Schaeffer's Trading Floor Blog

Analyst Downgrades: Rambus Inc., Splunk Inc, and TiVo Inc.

Analysts downwardly revised their ratings on RMBS, SPLK, and TIVO

by 8/29/2014 9:06 AM
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Analysts are weighing in today on tech stock Rambus Inc. (NASDAQ:RMBS), software concern Splunk Inc (NASDAQ:SPLK), and set-top box maker TiVo Inc. (NASDAQ:TIVO). Here's a quick roundup of today's bearish brokerage notes on RMBS, SPLK, and TIVO.

  • Despite adding 28.5% this year to trade at $12.17, RMBS got hit with a $1.50 price-target cut to $13.50 at Jefferies. The brokerage firm isn't the only one with doubts about the stock, either -- short sellers are skeptical, as well. Specifically, 7.3% of Rambus Inc.'s float is sold short, which would take nearly 17 sessions to buy back, at the equity's typical trading volumes.

  • While SPLK is set to open higher out of the gate following a successful turn in the earnings confessional and an upwardly revised full-year outlook, the shares still have a long way to go to reach year-to-date breakeven -- down 34% in 2014 to rest near $45.29. Splunk Inc also received a trio of price-target cuts at Canaccord Genuity, FBR, and Susquehanna (although Barclays, Cowen, Deutsche Bank, and Janney raised their 12-month estimates). Additional bearish notes could be forthcoming on the longer-term underperformer. After all, SPLK's consensus 12-month price target is docked at $66.08 -- a nearly 46% premium to the stock's current perch -- and 14 brokerage firms maintain "strong buy" opinions on the shares, compared to just five "holds" and not a single "sell" recommendation.

  • Finally, TIVO saw its price target reduced by $1 to $19 at Barrington Research, just a day after receiving price-target hikes from BMO, Janney, and J.P. Morgan Securities. Technically speaking, TiVo Inc. shares have made measured progress in 2014, tacking on 5.6% to trade at $13.85. Meanwhile, options speculators see upside ahead, as the security's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 10.44 ranks in the bullishly skewed 80th percentile of its annual range.

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Buzz Stocks: Sprint Corporation, Baidu Inc (ADR), Google Inc, and Johnson & Johnson

Stocks in the news today include S, BIDU, GOOGL, and JNJ

by 8/29/2014 9:01 AM
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U.S. stock futures are on track for a comeback this morning, with the major equity indexes looking to recover from Thursday's dip and build on their weekly gains. In company news, today's stocks to watch include wireless provider Sprint Corporation (NYSE:S), online search giants Baidu Inc (ADR) (NASDAQ:BIDU) and Google Inc (NASDAQ:GOOGL), and drug company Johnson & Johnson (NYSE:JNJ).

  • Sources indicate that Softbank unit Sprint Corporation (NYSE:S) will soon offer a Sony Corp (ADR) (NYSE:SNE) smartphone for the first time ever, as a new iteration of the Xperia device is due to be unveiled at Berlin's IFA tech expo next week. Currently, T-Mobile US Inc (NYSE:TMUS) is the only U.S. carrier offering contracts connected to Sony's smartphones. (Reuters)

  • Baidu Inc (ADR) (NASDAQ:BIDU) is teaming up with fellow Chinese tech firms Tencent and Wanda to launch an $814 million joint venture, as the companies look to compete with Alibaba in the e-commerce arena. Wanda will hold a 70% interest in the venture, while BIDU and Tencent will hold stakes of 15% each. (TechCrunch)

  • Google Inc (NASDAQ:GOOGL) announced a new program known as Project Wing, through which the company is developing airborne delivery drones. The project seems to be GOOGL's attempt to keep up with Amazon.com, Inc. (NASDAQ:AMZN), which last year unveiled plans for its "Prime Air" drone delivery service. (Reuters, via CNBC)

  • A source close to the situation says that Johnson & Johnson (NYSE:JNJ) is contemplating the sale of its Cordis unit, which specializes in cardiovascular devices. Cordis brought in $7.24 billion in revenue for the second quarter, and JNJ could bring in up to $2 billion on the sale of the business. (Bloomberg)

  • In earnings news, Big Lots, Inc. (NYSE:BIG), Avago Technologies Ltd (NASDAQ:AVGO), Splunk Inc (NASDAQ:SPLK), and Pacific Sunwear of California, Inc. (NASDAQ:PSUN) will be in focus today after reporting their latest quarterly results. (MarketWatch)

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Analyst Upgrades: 3D Systems Corporation, Micron Technology, Inc., and OmniVision Technologies, Inc.

Analysts upwardly revised their ratings on DDD, MU, and OVTI

by 8/29/2014 8:38 AM
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Analysts are weighing in today on printing issue 3D Systems Corporation (NYSE:DDD), and semiconductor concerns Micron Technology, Inc. (NASDAQ:MU) and OmniVision Technologies, Inc. (NASDAQ:OVTI). Here's a quick roundup of today's bullish brokerage notes on DDD, MU, and OVTI.

  • Since hitting a month-to-date low of $46.05 on Aug. 5, DDD has been trending northward, up 15.5% at $53.19. Accordingly, Stifel started coverage of the stock with a "buy" rating and $65 price target. Should shares of 3D Systems Corporation continue to climb higher, a huge short-covering rally could ensue. Currently, 35.2% of the equity's float is sold short, which would take nearly 12 sessions to buy back, given DDD's typical daily trading levels.

  • MU has had a strong 2014, up almost 51% to trade at $32.81. Jefferies recognized this technical progress, boosting its price target on the shares to $40 from $38. While short interest on Micron Technology, Inc. has been falling -- down 16.1% during the most recent reporting period -- nearly 10% of the equity's float remains dedicated to short interest. In other words, there's still plenty of sideline cash available to fuel MU's ascent.

  • Like MU, OVTI is a technical outperformer, advancing 58% this year to rest at $27.18. What's more, following yesterday's fiscal first-quarter earnings beat, the security received a price-target hike to $28 from $27 at Wedbush, and an upgrade to "market perform" from "underperform" at Raymond James. Additional bullish notes could be forthcoming, too. After all, six out of seven analysts covering OmniVision Technologies, Inc. have doled out "hold" or worse recommendations, while the stock's average 12-month price target of $25.65 stands at a discount to the current share price. Ahead of the open, OVTI is up more than 2%.

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Options Check-Up: Plug Power Inc, First Solar, Inc., and Molycorp Inc

Analyzing recent option activity on PLUG, FSLR, and MCP

by 8/29/2014 7:41 AM
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Among the stocks attracting attention from options traders lately are alternative energy concerns Plug Power Inc (NASDAQ:PLUG) and First Solar, Inc. (NASDAQ:FSLR), and rare-earths issue Molycorp Inc (NYSE:MCP). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on PLUG, FSLR, and MCP.

  • Since breaking through resistance in the $5 region in late July, PLUG has spent its time churning between $5.50 and $6.50, and on Thursday, the equity closed at the lower end of this range, at $5.55. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), option traders are betting on a breakout for the shares. Specifically, the security has racked up a 10-day call/put volume ratio of 7.41 on this trio of exchanges. With more than one-quarter of Plug Power Inc's float sold short, though, a portion of this activity could be a result of shorts hedging against any additional upside for a stock that's rallied roughly 258% year-to-date. Regardless, PLUG's front-month options can be purchased on the cheap, as the equity's Schaeffer's Volatility Index (SVI) of 64% ranks lower than all comparable readings taken in the past year.

  • FSLR has rallied around 84% over the past year, thanks to a handful of bounces off its rising 200-day moving average. On Thursday, the equity consolidated a portion of these gains amid a broad-market downturn, and finished the session 1.2% lower at $69.15. Given its longer-term uptrend, though, it's no surprise to see that long calls have been preferred over puts of late. The security's 10-day ISE/CBOE/PHLX call/put volume ratio of 4.59 ranks just 4 percentage points from an annual bullish peak. However, First Solar, Inc. is heavily shorted, too, sporting a short-interest-to-float ratio of 14.1%. So, it's entirely possible that some of this call buying is a result of shorts protecting their bearish bets against a continued rise. At present, FSLR's front-month options are pricing in the lowest volatility expectations of the year -- the stock's SVI of 33% ranks below all similar readings taken over the last 12 months.

  • It's been a terrible year for MCP, which has shed 69% in 2014 to churn near $1.74. Option traders on the ISE, CBOE, and PHLX are eyeing even more downside, as evidenced by the equity's 10-day put/call volume ratio of 2.44, which ranks at an annual peak. In the front-month series, specifically, peak put open interest is found at the in-the-money September 3 strike, where 11,757 contracts currently reside. Now is an opportune time to roll the dice on Molycorp Inc's near-term trajectory at a relative bargain, considering the security's SVI of 85% sits below 75% of other such readings taken in the past 52 weeks.

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Analyst Update: Amgen, Inc., J C Penney Company Inc, and Lululemon Athletica inc.

Analysts adjusted their ratings on AMGN, JCP, and LULU

by 8/28/2014 1:44 PM
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Analysts are weighing in today on biotech issue Amgen, Inc. (NASDAQ:AMGN), department store chain J C Penney Company Inc (NYSE:JCP), and yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU). Here's a quick look at today's brokerage notes on AMGN, JCP, and LULU.

  • AMGN announced that it's currently seeking regulatory approval in the U.S. for its cholesterol treatment evolocumab, following successful clinical trials. Deutsche Bank responded to the news by raising its price target on the shares to $163 from $160, helping lift Amgen, Inc. to a record high of $139.38. At last check, the stock was sitting slightly below this mark, at $138.70. Given this technical milestone, additional price-target hikes could be on the way. AMGN's average 12-month price target sits at $140.30, or 1.2% from the equity's current perch.

  • JCP has stumbled this afternoon, down 2.9% to trade at $10.88 following a downgrade to "neutral" from "buy" at BTIG. This is more of the same for the retailer, which has received 16 "hold" or worse ratings, compared to just two "buy" endorsements. Meanwhile, J C Penney Company Inc's consensus 12-month price target of $9.58 represents a discount to current trading levels. However, with the shares up nearly 19% on a year-to-date basis -- and outperforming the broader S&P 500 Index (SPX) by 27.6 percentage points during the previous three months -- a round of upgrades and/or price-target hikes is a possibility.

  • LULU is staring at a 2.5% deficit this afternoon, last seen at $40.44. This is typical of the shares, which are down 31.5% in 2014. Prompting today's negative price action was a downgrade to "neutral" from "buy" at D.A. Davidson, which also reduced the stock's price target to $44 from $46. Even from a broader perspective, Lululemon Athletica inc. is surrounded by negativity. Seventeen out of 25 covering analysts have given the equity a "hold" or worse rating, and 21.2% of LULU's float is sold short -- which would take nearly two weeks to buy back, given the stock's typical daily trading volume.

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