Schaeffer's Trading Floor Blog

American Apparel Inc (APP) Ripe for a Short-Covering Rally Amid Buyout Buzz

American Apparel Inc has been a favorite among short sellers

by 12/19/2014 11:27 AM
Stocks quoted in this article:

American Apparel Inc (NSYEMKT:APP) has rallied 10% today to $1.10, as speculation swirls the retailer could be a potential takeover target. The reports cap a dramatic week for the company, which saw the ousting of controversial CEO Dov Charney, who was quickly replaced by APP's first female chief executive, Paula Schneider.

Weekly Chart of APP Since August 2013 With 80-Week Moving Average

Heading into today's session, APP was staring at a nearly 19% year-to-date deficit. However, thanks to this week's raft of well-received developments, the equity is on pace to close north of its 80-week moving average for the first time since early September 2013.

Should American Apparel Inc (NSYEMKT:APP) extend its bounce, it could get a helping hand from short sellers or analysts. Although short interest declined 5.2% in the latest reporting period, it still accounts for 11.2% of the equity's available float, representing almost 12 sessions' worth of pent-up buying demand. Additionally, only one brokerage firm currently covers APP, although they maintain a "strong buy" rating. Simply stated, a continued rush to cover by shorts and/or a round of bullish brokerage initiations could translate into a fresh wave of buying power for the shares.


permanent link

15 More Things That Will Take a 'Considerable Time'

We're confident interest rates will go up before any of these things happen

by 12/19/2014 9:58 AM
Stocks quoted in this article:

On Wednesday, after much speculation, the Federal Open Market Committee (FOMC) said it will exercise "patience" before raising interest rates for the first time since 2008, though the central bank said the new language is consistent with the infamous "considerable time" phrase that's been tossed around since September 2012. In other words, no one knows when interest rates will go up -- including the Fed -- though most still expect a hike around mid-2015.

Regardless, there are some things in this world that we know for sure won't happen for a "considerable time." To name a few:

  1. The Cleveland Browns win a Super Bowl.

  2. The J C Penney Company Inc (NYSE:JCP) turnaround is completed.

  3. The NYSE closes on Black Friday and Christmas Eve, because why not?

  4. Tesla Motors Inc (NASDAQ:TSLA) and SpaceX CEO Elon Musk gives up his dream of colonizing Mars.

  5. Self-tying shoes -- imagine the time you'll save!

  6. Pete Rose inducted into the Major League Baseball Hall of Fame.

  7. TLC's programming slate sweeps the Emmy awards.

  8. Amazon.com, Inc. (NASDAQ:AMZN) successfully uses drones to deliver packages.

  9. AMZN actually has a profitable business model.

  10. Justin Bieber grows up.

  11. Justin Bieber produces a good song.

  12. Bill Ackman and Carl Icahn sing karaoke duet of "Islands in the Stream."

  13. The United States government functions competently, shows bipartisanship.

  14. Gum holds flavor for more than five minutes.

  15. "The Interview 2" is released.

The JCP turnaround will take considerable time

Be sure to check back, as we may add to this list in considerable time.


permanent link

Analyst Upgrades: Facebook Inc (FB), NVIDIA Corporation, and Red Hat Inc

Analysts upwardly revised their ratings on FB, NVDA, and RHT

by 12/19/2014 9:28 AM
Stocks quoted in this article:

Analysts are weighing in today on social network Facebook Inc (NASDAQ:FB), chipmaker NVIDIA Corporation (NASDAQ:NVDA), and open source software firm Red Hat Inc (NYSE:RHT). Here's a quick roundup of today's bullish brokerage notes on FB, NVDA, and RHT.

  • Citigroup boosted its price target on FB to $91 from $86, and underscored a "buy" endorsement. The positive analyst note appears to be warranted, considering the stock's 43.5% year-to-date advance to rest at $78.40. Brokerage firms are already largely in Facebook Inc's corner, with 31 of 33 sporting "buy" or better ratings, versus just two "holds" and not a single "sell" recommendation. However, short-term option traders have rarely been as put-skewed as they are now, per the stock's Schaeffer's put/call open interest ratio (SOIR) 0f 0.84, which ranks in the 96th annual percentile. While some of these open put positions may have been at the hands of shareholders protecting paper profits, a capitulation among "vanilla" bears could spell additional upside.

  • NVDA saw its rating boosted to "neutral" from "underperform," and its price target raised to $22 from $19, at BofA-Merrill Lynch. This bullish brokerage note is also well-deserved, given the stock's 26.2% year-to-date gain to trade at $20.22. However, not everyone on the Street is sold on NVIDIA Corporation. Seventeen out of 26 covering brokerage firms designate the shares a "hold" or worse, and their consensus 12-month price target of $21.28 is just a chip-shot away. Additionally, 7.6% of NVDA's float is sold short, which would take 8.4 days to buy back, at typical daily trading levels. A shift in sentiment -- in the form of additional upgrades and/or short-covering activity -- could spur the equity to additional gains.

  • Following last night's third-quarter earnings beat, RHT is seeing a rush of positive analyst attention. No fewer than 17 covering brokerage firms upped their price targets on the stock, with Oppenheimer leading the way -- boosting its target to $80 from $74, to go along with an "outperform" opinion. Red Hat Inc is benefiting big-time from these developments, sitting roughly 10% higher ahead of the bell. In other words, the shares -- which landed at $61.50 last night -- will likely build on their 25.5% year-over-year lead today, and explore decade-plus highs. Over the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), RHT has racked up a put/call volume ratio of 0.52 -- in the 81st percentile of its annual range, suggesting a healthier-than-usual appetite for bearish bets over bullish. However, given the stock's technical tenacity, some of these bets may have been initiated by shareholders as downside insurance.

permanent link

Analyst Downgrades: Advanced Micro Devices, Inc., Halliburton Company, and Salesforce.com, inc.

Analysts downwardly revised their ratings on AMD, HAL, and CRM

by 12/19/2014 9:27 AM
Stocks quoted in this article:

Analysts are weighing in today on semiconductor concern Advanced Micro Devices, Inc. (NYSE:AMD), oil-and-gas issue Halliburton Company (NYSE:HAL), and cloud company Salesforce.com, inc. (NYSE:CRM). Here's a quick roundup of today's bearish brokerage notes on AMD, HAL, and CRM.

  • It's been a dismal year for AMD, which has shed more than 34% to churn at $2.55. BofA-Merrill Lynch thinks there's more downside on the horizon, too, and cut its price target on the shares to $2.25 from $3.25. This bearish positioning toward Advanced Micro Devices, Inc. isn't relegated to the brokerage bunch, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AMD's 50-day put/call volume ratio of 1.02 ranks in the 81st annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip in recent months.

  • Citigroup chimed in on a number of energy names this morning, and for HAL, this meant a price-target reduction to $50 from $68. However, the brokerage firm reiterated its "buy" rating, echoing the majority of the 25 analysts currently covering the shares. Additionally, the equity's consensus 12-month price target of $56.19 stands at a steep 43.2% premium to last night's close at $39.23. Should Halliburton Company extend its nearly 23% year-to-date deficit, another round of bearish brokerage notes could be on the horizon.

  • Jefferies slashed its price target on CRM to $47, representing expected downside of 20.8% to Thursday's close at $59.33 -- as well as territory not seen by Salesforce.com, inc. since August 2013. In fact, the stock has been bouncing steadily higher over the past 12 months, tacking on 11.8%. Option traders have kept the faith, though, as evidenced by the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 4.30. Not only does this show that more than four calls have been bought to open for every put over the past two weeks, but it ranks just 2 percentage points from a 52-week peak.

permanent link

Buzz Stocks: Nike Inc, Orexigen Therapeutics, Inc., and Xerox Corp

Today's stocks to watch in the news include NKE, OREX, and XRX

by 12/19/2014 9:17 AM
Stocks quoted in this article:

U.S. equities are poised to end the week on a high note, with futures pointed sharply higher in pre-market trading. In company news, today's stocks to watch include athletic apparel titan Nike Inc (NYSE:NKE), drugmaker Orexigen Therapeutics, Inc. (NASDAQ:OREX), and business support company Xerox Corp (NYSE:XRX).

  • NKE is sitting 1.5% lower ahead of the bell, despite reporting better-than-expected quarterly profit and revenue figures. Overshadowing the solid results are disappointing global future orders, particularly in Japan and emerging markets. Taking a step back, Nike Inc has had a solid 2014, gaining 23.4% as of last night's close at $97.08, and recently bounced off its 50-day moving average. Nonetheless, the brokerage crowd is fairly divided on the shares, with 12 sporting "buy" opinions, compared to nine "holds." What's more, NKE's consensus 12-month price target of $101.56 is less than 5% from its current perch.

  • OREX's diet pill, known in the U.S. as Contrave, has been recommended for approval in Europe by the European Medicines Agency (EMA). As a result, the shares are pointed nearly 9% higher ahead of the open. Longer term, Orexigen Therapeutics, Inc. has advanced almost 17% year-over-year to trade at $6.29. Should the stock continue to rally, short sellers may be forced to cover their bearish positions. Roughly 32% of OREX's float is sold short, which would take more than three weeks to cover, at the equity's typical daily trading volume.

  • Finally, XRX is up 1.2% in electronic trading, after the company agreed to sell its IT outsourcing unit to France-based Atos. The deal is worth just over $1 billion, and is expected to close in the first half of 2015. On the charts, Xerox Corp has tacked on approximately 18% since this time last year to rest at $13.89, ushered higher by its 40-week moving average. Still, analysts are skeptical of the shares, with more than half of the covering brokerage firms doling out "hold" or worse ratings. What's more, XRX's consensus 12-month price target sits at $13.77, a discount to last night's close. Should the stock maintain its upward momentum, it could benefit from upgrades and/or price-target hikes.

permanent link
1 
2 
3 
4 
5 
… 
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.