Schaeffer's Trading Floor Blog
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U.S. stocks are notably higher this afternoon, as Wall Street applauds encouraging housing data and a relatively tame inflation report. Meanwhile, among the equities in focus are home health care provider Almost Family Inc (NASDAQ:AFAM), discount retailer Family Dollar Stores, Inc. (NYSE:FDO), and smartphone game maker China Mobile Games & Entertainment Group Ltd (NASDAQ:CMGE), which have all attracted analyst attention.

  • AFAM is flirting with a 3% lead at $27.78, after Jefferies upgraded the stock to "buy" from "hold," and hiked its price target by $10 to $33. In addition, the brokerage firm said likely M&A activity could bolster estimated per-share 2015 earnings by 50%. Bullish analyst attention is relatively rare for AFAM, with just one out of six brokerage firms doling out a "strong buy." Sentiment isn't much better outside of the analyst arena, as short interest represents six sessions' worth of pent-up buying demand, at Almost Family Inc's average pace of trading. The stock has outperformed the broader S&P 500 Index (SPX) by more than 23 percentage points during the past two months. Should AFAM extend its uptrend, a short-squeeze situation or more upgrades could add fuel to the equity's fire.

  • FDO is fractionally lower at $79.77, after earlier notching a fresh record peak of $80.10. Activist investor Carl Icahn last night critiqued FDO for "wasting more than $300 million" in breakup fees to Dollar Tree, Inc. (NASDAQ:DLTR), and said had he not fended off CEO Howard Levine's attempts to "neutralize" him, FDO may not have received a competing bid from Dollar General Corp (NYSE:DG). The board drama, as well as little motivation for the stock to go beyond DG's offer of $78.50, has kept Family Dollar Stores, Inc. shares in check today, despite an upgrade to "equal weight" from "underweight" and a price-target hike to $82 from $50 at Barclays.

  • Finally, CMGE is down 1.5% at $14.97 -- erasing yesterday's post-earnings gains -- after Barclays cut its price target to $31 from $34. The shares of China Mobile Games & Entertainment Group Ltd have surrendered more than 40% in 2014, and more negative analyst notes could be on the way. All three brokerage firms following CMGE consider the stock a "buy," and the consensus 12-month price target of $28.33 represents expected upside of nearly 100% from the security's current perch.

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Stocks On the Move: Skilled Healthcare Group, Inc., DepoMed Inc., and Elizabeth Arden, Inc.

SKH, DEPO, and RDEN are moving sharply in Tuesday's trading

by 8/19/2014 1:21 PM
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Heading into the final hours of today's trading, three of the biggest market movers are assisted-living issue Skilled Healthcare Group, Inc. (NYSE:SKH), pharmaceutical stock DepoMed Inc. (NASDAQ:DEPO), and cosmetics concern Elizabeth Arden, Inc. (NASDAQ:RDEN). Here's a quick roundup of how SKH, DEPO, and RDEN are performing on the charts so far.

  • SKH is soaring today in the wake of some well-received M&A news -- up 20.7% at $7.42, after earlier tagging a fresh 52-week peak of $7.90. Thanks to this bull gap, shares of SKH are now sitting more than 54% above where they started the year. Heading into the session, sentiment surrounding Skilled Healthcare Group, Inc. was tilted toward the bearish side. Short interest, for example, accounts for a healthy 4.2% of the stock's available float, and would take more than nine sessions to cover, at SKH's average daily pace of trading. Elsewhere, the security's Schaeffer's put/call open interest (SOIR) of 0.81 ranks in the 93rd percentile of its annual range, meaning short-term option speculators have rarely been more put-heavy toward SKH.

  • A favorable court ruling has sent shares of DEPO nearly 9% higher this afternoon. Longer term, the equity has more than doubled on a year-over-year basis, but has recently run into resistance around the $15 mark. In fact, the stock peaked at $15.11 earlier today, before easing back to its current perch at $14.36. In the near term, this area could continue to contain DepoMed Inc.'s rally attempts, as peak call open interest in the front-month series resides at the September 15 strike. Simply stated, this heavy accumulation of call open interest could translate into options-related resistance, as the hedges related to these bets unwind ahead of expiration on Friday, Sept. 19.

  • RDEN is having a terrible day both on and off the charts. Specifically, the stock has plunged 23.8% -- and earlier bottomed at a four-year low of $14.65 -- after disappointing sales from a number of its high-profile-celebrity perfumes caused the company to post its biggest quarterly loss on record. Today's dreary price action is just more of the same for Elizabeth Arden, Inc., which is down almost 58% year-to-date -- and additional losses could be on the horizon. At present, the average 12-month price target for RDEN of $26.60 stands at a steep 78% premium to the stock's current perch at $14.94, leaving the door wide open for a round of price-target cuts in the face of the equity's technical struggles.

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Analyst Downgrades: SolarCity Corp, El Pollo LoCo Holdings Inc, and Sprint Corporation

Analysts downwardly revised their ratings on SCTY, LOCO, and S

by 8/19/2014 9:25 AM
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Analysts are weighing in today on alternative energy issue SolarCity Corp (NASDAQ:SCTY), restaurant operator El Pollo LoCo Holdings Inc (NASDAQ:LOCO), and telecom titan Sprint Corporation (NYSE:S). Here's a quick roundup of today's bearish brokerage notes on SCTY, LOCO, and S.

  • SCTY -- which settled Monday at $72.05 -- is pointed 1% lower ahead of the bell, after Baird downgraded the stock to "neutral" from "outperform." The stock has outperformed the broader S&P 500 Index (SPX) by more than 33 percentage points during the past three months, yet option traders have been purchasing puts over calls at a near-annual-high clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.81 stands higher than 94% of all other readings from the past year. However, with SolarCity Corp sitting on a year-to-date gain of 26.8%, it's possible the puts are being purchased by shareholders looking to lock in gains.

  • LOCO is bracing for a 6% drop out of the gate today, after settling at $33.20 on Monday. Analysts are waxing pessimistic on the Wall Street freshman, with Morgan Stanley initiating coverage with an "underweight" rating, and Baird offering a "neutral" rating and tepid $32 price target. Likewise, Stifel and Jefferies both launched coverage with "hold" ratings, and the latter's price target of $30 represents a discount to El Pollo LoCo Holdings Inc's current price. (William Blair was the black sheep, starting LOCO at "outperform.") Since its late-July IPO, the stock has advanced nearly 75%.

  • Finally, S is flirting with breakeven at $5.62, despite a price-target cut to $4 from $7 at Jefferies. Furthermore, the brokerage firm underscored its "underperform" rating on S, which has shed 47.7% in 2014, primarily in the wake of its abandoned bid for T-Mobile US Inc (NYSE:TMUS). Helping to offset today's negative analyst attention, however, is Sprint Corporation's new pricing plan, which goes into effect on Friday.

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Stocks are poised to continue this week's upward momentum, thanks to a solid quarterly earnings report from blue chip The Home Depot, Inc. (NYSE:HD). Elsewhere on the corporate front, here are some additional names to watch today.

  • Australia-based BHP Billiton Limited (ADR) (NYSE:BHP) plans to spin off several of its assets into a new company, which will allow BHP to cut costs and improve productivity in its remaining operations. The spinoff is still awaiting regulatory and shareholder approval. (The New York Times)

  • Microsoft Corporation's (NASDAQ:MSFT) cloud-computing service Azure experienced a roughly five-hour-long global outage on Monday. This is the second time this month Azure operations were disrupted, with the outage affecting major components across multiple data centers. (Bloomberg)

  • Julian R. Geiger will rejoin Aeropostale Inc (NYSE:ARO) as CEO, effective immediately. Geiger previously served as chairman and CEO of ARO from 1998-2010, and will be replacing Thomas Johnson. The company also updated its second-quarter outlook, with full results due out after Thursday's close. (AP, via ABC News)

  • Skilled Healthcare Group, Inc. (NYSE:SKH) announced yesterday it will combine forces with Genesis HealthCare -- an all-stock transaction that was unanimously approved by both boards. The merger is expected to close in early 2015, with collective operations assuming the Genesis Healthcare name. (MarketWatch)

  • As widely expected, Sprint Corporation (NYSE:S) on Monday unveiled the details of its new lower-price plan, in an attempt to compete with other telecom concerns such as AT&T Inc (NYSE:T) and T-Mobile US Inc (NYSE:TMUS). Following the announcement, Sprint's CEO Marcelo Claure said, "We want customers to think twice before choosing another wireless carrier." (USA Today)

  • On the earnings front, HD, Dick's Sporting Goods Inc (NYSE:DKS), Medtronic, Inc. (NYSE:MDT), and Urban Outfitters, Inc. (NASDAQ:URBN) all reported. (USA Today; MSN; MarketWatch)

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Analyst Upgrades: The Home Depot, Inc., Dollar General Corp., and Urban Outfitters, Inc.

Analysts upwardly revised their ratings on HD, DG, and URBN

by 8/19/2014 8:58 AM
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Analysts are weighing in today on blue chip The Home Depot, Inc. (NYSE:HD), discount retailer Dollar General Corp. (NYSE:DG), and apparel issue Urban Outfitters, Inc. (NASDAQ:URBN), which all stepped into the earnings confessional last night. Here's a quick roundup of today's bullish brokerage notes on HD, DG, and URBN.

  • HD is leading the Dow higher ahead of the bell, with the stock poised to add more than 3% on the heels of a solid earnings showing. The firm also hiked its full-year earnings outlook, and said it plans to buy back $3.5 billion shares by the end of the fiscal year. Against this backdrop, Credit Suisse lifted its price target on The Home Depot, Inc. to $95 from $87, and underscored its "outperform" rating. Most analysts were already optimistic toward HD ahead of earnings, with the stock boasting 13 "buy" or better endorsements, compared to six "holds" and not one "sell." HD settled at $83.59 on Monday.

  • DG gapped 11.6% higher to land at $64.14 on Monday -- its best closing price on record -- after making an all-cash bid for Family Dollar Stores, Inc. (NYSE:FDO). Specifically, DG's per-share offer of $78.50 topped that of rival Dollar Tree, Inc. (NASDAQ:DLTR), which had bid $74.50 per share for FDO. Dollar General Corp. is looking to add to its lead today, with the shares pointed modestly higher on the heels of a price-target boost to $73 from $69 at Deutsche Bank, which also reiterated its "buy" rating on DG. In light of the stock's bull gap, though, its 14-day Relative Strength Index (RSI) now sits at a lofty 76 -- in overbought territory.

  • Finally, URBN -- which finished at $36.92 on Monday -- is pointed 1% higher in pre-market action, after the firm reported stronger-than-expected fiscal second-quarter sales. As such, Baird upgraded URBN to "outperform" from "neutral," while Sterne Agee upped its price target to $38 from $37. (Wedbush, meanwhile, shaved its price target by $1 to $36.) Urban Outfitters, Inc.'s expected advance should put the stock in the black on a year-to-date basis, and could spook a few bears into hitting the exits. Short interest on URBN rocketed 41% higher during the past two reporting periods, and now represents a week's worth of pent-up buying demand, at the equity's average pace of trading.

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