Schaeffer's Trading Floor Blog

Earnings on Deck: Microsoft Corporation, Amazon.com, Inc., and Sirius XM Holdings Inc.

Previewing MSFT, AMZN, and SIRI ahead of their upcoming earnings reports

by 4/23/2014 2:21 PM
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The line for the earnings confessional is out the door, with a slew of notable names waiting to report. Among them are tech titan Microsoft Corporation (NASDAQ:MSFT), e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN), and satellite radio issue Sirius XM Holdings Inc. (NASDAQ:SIRI). Here's a quick look at these names as earnings approach.

  • Microsoft Corporation (NASDAQ:MSFT) will unveil its fiscal third-quarter figures after the close tomorrow. The blue chip has bested the Street's per-share profit projections in five of the past seven quarters, and found itself in the black one week after its last two earnings reports. Nevertheless, MSFT puts are growing more popular, as the stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 0.75 -- above 70% of all other readings from the past year. Likewise, short interest grew 14.5% during the past two reporting periods, reflecting skepticism on the Street. Should MSFT once again exceed earnings expectations, a mass exodus of option bears and/or a short-squeeze situation could add fuel to the stock's fire. At last check, MSFT has followed the broader equities market into the red, down 1.1% at $39.56.

  • Amazon.com, Inc. (NASDAQ:AMZN) will report first-quarter earnings after the close tomorrow. While the firm has fallen short of analysts' bottom-line estimates in five of the past eight quarters, the equity has averaged a one-week post-earnings gain of 2.5%. Short-term options traders and analysts are optimistic ahead of the event. The security's Schaeffer's put/call open interest ratio (SOIR) of 0.82 sits just 1 percentage point from a 12-month nadir, implying that short-term speculators have rarely been more call-heavy during the past year. Meanwhile, 24 out of 29 analysts offer up "buy" or better endorsements, with not a single "sell" to be found. In afternoon trading, AMZN is 1.3% lower at $325.07, despite inking an exclusive deal with HBO.

  • Finally, Sirius XM Holdings Inc. (NASDAQ:SIRI) will release its first-quarter earnings before the open tomorrow. The company has matched or exceeded the Street's per-share profit predictions in five of the past eight quarters, averaging a gain of 1.2% one week after reporting. SIRI calls have been growing more popular on the long side, as the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 19.86 rests just 4 percentage points from a 52-week acme. What's more, short-term traders are paying a pretty penny to bet on SIRI's post-earnings trajectory, as the equity's SVI of 42% stands higher than 90% of all comparable readings from the past year. At last check, SIRI is 1.4% lower at $3.17, in the wake of a price-target cut at Wunderlich.

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Midday Market Stats: Dow Jones Industrial Average Slumps On Disappointing Economic Reports

Thermo Fisher Scientific Inc. and Amgen, Inc. plunge after reporting first-quarter earnings

by 4/23/2014 11:59 AM
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The Dow Jones Industrial Average (INDEXDJX:.DJI) is sitting 17.8 points, or 0.11%, south of breakeven at midday, at 16,496.61, following a round of disappointing economic reports. First, the latest data on new home sales showed a sharp decline of 14.5% in March, compared to the modest gain projected by economists. Meanwhile, Markit's preliminary purchasing managers manufacturing index (PMI) dipped to a lower-than-expected 55.4. However, factory output for this month has grown at its fastest rate in three years.

Here are a few noteworthy stats at midday:

  1. The equity put/call volume ratio across all 12 options exchanges stands at 0.79. Roughly 3.07 million calls, compared to about 2.44 million puts, have crossed the tape so far.

  2. Among the names with call-heavy trading activity today is Thermo Fisher Scientific Inc. (NYSE:TMO). At last check, more than 95% of the stock's intraday options volume had changed hands on the call side. On the charts, meanwhile, TMO is down 1.8% to trade at $118.15, despite an upbeat turn in the earnings confessional this morning.

  3. The Nasdaq shows an advance/decline ratio of 0.84, with decliners easily outpacing advancing stocks.

  4. Among the underperformers on the Nasdaq today is Amgen, Inc. (NASDAQ:AMGN), which is down 6% to trade at $112.16, after reporting weak first-quarter earnings results last night.

  5. The CBOE Volatility Index (VIX) is up 1.8% at 13.43 this afternoon, but is still on pace to finish its fourth consecutive session below the 14 mark.

  6. The iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) is down .02%% to $40.89. Meanwhile, the ETN's put/call volume ratio stands at 1.89, with put volume almost doubling call volume.

View a real-time chart of the Dow Jones Industrial Average (INDEXDJX:.DJI).

Unusual Option Volume

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Analyst Downgrades: Sirius XM Holdings Inc., AT&T Inc., and VMware, Inc.

Analysts downwardly revised their ratings on SIRI, T, and VMW

by 4/23/2014 9:39 AM
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Analysts are weighing in today on streaming music platform Sirius XM Holdings Inc. (NASDAQ:SIRI), telecom specialist AT&T Inc. (NYSE:T), and IT services provider VMware, Inc. (NYSE:VMW). Here's a quick roundup of today's bearish brokerage notes.

  • SIRI -- which is slated to report first-quarter earnings ahead of tomorrow's opening bell -- received a price-target cut to $3.50 from $3.80 at Wunderlich this morning. Since the start of 2014, Sirius XM Holdings Inc. has shed 7.5% to trade at $3.23, and investors have responded by upping the amount of short interest on the stock. During the past two reporting periods, these bearish bets increased by 30%, and now account for 8.3% of SIRI's available float.

  • T reported mixed first-quarter earnings results last night, spurring J.P. Morgan Securities to lower its price target to $34 from $35 this morning. (Meanwhile, Cowen and Company upped its price target by $1.) On the charts, AT&T Inc. has shed 3.9% out of the gate today to trade at $34.89, and is now sitting almost 1% below its year-to-date flat line. As such, the equity may see some downgrades in the near term, which could place additional pressure on the shares. At last check, T maintained nine "strong buy" endorsements, 15 "holds," and just one "strong sell" recommendation.

  • Last night, VMW forecast a narrower operating margin for the current quarter, and in response, a handful of brokerage firms downwardly adjusted their positions on the stock. This includes Barclays and Cowen and Company, which both slashed their price targets by $3 to $114 and $107, respectively. Meanwhile, on Main Street, short interest on VMware, Inc. accounts for roughly 23% of its available float. It would take nearly eight sessions to cover these bearish bets, at the shares' average pace of trading. Furthermore, VMW shares have plunged 10% already this morning to trade at $94.55.

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Analyst Upgrades: Yamana Gold Inc. (USA), The Walt Disney Company, and McDonald's Corporation

Analysts upwardly revised their ratings on AUY, DIS, and MCD

by 4/23/2014 9:26 AM
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Analysts are weighing in today on gold miner Yamana Gold Inc. (USA) (NYSE:AUY), entertainment powerhouse The Walt Disney Company (NYSE:DIS), and fast-food giant McDonald's Corporation (NYSE:MCD). Here's a quick roundup of today's bullish brokerage notes.

  • Davy Research upgraded AUY to "outperform" from "neutral" this morning, despite the shares falling 27.5% from their March 14 intraday high of $10.70 to their current price of $7.76. Elsewhere, other members of the brokerage crew are bullish toward Yamana Gold Inc. (USA), as well, with nearly three-fourths of the covering analysts dishing out "buy" or better endorsements. Furthermore, the average 12-month price target of $11.34 represents expected upside into territory not explored by AUY since September.

  • DIS -- which is up 13.7% from its Feb. 3 year-to-date low of $69.85 to perch at $79.45 -- received a price-target lift to $82 at Morgan Stanley in pre-market trading. Meanwhile, on Main Street, The Walt Disney Company has seen 36.4 million shares sold short, which is equivalent to 5.3 sessions' worth of pent-up buying demand, at the stock's average pace of trading. This means there is a significant amount of sideline cash available, and if DIS continues to make headway on the charts, a rush of short-covering activity could add fuel to the stock's rally.

  • Jefferies weighed in on MCD, following the company's first-quarter earnings announcement yesterday morning. To be specific, the brokerage firm lifted its price target to $95 from $91 last night. (Meanwhile, Morgan Stanley cut its price target by $2.) On the charts, McDonald's Corporation has been a technical laggard, sitting 0.4% lower on a year-over-year basis to trade at $99.32; however, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.65 ranks lower than all comparable readings from the past year, showing short-term speculators are more call-biased toward MCD now than at any other time during the past 12 months.

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Buzz Stocks: BP plc (ADR), Allergan, Inc., JetBlue Airways Corporation, and Toyota Motor Corp (ADR)

Today's stocks to watch in the news include BP, AGN, JBLU, and TM

by 4/23/2014 8:57 AM
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The stock market is little changed ahead of the open, despite earnings reports from a pair of Dow components and several other large-cap firms. In company news, here are some stocks to watch today:

  • BP plc (ADR) (NYSE:BP) has sold its interests in four Alaskan oilfields to privately held energy concern Hilcorp. The transaction includes BP's entire stake in the Endicott and Northstar fields, as well as a 50% interest in both the Liberty and Milne Point fields, which cumulatively account for about 15% of BP's net output on the North Slope, at 19,700 barrels per day. (Reuters)

  • In the face of a hostile takeover attempt from Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Pershing Square Capital Management LP, Allergan, Inc. (NYSE:AGN) has adopted a poison pill. Specifically, the Botox maker announced last night that if any unauthorized investor accumulates more than 10% of AGN's outstanding shares, existing stockholders will be granted the right to purchase additional shares at a discount. (MarketWatch)

  • A decision by JetBlue Airways Corporation (NASDAQ:JBLU) pilots to join the Air Line Pilots Association (ALPA) has ended the carrier's reign as the largest nonunion U.S. airline. According to ALPA, more than 70% of the pilots who participated cast their votes in favor of union representation, after similar efforts failed in 2009 and 2011. (Bloomberg Businessweek)

  • For the third straight quarter, Toyota Motor Corp (ADR) (NYSE:TM) outsold its automaker peers, with sales rising 6% year-over-year to nearly 2.6 million units from January through March. Running neck-and-neck in second place were General Motors Company (NYSE:GM) and Volkswagen, with sales of roughly 2.4 million units each. (Bloomberg Businessweek)

  • Also, The Boeing Company (NYSE:BA), The Procter & Gamble Company (NYSE:PG), Delta Air Lines, Inc. (NYSE:DAL), and Yum! Brands, Inc. (NYSE:YUM) reported quarterly earnings. (CNBC; USA Today; MarketWatch)

  • Finally, Meb Keflezighi, winner of the 2014 Boston Marathon, claims his age cost him a shoe deal with Nike Inc (NYSE:NKE) three years ago. "I'm almost 39 years old and Nike thought I was probably too old," said Keflezighi, who is currently sponsored by Skechers USA Inc (NYSE:SKX). (CNBC)


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