Schaeffer's Trading Floor Blog

Recounting an Interesting Week on Twitter, Inc. (TWTR)

Twitter Inc (TWTR) has been full of intrigue lately

by 1/23/2015 2:45 PM
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It was an interesting week in the social media world, particularly in the Twittersphere. Now, I don't use Twitter Inc (NYSE:TWTR), but a number of tweets went viral and made it onto the pages of prominent media publications -- where I promptly took note.

For starters, this "war of words" between Chris Pratt and Chris Evans was particularly heartwarming. The big-screen actors -- best known for their respective roles as Star-Lord in "Guardians of the Galaxy" and Captain America in, well, the "Captain America" franchise -- placed a Super Bowl wager.

But this wasn't just an ordinary bet. Sure, the dialogue (particularly from Pratt) was wittier than usual, but most notable were the beneficiaries: sick children. Specifically, if Pratt's Seahawks win, Captain America will make an appearance at the Seattle Children's Hospital. If Evans' Patriots win, Star-Lord will be heading to Christopher's Haven, a temporary home for children battling cancer.

There were other touching moments on TWTR, too. One social media user snapped some photos of Triple H -- a notorious villain for World Wrestling Entertainment, Inc. (NYSE:WWE) -- breaking character to console a young fan he'd accidentally upset.

Finally, there was this story about the back-and-forth between TWTR users Jaime Guerra (a high school student) and Nik Stauskas (a player for the NBA's Sacramento Kings). Guerra asked Stauskas how many retweets he would need to take the shooting guard's girlfriend, Taylor Anderson, to prom. The reply: 10,000.

Within roughly two hours, Jaime had hit the benchmark, and secured a high-profile prom date. As a bonus (and perhaps fearing Anderson's wrath), Stauskas decided he would also attend the dance.

On the charts, Twitter Inc (NYSE:TWTR) has been much less memorable. For the past couple months, the stock has been churning in the $36-$40 range. That hasn't stopped options traders from betting bullishly, though. TWTR's 50-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 2.59 -- in the 93rd percentile of its annual range.

Daily Chart of TWTR since October 2014

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Analyst Update: LinkedIn Corporation, Puma Biotechnology, Inc., and Cliffs Natural Resources Inc.

Analysts adjusted their ratings on LinkedIn Corp (LNKD), Puma Biotechnology Inc (PBYI), and Cliffs Natural Resources Inc (CLF)

by 1/23/2015 12:15 PM
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Analysts are weighing in today on professional network LinkedIn Corp (NYSE:LNKD), drugmaker Puma Biotechnology Inc (NYSE:PBYI), and commodities concern Cliffs Natural Resources Inc (NYSE:CLF). Here's a quick look at today's brokerage notes on LNKD, PBYI, and CLF.

  • This morning, Raymond James upgraded LNKD to "strong buy" from "market perform," prompting a 3.1% increase in the shares, last seen at $231.84. The gain brings LinkedIn Corp's year-over-year growth to 6.6%. However, many traders remain skeptical of the stock, with 7.4% of LNKD's float sold short, representing over six sessions' worth of buying power, at its average daily trading rate. Elsewhere, the equity has the approval of the brokerage bunch -- 18 analysts rate it a "buy" or better, with nine others doling out "holds," and zero "sells" to be found.

  • PBYI is up 9.7% at $213.44, after RBC -- which weighed in on several pharmaceutical names -- initiated coverage with an "outperform" rating and a $282 price target. This projection represents a 32.1% increase from the equity's current perch -- lofty expectations for a stock that has underperformed the S&P 500 Index (SPX) by almost 25 percentage points in the past three months. Regardless, call buying has run rampant in Puma Biotechnology Inc's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PBYI's 10-day call/put volume ratio of 7.47 ranks in the 91st percentile of its annual range. However, with 11.2% of the security's float sold short, some of this call buying may have been the work of short sellers hedging against any upside.

  • CLF is down 7% at $7.99, after Goldman Sachs slashed its price target to $7 from $9 and kept its "neutral" opinion. The equity has now shed 58.7% in the past 52 weeks. In response, bears have stepped up, with 52% of Cliffs Natural Resources Inc's float sold short, which would take over seven days to repurchase, at its normal trading pace. The analyst community is also in the bears' corner, as 11 of the 12 covering brokerage firms rate the stock a "hold" or worse.

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Analyst Upgrades: Starbucks Corporation, lululemon athletica inc., and Infinera Corporation

Analysts upwardly revised their ratings on Starbucks Corporation (SBUX), Lululemon Athletica inc. (LULU), and Infinera Corp. (INFN)

by 1/23/2015 9:53 AM
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Analysts are weighing in today on coffee concern Starbucks Corporation (NASDAQ:SBUX), yoga apparel peddler Lululemon Athletica inc. (NASDAQ:LULU), and fiber optic name Infinera Corp. (NASDAQ:INFN). Here's a quick roundup of today's bullish brokerage notes on SBUX, LULU, and INFN.

  • SBUX was greeted by a round of upbeat analyst notes after posting strong fiscal first-quarter results. Specifically, Barclays, UBS, J.P. Morgan Securities, RBC, and Wedbush all raised their price targets on the stock. As such, Starbucks Corporation is 5.7% higher out of the gate at $87.44, bringing its year-over-year lead to 16.6%. Earlier, in fact, the equity hit a record high of $87.85. If this momentum continues, the stock could get a lift from potential short-covering activity, as more than 12 million SBUX shares are sold short.

  • LULU is already up 3.2% at $65.78, thanks to an upgrade to "overweight" from "neutral," and a price-target hike to $75 from $50, at J.P. Morgan Securities. Today's rally is just more of the same for the shares, which have advanced 38% year-over-year, and hit an annual high of $66.20 moments ago. There's plenty of room for additional bullish brokerage notes, too. Fifteen out of the 26 analysts tracking Lululemon Athletica inc. have doled out "hold" or worse opinions, and its average 12-month price target of $61.16 stands at a discount to current trading levels.

  • Finally, INFN posted a fourth-quarter earnings beat last night. The brokerage bunch has responded, with no fewer than four analysts upping their price targets -- led by Barrington and J.P. Morgan Securities, which each boosted their targets to $20 and reiterated "outperform" assessments. As such, Infinera Corp. has popped 20.1% out of the gate to hover near $17.30, and earlier touched a seven-year high of $17.37. Not surprisingly, traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have shown near-extreme levels of optimism toward the stock. INFN's 50-day call/put volume ratio of 46.14 sits just 3 percentage points from a 12-month high. However, it's possible some of these long calls were initiated by short sellers looking to guard against additional upside.

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Buzz Stocks: General Electric Company, LeapFrog Enterprises, Inc., and Sony Corporation

Today's stocks to watch in the news include General Electric Company (GE), LeapFrog Enterprises, Inc. (LF), and Sony Corp (ADR) (SNE)

by 1/23/2015 9:24 AM
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U.S. markets are pointed higher in electronic trading, thanks to carryover from yesterday's stimulus-related optimism. In company news, today's stocks to watch include tech and finance conglomerate General Electric Company (NYSE:GE), children's entertainment company LeapFrog Enterprises, Inc. (NYSE:LF), and electronics-and-media issue Sony Corp (ADR) (NYSE:SNE).

  • GE reported better-than-expected fourth-quarter earnings, powered by a strong performance in its turbine business. Nevertheless, the shares are pointed slightly lower ahead of the bell, threatening to add to their 6% year-over-year deficit at $24.28, after the blue chip's CFO warned of a "challenging year" for the company's oil and gas unit. Put buying has been relatively popular of late in General Electric Company's options pits. The stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.84 ranks in the 94th percentile of its annual range. Along similar lines, GE's Schaeffer's put/call open interest ratio (SOIR) of 1.17 is just 1 percentage point from a 12-month high -- meaning short-term speculators have rarely been so put-skewed.

  • LF said holiday sales fell well short of internal projections, forcing the firm to reduce its quarterly estimates and withdraw its full-year guidance. "In light of our significant sales decline and losses, we are thoroughly reviewing our product strategies, operations and cost structure in order to improve our financial performance," the company said. In the aftermath of this news, CRT Capital cut is price target on LeapFrog Enterprises, Inc. to $3 from $5, while maintaining a "fair value" rating," and Monness, Crespi, Hardt downgraded the stock to "neutral" from "buy." As such, the shares are down 33% in electronic trading. Longer term, things haven't been pretty, either -- LF has shed nearly half of its value year-over-year to perch at $3.90, and yesterday hit a three-year low of $3.76. Not surprisingly, the brokerage bunch has shown skepticism toward the stock, with all six covering analysts levying lukewarm "hold" assessments.

  • Finally, SNE, which was supposed to release fiscal third-quarter earnings on Wednesday, Feb. 4, has delayed the event due to the recent North Korean cyberattack. While the company will still hold a call on Feb. 4 to provide an operational update, Sony Corp (ADR) will not publish quarterly data until mid-March, assuming its requested extension is approved. Meanwhile, ahead of the bell, the shares are up roughly 2%, putting them on track to open at a new annual high -- following a 32% year-over-year advance to $22.17. Traders aren't necessarily convinced of SNE's technical tenacity, though. The stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 3.08 is higher than 98% of all comparable readings from the last year. However, some of these put buyers may have been shareholders picking up downside hedges.

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Analyst Downgrades: DreamWorks Animation SKG, Inc., Exxon Mobil Corporation, and Momenta Pharmaceuticals, Inc.

Analysts downwardly revised their ratings on Dreamworks Animation Skg Inc (DWA), Exxon Mobil Corporation (XOM), and Momenta Pharmaceuticals, Inc. (MNTA)

by 1/23/2015 9:22 AM
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Analysts are weighing in today on entertainment issue Dreamworks Animation Skg Inc (NASDAQ:DWA), commodity concern Exxon Mobil Corporation (NYSE:XOM), and generic drugmaker Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA). Here's a quick roundup of today's bearish brokerage notes on DWA, XOM, and MNTA.

  • DWA is down 13% in electronic trading, following a big announcement from the firm. Specifically, Dreamworks Animation Skg Inc will axe roughly 500 positions, reduce its yearly film output, and shake-up its current management structure. The news was met with a downgrade to "underperform" from "market perform" and a price-target cut to $14 from $21 at Cowen and Company, while Janney reduced its outlook to "sell" from "neutral." Piper Jaffray, however, raised its rating on DWA to "overweight" from "neutral." The security has been a long-term laggard, shedding nearly 38% over the past 52 weeks amid pressure from its 40-week moving average, and settled last night at $21.31. Short sellers have been rolling the dice on more downside, too. Short interest surged 18.1% during the last two reporting periods, and now accounts for nearly 15% of the security's available float.

  • It's been a rough ride for XOM in recent months, with the shares off more than 11% from their late-July record peak of $104.76 to trade at $92.87. This -- as well as crude oil's continued slump -- may have been what prompted Credit Suisse to lower its rating to "underperform" from "neutral." This negative outlook is seen elsewhere on the Street, as well. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, XOM's 10-day put/call volume ratio of 3.04 ranks in the 94th percentile of its annual range. Simply stated, Exxon Mobil Corporation puts have been bought to open over calls with more rapidity just 6% of the time within the past year.

  • It's been a tough week for MNTA -- which is down nearly 11% from last Friday's close, after being dealt a blow by the Supreme Court on Tuesday. This equity is poised to extend these losses today, following a downgrade to "hold" from "sell" and a price-target cut to $7 from $17 at Maxim. There's plenty of room for another round of bearish brokerage notes for a stock that's shed more than 42% year-over-year. All four analysts covering Momenta Pharmaceuticals, Inc. maintain a "strong buy" rating. Plus, the average 12-month price target of $15.44 stands at a 38% premium to last night's close at $11.19, as well as in territory not charted since last March.

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