Schaeffer's Trading Floor Blog

Analyst Update: Marathon Petroleum Corp, QLogic Corporation, and Seventy Seven Energy Inc

Analysts adjusted their ratings on MPC, QLGC, and SSE

by 7/11/2014 2:06 PM
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Analysts are weighing in today on oil refiner Marathon Petroleum Corp (NYSE:MPC), network infrastructure specialist QLogic Corporation (NASDAQ:QLGC), and oilfield services issue Seventy Seven Energy Inc (NYSE:SSE). Here's a quick look at today's brokerage notes on MPC, QLGC, and SSE.

  • MPC is on the upswing this afternoon, rising 1.6% to trade at $78.63. Ahead of the bell, Citigroup upgraded the stock to "buy" from "neutral," even as the brokerage firm lowered its price target for the shares to $94 from $96. (Likewise, Macquarie trimmed its price target on MPC to $100 from $116 earlier, but kept its "outperform" recommendation.) Bullish analysts seem unfazed by the lackluster price action for Marathon Petroleum Corp so far this year, with the stock down about 14% since the start of 2014. The energy firm sports roughly 82% "buy" ratings, and there's not a single "sell" in the bunch.

  • After hitting a two-month high of $10.65 earlier today, QLGC is currently sitting on a gain of 1.9% at $10.40. Despite a morning upgrade to "equal weight" from "underweight" at Morgan Stanley, the stock hasn't been able to maintain its footing above emerging resistance at $10.50. Today's relatively lukewarm note is more of the same for QLogic Corporation; among the six analysts tracking the shares, only one considers the stock worthy of a "buy" rating. With the equity down about 12% year-to-date, though, this skeptical configuration isn't too surprising.

  • SSE has popped 2.8% to $25.75, bolstered by a new "buy" rating and $34 price target from Wunderlich. While the Chesapeake Energy Corporation (NYSE:CHK) spin-off has edged mostly sideways since making its public trading debut on July 1, news that Carl Icahn holds a 9.98% stake in Seventy Seven Energy Inc has generated some excitement over the past couple of days. Currently, SSE is up 4.6% from its July 9 all-time closing low of $24.62.

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Big Bank Earnings Preview: Citigroup Inc (C)

Citigroup Inc will unveil its second-quarter earnings results ahead of Monday's open

by 7/11/2014 1:04 PM
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Banking giant Citigroup Inc (NYSE:C) will report quarterly earnings bright and early Monday morning. Ahead of the event, option players at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been growing increasingly bullish.

Specifically, the stock's 10-day call/put volume ratio on this trio of exchanges has jumped to 3.32 from its June 23 reading of 1.40. What's more, the current ratio ranks in the 82nd percentile of its annual range, meaning calls have been bought to open over puts at an accelerated clip. (As a point of reference, June 23 marked the beginning of the July options cycle.)

Echoing this call-skewed bias is C's Schaeffer's put/call open interest ratio (SOIR), which has dropped to 0.89 from 0.97 since July 23, as call open interest among the front three-months' series of options surged 40%. The most recent ratio ranks lower than 61% of similar readings taken in the past year, meaning short-term speculators are more call-heavy than usual toward Citigroup.

Drilling down on the July series, heavy accumulations of call open interest currently reside at C's overhead 47 and 48 strikes, where a collective 37,283 contracts are housed. With front-month expiration occurring at next Friday's close, these levels could translate into short-term resistance for C, as the hedges related to these bets begin to unwind.

Citigroup's encounters with resistance are nothing new, though. Since late March, the stock has struggled against the $48.50-$50.50 region; and, in early June, the equity was quickly rejected by its 200-day moving average, currently located at $49.25. Since then, shares of the financial firm have shed roughly 5.8% to churn near $46.80.

For Citigroup Inc's (NYSE:C) second quarter, analysts are calling for a per-share profit of $1.06 -- a 28-cent drop from the company's year-ago results. C has fallen short of consensus bottom-line estimates in three of the past eight quarters, and a 13-cent profit miss last January sent the shares 4.4% lower in the subsequent session.

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Stocks on the Move: Finish Line Inc, PriceSmart, Inc., and Rent-A-Center Inc

FINL, PSMT, and RCII are moving sharply in Friday's trading

by 7/11/2014 11:45 AM
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Around midday, three of the top market movers are athletic shoe peddler Finish Line Inc (NASDAQ:FINL), shopping warehouse operator PriceSmart, Inc. (NASDAQ:PSMT), and rent-to-own business Rent-A-Center Inc (NASDAQ:RCII). Here's a quick roundup of how this trio of names is performing on the charts so far.

  • FINL has shed 5.6% today to trade at $27.22, after Sterne Agee downgraded the stock to "neutral" from "buy." With the move lower, the shares are in danger of finishing below their 120-day moving average for the first time since mid-April. Should the equity continue to struggle, there's plenty of room for additional bearish brokerage notes to come down the pike; in fact, nine out of 15 analysts covering Finish Line Inc have given it a "buy" or "strong buy" rating, with not a single "sell" recommendation to be found. On the fundamental front, the retailer will host its annual shareholder meeting next Thursday.

  • PSMT is currently off 6.8% to perch at $80.39, pushing its year-to-date loss beyond 30%. Earlier, the stock sank to a fresh annual low of $78.63, as well. Prompting the pullback was PriceSmart, Inc.'s fiscal third-quarter revenue miss last night. Meanwhile, in the options pits, the bears are firmly in control. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PSMT has racked up a put/call volume ratio of 0.71. This ratio ranks near the top quartile of all readings taken in the previous year, suggesting traders have scooped up long puts over calls at a quicker-than-usual clip in recent months.

  • Finally, RCII has plummeted 11.2% and now hovers near $25.81, following a disappointing second-quarter forecast last night, and subsequent price-target cut to $24 from $28 at Canaccord Genuity. From a longer-term perspective, the equity is off nearly 23% in 2014. This is good news for short sellers, though, as 17.2% of Rent-A-Center Inc's float is sold short (which would take nearly 18 sessions to buy back, at the stock's average daily trading volume). Looking forward, the company will officially report quarterly results after the close on Monday, July 21.

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Buzz Stocks: Google Inc, Unilever plc (ADR), CYNK Technology Corp, and Reynolds American, Inc.

Today's stocks to watch in the news include GOOGL, UL, CYNK, and RAI

by 7/11/2014 9:11 AM
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With a couple speeches from Federal Reserve officials on tap for today, investors are expressing optimism ahead of the bell, as futures are sitting modestly higher. In company news, here are some stocks to watch today:

  • London-based tech startup This Place has hacked Google Inc (NASDAQ:GOOGL) Glass -- combining it with an electroencephalography (EEG) headset and MindRDR software -- allowing a user to take pictures just by thinking about it. "We have not reviewed, nor approved, the app so it won't be available in the Glass app store," a GOOGL spokesperson said in response to the report. (BBC News)

  • Unilever plc (ADR) (NYSE:UL) announced the sale of its Slim-Fast weight-loss brand to private equity firm Kainos Capital for an undisclosed sum. UL will retain a minority stake in Slim-Fast, but is attempting to focus its U.S. portfolio more on higher-margin personal care products. (Reuters)

  • CYNK Technology Corp (OTCMKTS:CYNK) is confounding market experts, after posting a 25,000% return in less than a month. The strangest part: The latest Securities and Exchange Commission (SEC) filing of the so-called "social marketplace" listed no assets or revenue as of November 2013, as well as a fiscal-year loss of $1.5 million. (CNNMoney)

  • Amid talks of a merger between cigarette giants Reynolds American, Inc. (NYSE:RAI) and Lorillard Inc. (NYSE:LO), Imperial Tobacco Group PLC said it's trying to acquire certain brands and assets from both companies. Earlier this week, rumors surfaced that British American Tobacco was considering an unsolicited bid for RAI, of which it already owns a 42% stake. (Associated Press, via FOX Business)

  • Also, Wells Fargo & Co (NYSE:WFC) reported quarterly earnings. (USA Today)

  • Finally, later today, President Barack Obama will publicly introduce an initiative that seeks to get larger companies to commit to paying their smaller suppliers in a more timely manner. Twenty-six major firms -- including The Coca-Cola Company (NYSE:KO) and Johnson & Johnson (NYSE:JNJ) -- have already signed on to the program, with the White House hoping that faster payments will facilitate hiring and infrastructure updates among small businesses. (Bloomberg Businessweek)

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Analysts are downwardly revising their ratings today on consumer goods giant The Procter & Gamble Company (NYSE:PG), online brokerage E TRADE Financial Corporation (NASDAQ:ETFC), and petroleum refiner Valero Energy Corporation (NYSE:VLO). Here's a quick look at today's bearish brokerage notes on PG, ETFC, and VLO.

  • Wells Fargo downgraded PG to "market perform" from "outperform," triggering a fractional loss for the stock in electronic trading. At $81.61, shares of The Procter & Gamble Company are barely clinging to positive ground on a year-to-date basis, up just 0.2% since the start of 2014. In fact, since last April, PG has been stymied by resistance in the $82-$84 area. As the blue chip stagnates, skepticism is on the rise; short interest on the equity jumped nearly 54% during the most recent reporting period.

  • JMP Securities cut its price target on ETFC to $27 from $28, with the new target implying expected upside of about 26% from Thursday's close at $21.43. E TRADE Financial Corporation has benefited in recent months from support at its rising 40-week moving average, which is currently hovering about one point below the stock's current perch -- and could help to launch ETFC on the next leg of its uptrend. Year-over-year, the security has rallied an impressive 60.4%.

  • VLO was hit with a price-target cut to $62 from $69 at Macquarie, but the revised forecast still represents a healthy 26% premium to the stock's Thursday finish at $49.21. Most analysts share a similarly upbeat outlook for Valero Energy Corporation, with the shares boasting 77% "buy" ratings and an average 12-month price target of $62.74. On the charts, however, VLO is off 2.4% year-to-date, and recently breached support at the round-number $50 level.

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