Schaeffer's Trading Floor Blog

Highs & Lows: eBay, Pfizer, and Lennar

EBAY, PFE, and LEN rallied to annual peaks

by 1/8/2013 1:09 PM
Stocks quoted in this article:

U.S. stocks are sitting on moderate losses this afternoon, as Wall Street awaits Alcoa Inc.'s (NYSE:AA) quarterly report, which unofficially rings in fourth-quarter earnings season after today's closing bell. Despite today's drop, though, the number of equities at new highs is easily outpacing those at new lows. There are currently 126 annual highs and four annual lows on the NYSE, while the Nasdaq counts 60 annual highs and six annual lows -- most notably a 17-month worst for Finish Line Inc (NASDAQ:FINL). Among the names charting notable moves higher are eBay Inc (NASDAQ:EBAY - 53.19), Pfizer Inc. (NYSE:PFE - 26.18), and Lennar Corporation (NYSE:LEN - 40.95).

  • After reaching an eight-year peak of $54.20 on a price-target hike from Evercore Partners, EBAY has retreated some 0.6% below the breakeven mark. But this has done little to dampen the shares' 52-week uptrend, which now comes in at an impressive 74%. In fact, the online auction business has outperformed the broader S&P 500 Index (SPX) by 14 percentage points over the past three months, with the stock up 4.6% since the beginning of the year. However, options traders are still bearish when it comes to EBAY, as evidenced by its 10-day put/call volume ratio of 1.11 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio lands four percentage points from an annual peak, implying that traders on these exchanges have rarely purchased puts over calls at a faster clip during the past year.

  • PFE got the nod from the European Commission to expand the use of its Prevenar 13 vaccine to older children and adolescents, and investors applauded, sending the stock to the $26.25 mark -- its best price since June 2007. The options arena also appears to be optimistic toward the biopharmaceutical giant. During the past 10 days, traders on the ISE, CBOE, and PHLX have bought to open 2.04 calls for every put on the security. Elsewhere on the Street, however, short interest on the equity advanced 22% during the past two reporting periods, suggesting the recent acceleration in call buying could be related to hedging activity by the shorts. But the bearish bandwagon is far from crowded, as it would take fewer than three sessions for all of those shorted PFE shares to unwind.

  • Homebuilder LEN has blazed a trail higher over the past 12 months, enjoying a nearly 100% gain in that timeframe, and jumping 6% in the first week of 2013. But sentiment toward this overachiever is still skeptically skewed, as 10 of the 16 covering analysts have doled out "hold" or "sell" recommendations for the stock. Furthermore, the average 12-month price target of $37.24 is a 10% discount to LEN's fresh five-and-a-half-year acme of $41.38, tagged earlier today.

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