Schaeffer's Trading Floor Blog

Stocks On the Move: Trina Solar Limited (ADR), Bill Barrett Corporation, and Skechers USA Inc

TSL, BBG, and SKX are moving sharply in Wednesday's trading

by 9/17/2014 12:50 PM
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As Wall Street awaits this afternoon's release of the Federal Open Market Committee's (FOMC) policy-setting statement, three stocks making notable moves are alternative energy issue Trina Solar Limited (ADR) (NYSE:TSL), oil-and-gas concern Bill Barrett Corporation (NYSE:BBG), and footwear firm Skechers USA Inc (NYSE:SKX). Here's a quick roundup of how TSL, BBG, and SKX are performing on the charts so far.

  • TSL is once again in rally mode, and is 5.7% higher this afternoon to trade at $14.28, after Deutsche Bank reiterated its "buy" rating on the shares, and said it expects solar stocks to outperform this year. Today's move higher has pulled the stock into the green on a year-to-date basis, and has widened the equity's year-over-year advance to roughly 24%. Meanwhile, Deutsche Bank's upbeat outlook for Trina Solar Limited (ADR) echoes the generally bullish bias witnessed among the brokerage bunch. More than half of covering analysts maintain a "strong buy" rating toward the shares -- with not a single "sell" to be found -- while the consensus 12-month price target of $17.33 stands at a 21% premium to current trading levels.

  • BBG tacked on more than 10% yesterday, after announcing a land-exchange deal, and today, the stock is extending this lead -- up 3.8% at $24.36 -- following a pair of bullish brokerage notes. Specifically, SunTrust Robinson raised its price target to $32 from $31, while maintaining its "buy" rating, and Mizuho boosted its target price by $4 to $28, and raised its recommendation to "buy" from "neutral." Longer term, the shares of Bill Barrett Corporation are down 9% in 2014, which has prompted a bearish bias among option traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 50-day put/call volume ratio of 3.11 ranks in the 82nd percentile of its annual range. Simply stated, puts have been bought to open over calls at a faster-than-usual clip in recent months.

  • Having a decidedly different day is SKX, which has plunged 8% to $58.54, in the wake of an infringement lawsuit the company filed against DB Shoe Company, LLC. Today's sell-off marks a change of pace for the equity, which has tacked on an impressive 77% year-to-date. Amid this uptrend, though, SKX's 14-day Relative Strength Index (RSI) is sitting at 68, dangerously close to overbought waters. In other words, a pullback may have been in the cards. Elsewhere, Skechers USA Inc's Schaeffer's put/call open interest ratio (SOIR) of 0.60 ranks in the lofty 75th percentile of its annual range, meaning short-term speculators are more put-heavy toward the security than usual.

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Analyst Update: General Electric Company, GNC Holdings Inc, and Kellogg Company

Analysts adjusted their ratings on GE, GNC, and K

by 9/17/2014 11:11 AM
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Analysts are weighing in today on blue chip General Electric Company (NYSE:GE), health and wellness concern GNC Holdings Inc (NYSE:GNC), and cereal bigwig Kellogg Company (NYSE:K). Here's a quick look at today's brokerage notes on GE, GNC, and K.

  • Shares of GE are moving higher today after Stifel initiated coverage on the equity with a "buy" rating. At last check, the stock was up 0.2% to trade at $26.27. General Electric Company has been a laggard in 2014, down 6% year-to-date. On the options front, traders have been mostly bearish lately -- GE's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.47 is only three percentage points from a bearishly skewed annual high.

  • Wedbush raised its price target for GNC to $46 from $34, and upgraded the stock to "outperform" from "neutral." Shares were last seen trading at $39.58, a gain of 1.07%. GNC Holdings Inc has struggled this year, down nearly 33% year-to-date. However, since hitting an annual low of $30.84 in late July, the equity has gained 28%. With its Schaeffer's Volatility Index (SVI) of 31% sitting in the 22nd percentile of its annual range, GNC's short-term options are on the inexpensive side, from a volatility standpoint.

  • After being cut to "hold" from "buy" by SocGen, shares of K are off 1.6% today to trade at $62.80. The equity has been somewhat stagnant in 2014, posting a gain of just 2.7% year-to-date. Option bears have taken notice, as Kellogg Company's ISE/CBOE/PHLX 50-day put/call volume ratio of 0.46 is seven percentage points from an annual high, implying that puts have been purchased over calls at a faster-than-normal rate in the past few months.

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Analyst Downgrades: Adobe Systems Incorporated, The Gap Inc., and Wynn Resorts, Limited

Analysts downwardly revised their ratings on ADBE, GPS, and WYNN

by 9/17/2014 9:28 AM
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Analysts are weighing in today on software heavyweight Adobe Systems Incorporated (NASDAQ:ADBE), specialty retailer The Gap Inc. (NYSE:GPS), and casino name Wynn Resorts, Limited (NASDAQ:WYNN). Here's a quick roundup of today's bearish brokerage notes on ADBE, GPS, and WYNN.

  • ADBE is off more than 4% ahead of the bell, after last night reporting weaker-than-expected third-quarter sales and current-quarter revenue guidance, and getting hit with price-target cuts to $81 (from $82) and $75 (from $77) at RBC and Goldman Sachs, respectively. Taking a step back, the stock has outperformed on the charts, adding 18.1% in 2014. Nevertheless, options traders over the past few months have bet bearishly on Adobe Systems Incorporated. The equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.24 ranks in the bearishly skewed 99th percentile of its annual range. Yesterday, ADBE settled at $70.73.

  • Piper Jaffray assumed coverage of GPS with a "neutral" rating. Most on Wall Street have taken a similar view on the shares, as 12 out of 23 covering analysts have given the security a "hold" rating -- compared to 10 "strong buys" and a single "sell" recommendation. Technically speaking, however, The Gap Inc. has performed well, tacking on nearly 13% year-to-date to trade at $44.12. More recently, the shares could be seen outperforming the broader S&P 500 Index (SPX) by 10.7 percentage points during the last two months, and in early September, they hit a 14-year high of $46.85.

  • Finally, WYNN received a pair of price-target reductions from Sterne Agee (to $230 from $245) and Union Gaming Research (to $227 from $253), after Wells Fargo yesterday warned Macau gaming revenues could suffer in September. Separately, WYNN said it won the rights to build a $1.6 billion casino outside of Boston. The expansion plans didn't help the shares, though, which finished slightly lower at $179.87 -- bringing their year-to-date deficit to 7.4%. Elsewhere, option bears have been circling Wynn Resorts, Limited recently, as its 10-day ISE/CBOE/PHLX put/call volume ratio of 1.40 sits in the top quartile of its 12-month range.

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Futures are modestly higher today, as traders take a cautious approach ahead of this afternoon's policy decision from the Federal Open Market Committee (FOMC) and subsequent speech from Federal Reserve Chair Janet Yellen. Among equities in focus, biotech firm Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL), cloud concern Rackspace Hosting, Inc. (NYSE:RAX), and commodity name United States Steel Corporation (NYSE:X) should all garner their fair share of attention.

  • AUXL is poised for a 44% pop right out of the gate, after Endo International plc (NASDAQ:ENDP) made an unsolicited $2.2 billion cash-and-stock bid for the company. The offer values AUXL shares at $28.10 apiece, a 30.6% premium to last night's closing price of $21.52. In response, Auxilium Pharmaceuticals, Inc. -- which previously agreed to merge with Canada-based QLT Inc. -- said it would review ENDP's offer, but adopted a shareholder rights plan to avert a hostile takeover. Adding to the bullish buzz is a pair of price-target hikes from Mizuho (to $37 from $33) and MKM Partners (to $32 from $26), with both brokerage firms maintaining "buy" recommendations. Heading into today's session, AUXL was up a slight 3.8% year-to-date, prompting a glass-half-empty approach among option traders. Specifically, the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 7.10 ranks just 4 percentage points from an annual bearish peak.

  • RAX has plunged 17% in pre-market trading, after the company said it has ended its formal M&A review, which it began in early July, deciding to maintain its independence. Separately, RAX announced Taylor Rhodes will replace Graham Weston as the firm's CEO. The news was met with a price-target cut to $39 from $43 at Piper Jaffray -- in line with the equity's current perch at $39.34 -- which also maintained its "overweight" rating, and a downgrade to "sell" at CLSA. Big moves to the downside are nothing new for RAX, and today's projected move lower could pull the shares into the red on a year-to-date basis. Additionally, Rackspace Hosting, Inc. may be met with another round of bearish brokerage notes, considering seven out of 16 covering analysts maintain a "buy" or better rating toward the equity.

  • X is ready to rally at the open -- up 12.2% ahead of the bell -- after the steelmaker's Canadian unit was granted creditor protection, and the company canceled plans for roughly $800 million in capital investments. United States Steel Corporation has already proven its technical might, with the shares up more than 84% from their June 3 year-to-date low of $22.47 to trade at $41.41. In spite of this upward momentum, nearly one-quarter of the equity's float is sold short, representing more than a week's worth of pent-up buying demand, at X's average daily pace of trading. Should the stock continue its run up the charts, an unwinding of these bearish bets could help fuel the fire.

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    Analyst Upgrades: Skullcandy Inc, Under Armour Inc, and Zulily Inc

    Analysts upwardly revised their ratings on SKUL, UA, and ZU

    by 9/17/2014 8:54 AM
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    Analysts are weighing in today on performance headphone manufacturer Skullcandy Inc (NASDAQ:SKUL), athletic apparel maker Under Armour Inc (NYSE:UA), and e-commerce firm Zulily Inc (NASDAQ:ZU). Here's a quick roundup of today's bullish brokerage notes on SKUL, UA, and ZU.

    • SKUL was initiated with an "overweight" rating at Piper Jaffray. Such optimism is relatively rare for the stock, as two-thirds of covering analysts give it a "hold" or worse rating. This is fairly surprising, given Skullcandy Inc's more than 31% year-over-year advance to trade at $7.58, and its 6.8-percentage-point outperformance of the broader S&P 500 Index (SPX) during the past two months. If the equity maintains this positive trajectory, a round of upgrades or additional positive initiations could materialize.

    • Piper Jaffray started coverage on UA with an "overweight" opinion, rewarding the stock for its 76.4% annual return. Taking a closer look at the charts, shares of the apparel brand took a bounce off their 50-day moving average yesterday to settle at $67.75, potentially setting them up for additional gains. Nevertheless, many on Wall Street aren't convinced that Under Armour Inc is a winner. In fact, 15 out of 25 analysts following the security have doled out "hold" or worse assessments. Should UA continue to outperform, a capitulation among the brokerage bunch -- in the form of additional bullish notes -- could provide tailwinds.

    • Finally, ZU received an initial "overweight" rating and $44 price target from Piper Jaffray. On the charts, however, the stock has had a rough go of it -- shedding nearly half of its value since its late-February record high of $73.50 to land $37.23. On the sentiment front, an astounding 90% of Zulily Inc's float is sold short, which would take more than two weeks to cover, at the stock's average daily pace of trading.

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