, Cyberonics, Inc. has been heavily targeted by short sellers. The 13.4% of its float sold short represents nearly two weeks of trading, at its normal daily trading pace. As far as analysts go, four give CYBX a "strong buy" rating, while the remaining three maintain tepid "hold" recommendations. This could pave the way for possible short-covering activity and/or a round of upgrades.

  • ARUN rallied toward the end of yesterday's session, finishing more than 21% higher at $22.24, on reports that Hewlett-Packard Company (NYSE:HPQ) is considering buying the company. Before yesterday's jump, Aruba Networks, Inc. had been hovering around breakeven on a year-to-date basis, but speculators had been placing bets in anticipation of a breakout. Specifically, the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 10.19 ranks higher than three-fourths of readings from the past year. In short, option traders have been buying to open calls over puts at a rate quicker than usual. Meanwhile, the stock is 0.4% lower at $22.19, as the company prepares for its fiscal second-quarter earnings report, scheduled for after the close today.

permanent link

Analyst Upgrades: Salesforce.com, inc., General Motors Company, and LinkedIn Corporation

Analysts upwardly revised their ratings on Salesforce.com, inc. (CRM), General Motors Company (GM), and LinkedIn Corp (LNKD)

by 2/26/2015 9:29 AM
Stocks quoted in this article:

Analysts are weighing in today on cloud computing concern Salesforce.com, inc. (NYSE:CRM), Detroit darling General Motors Company (NYSE:GM), and professional networking platform LinkedIn Corp (NYSE:LNKD). Here's a quick roundup of today's bullish brokerage notes on CRM, GM, and LNKD.

  • CRM is up more than 11% ahead of the bell, after the company's increase to its full-year sales forecast was applauded by a number of brokerage firms. Specifically, no fewer than 19 analysts upped their price targets, with Raymond James boosting its target all the way to $85 -- outstripping its peers. Today's expected gap higher could bring Salesfore.com, inc. -- which ended just below its year-over-year breakeven mark yesterday, at $62.87 -- into all-time-high territory, as the shares have never traded above $67. Ahead of last night's earnings reports, CRM had witnessed accelerated put buying among options traders. Specifically, the stock's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 0.78 -- higher than two-thirds of all comparable readings from the last 52 weeks. A capitulation among these skeptics could now result in tailwinds.

  • GM, which announced it will no longer manufacture vehicles in Indonesia, saw its price target bumped to $44 from $35 at Evercore ISI -- which also reiterated a "hold" opinion. This bullish brokerage attention is par for the course, as two-thirds of covering analysts have given General Motors Company a "buy" or better rating, and the remainder handing out "holds." What's more, the equity's average 12-month price target of $41.81 stands at a 10.4% premium to last night's close at $37.86. Technically speaking, GM has had a solid start to 2015, adding 8.5% year-to-date -- putting it on the doorstep of its annual high of $38.18, touched two weeks ago.

  • Finally, LNKD is pointed higher in electronic trading, after Morgan Stanley initiated coverage on the stock with an "overweight" rating and $310 price target -- which would mark a record peak for the shares. On the charts, LinkedIn Corp has been a strong performer, surging more than 17% since the start of the year to trade at $269. Not surprisingly, option bulls have been active on the security. LNKD's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.60 outstrips 82% of similar readings from the previous 12 months.

permanent link

Analyst Downgrades: Transocean Ltd., Yahoo! Inc., and Freeport-McMoRan Inc.

Analysts downwardly revised their ratings on Transocean LTD (RIG), Yahoo! Inc. (YHOO), and Freeport-McMoRan Inc (FCX)

by 2/26/2015 9:25 AM
Stocks quoted in this article:

Analysts are weighing in today on oil-and-gas issue Transocean LTD (NYSE:RIG), search engine giant Yahoo! Inc. (NASDAQ:YHOO), and mining magnate Freeport-McMoRan Inc (NYSE:FCX). Here's a quick roundup of today's bearish brokerage notes on RIG, YHOO, and FCX.

  • RIG said last night that declining demand in the fourth quarter prompted the firm to write down the value of its contract drilling business by $992 million -- and record a per-share loss of $2.04. Prior to the report, Moody's downgraded the stock's roughly $9 billion in credit to "junk." Traders are seemingly brushing all of this off, however, with shares of RIG up nearly 3% in electronic trading. Today's projected price move runs counter to the equity's longer-term trajectory, with RIG staring at a 62.7% year-over-year deficit. Should Transocean LTD resume its downtrend, another round of bearish brokerage attention could be forthcoming. At present, the security's consensus 12-month price target of $22.73 represents expected upside of 41.7% to Wednesday's settlement at $16.04.

  • YHOO got hit with price-target cuts from Nomura (to $55) and CRT Capital (to $61), with both brokerage firms reiterating their respective "buy" ratings. Technically speaking, the stock has had a slow start to the year, down 12% at $44.43. Additionally, over the past two months, the equity has lagged the broader S&P 500 Index (SPX) by 13 percentage points. Should the shares continue to underperform, more downwardly revised analyst notes could be on the horizon. Currently, 71% of covering analysts maintain a "buy" or better recommendation, with not a single "sell" to be found. Plus, the average 12-month price target of $58.52 stands at a 32% premium to last night's closing price -- and in territory not charted by Yahoo! Inc. since September 2000.

  • Deutsche Bank reduced its price target on FCX to $30 from $36 -- but underscored its "buy" rating -- although this still represents expected upside of nearly 40% to Wednesday's close at $21.50. On the charts, the stock has been gaining ground since bottoming at a five-year low of $16.43 in late January, up 30.9%. However, the security remains a long-term laggard, and over the past 52 weeks, has surrendered nearly 36% of its value. Options traders have been betting on more downside at breakneck speed in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Freeport-McMoRan Inc's 10-day put/call volume ratio of 1.45 ranks in the 97th annual percentile. In other words, puts have been bought to open over calls at a faster clip just 3% of the time within the past year.

permanent link
1 
2 
3 
4 
5 
… 
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Partner Center

© 2015 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.