Schaeffer's Trading Floor Blog

Earnings on Deck: Adobe Systems Incorporated, Oracle Corporation, and Yingli Green Energy Hold. Co. Ltd. (ADR)

Previewing ADBE, ORCL, and YGE ahead of Tuesday's earnings reports

by 3/17/2014 11:52 AM
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Headed to the earnings confessional on Tuesday are software makers Adobe Systems Incorporated (NASDAQ:ADBE) and Oracle Corporation (NYSE:ORCL), as well as alternative energy issue Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE). Here's a quick look at these names as earnings approach.

  • Adobe Systems Incorporated (NASDAQ:ADBE) will unveil its fiscal first-quarter earnings report after the close tomorrow. The company has matched or exceeded the Street's per-share profit predictions in seven of the last eight quarters, averaging a one-week post-earnings gain of 2.6%. At last check, ADBE is 1.8% higher at $68.40, and the stock's 30-day at-the-money implied volatility touched a 52-week peak, pointing to escalating demand for short-term contracts ahead of earnings. Meanwhile, analysts are optimistically aligned, with 11 out of 16 brokerage firms offering up "strong buy" endorsements, leaving five "holds" and not a "sell" or worse rating in sight. In fact, just this morning RBC lifted its price target on the equity to $75 from $63, and reiterated its "outperform" recommendation.

  • Oracle Corporation (NYSE:ORCL) will step up to the earnings plate tomorrow night, when it will release its fiscal third-quarter figures. The firm has matched or topped analysts' bottom-line earnings estimates in seven of the past eight quarters, and gained 8.9% in the week following its most recent report. Options buyers have shown a healthier-than-usual appetite for ORCL calls over puts during the past couple of weeks. The stock's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 1.60, in the 64th percentile of its annual range. Analysts are also bullish, with 17 out of 25 brokerage firms maintaining a "buy" or better opinion, and Evercore Partners just last night lifting its price target to $40. Around midday, ORCL is 1.9% higher at $38.31.

  • Finally, Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) is up 3.3% at $5.95, on news that the Chinese firm supplied 10 megawatts of solar panels to a U.K.-based solar company. YGE is slated to report fourth-quarter earnings before the open tomorrow, and if history is any indicator, could make a notable move over the subsequent week. The company has fallen short of the Street's per-share earnings forecast in each of the past seven quarters, and the stock has swung as wildly as 33.1% higher and 20% lower in the following five sessions, but averages a one-week post-earnings gain of 1.9%. Options traders are purchasing to open YGE calls over puts at a faster-than-usual clip, as the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 49.17 sits 15 percentage points from an annual high. However, short interest represents more than a week's worth of pent-up buying demand, at YGE's average pace of trading, suggesting some shorts could be hedging with long calls.

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