Schaeffer's Outside the Box Blog
Stocks quoted in this article:

The 86th annual Academy Awards are this Sunday, and no category merits more attention than Best Picture -- though that doesn't necessarily translate into box office gold. In fact, the past 10 Best Picture winners raked in just $310 million, on average, compared to $1.3 billion for the highest-grossing films of the past 10 years.

Among the nine Best Picture candidates this year are Gravity, American Hustle, Captain Phillips, and Her, while Frozen is the clear front-runner for the Animated Feature Film award. Against this backdrop, we're going to have a pre-Oscar party and take a look at some of the studios in the red-carpet spotlight.

Warner Bros. -- a subsidiary of Time Warner Inc (NYSE:TWX) -- is tied for the most nominations overall, at 21. Most notably, the studio produced both Gravity and Her, which scored 10 and five nominations, respectively.

On the charts, TWX has underperformed the broader S&P 500 Index (SPX) by more than 7 percentage points during the past two months, and was last seen doing battle with its formerly supportive 10-week moving average. Furthermore, this trendline just made a bearish cross with its 20-week counterpart -- often a signal of intermediate-term weakness.

Off the charts, the speculative crowd loves Time Warner Inc (NYSE:TWX). On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), options traders have bought to open almost eight TWX calls for every put during the past two weeks. Furthermore, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 7.77 stands in the 87th percentile of its annual range, hinting at a healthier-than-usual appetite for bullish bets over bearish. In the same vein, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.28 sits 6 percentage points from an annual low, suggesting short-term speculators have rarely been more call-heavy during the past year.

Meanwhile, two-thirds of the analysts following TWX deem it worthy of a "strong buy" opinion, with not a single "sell" or worse rating in sight. Likewise, the consensus 12-month price target of $74.30 not only represents a multi-year high for TWX, but also a premium of 14.1% to the stock's current perch at $65.11. Should TWX steepen its year-to-date slide of 6.6%, a mass exodus of bulls in the options pits, or a wave of bearish brokerage attention, could translate into contrarian headwinds for the shares.

Moving on, Sony Pictures Entertainment -- a subsidiary of Sony Corporation (ADR) (NYSE:SNE) -- was the muscle behind American Hustle and Captain Phillips, which earned 10 and six nominations, respectively. Overall, the studio tied Warner Bros. with 21 total nominations. Technically speaking, SNE has underperformed the SPX by more than 7 percentage points during the past three months, and is struggling to surmount its 20-week moving average, which hasn't been toppled on a weekly closing basis since late September.

Like TWX, SNE remains beloved on the Street, despite its technical troubles of late. The equity's SOIR of 0.71 stands higher than just 39% of all other readings from the past year, implying that short-term calls are favored by a wider-than-usual margin right now, compared to their put counterparts.

Meanwhile, all three of the analysts covering Sony Corporation (ADR) (NYSE:SNE) maintain "strong buy" opinions, and the average 12-month price target of $21.51 represents expected upside of 22.8% from SNE's current price of $17.51. Should the security retreat in the face of trendline resistance, an unwinding of optimism among option traders and/or analysts could exacerbate selling pressure on the shares.

Finally, The Walt Disney Company (NYSE:DIS) has two pictures in the Animated Feature Film category: aforementioned front-runner Frozen -- also nominated for Original Song, with "Let It Go" -- and The Wind Rises, about a Japanese boy in the 1920s and '30s.

DIS has advanced roughly 47% over the past year, and tagged a record high of $81.59 on Monday, but has since pulled back to the $80.10 vicinity. Meanwhile, the equity sports a SOIR of 0.68 -- in the 12th annual percentile -- and harbors zero "sell" or worse ratings, compared to 13 "buy" or better suggestions and nine "holds."

However, that's not to say the bullish bandwagon is at capacity. The consensus 12-month price target among analysts rests at $81.64, just a hop, skip, and jump from DIS' current price. Just this morning, RBC lifted its price target on The Walt Disney Company (NYSE:DIS) to $89 from $75, and underscored its "outperform" endorsement. Should more analysts follow suit, DIS could be exploring new highs again in no time.


permanent link
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.