Schaeffer's Trading Floor Blog

The Week Ahead: Retail in the Spotlight

Next week's calendar features retail sales, as well as earnings from Aeropostale Inc (ARO) and rookie Shake Shack Inc (SHAK)

by 3/5/2015 3:30 PM
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It's all about retail next week, as a relatively light economic docket features the release of retail sales data, the producer price index (PPI), and the Thomson Reuters/University of Michigan consumer sentiment index. Among the retailers reporting earnings are Urban Outfitters, Inc. (NASDAQ:URBN), Men's Wearhouse Inc (NYSE:MW), Aeropostale Inc (NYSE:ARO), and Express, Inc. (NYSE:EXPR), while fast-casual restaurant Shake Shack Inc (NYSE:SHAK) will make its earnings debut.

Below is a brief list of some key market events scheduled for the upcoming week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Monday

Tuesday

  • The Job Openings and Labor Turnover Survey (JOLTS) report will headline Tuesday's economic calendar. For earnings, Barnes & Noble (BKS), FuelCell Energy (FCEL), and VeriFone (PAY) will report.

Wednesday

  • Weekly crude inventories and the Treasury budget will be released on Wednesday. Express (EXPR), Krispy Kreme Doughnuts (KKD), Men's Wearhouse (MW), Shake Shack (SHAK), and Tahoe Resources (TAHO) will flex their earnings muscles.

Thursday

  • Weekly jobless claims, retail sales, import and export prices, and wholesale inventories are all on Thursday's docket. On the earnings front, Aeropostale (ARO), Dollar General (DG), El Pollo Loco (LOCO), JA Solar (JASO), and The Children's Place (PLCE) will present.

Friday

  • Closing out the week's economic news is the producer price index (PPI), along with the Thomson Reuters/University of Michigan consumer sentiment index. Ann Inc (ANN) will round out the earnings docket.

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Earnings Preview: Foot Locker, Inc., Qihoo 360 Technology Co. Ltd., and Staples, Inc.

Analyzing recent option activity on Foot Locker, Inc. (FL), Qihoo 360 Technology Co Ltd (QIHU), and Staples, Inc. (SPLS)

by 3/5/2015 1:35 PM
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Among the stocks gearing up to report earnings are footwear retailer Foot Locker, Inc. (NYSE:FL), Chinese Internet provider Qihoo 360 Technology Co Ltd (NYSE:QIHU), and office supplies vendor Staples, Inc. (NASDAQ:SPLS). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on FL, QIHU, and SPLS.

  • Over the past twelve months, FL has advanced on the charts at a decent clip, with the shares riding their 10-month moving average to an impressive 32.5% year-over-year gain. However, since notching an all-time high of $59.19 on Nov. 21, the shares have shed about 4.3% to hit $56.63, including a 1.5% dip today. Accordingly, bearish sentiment in Foot Locker, Inc.'s options pits is ramping up ahead of tomorrow morning's earnings release. Drilling down, FL's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.62 sits in the 70th percentile of its annual range. Meanwhile, in the session immediately following its last four earnings reports, FL has gained an average of 2.3%, including an 8.8% boost last March. Traders are paying bottom-of-the-barrel prices for their short-term bets on the equity, as its Schaeffer's Volatility Index (SVI) of 43% sits just 5 percentage points away from the lowest similar reading taken over the past year.

  • On the other hand, QIHU has been a technical laggard, with the shares down about 18.8% year-to-date to hit $46.52. Not surprisingly, sentiment in the options pits has hit a pessimistic peak ahead of Qihoo 360 Technology Co Ltd's upcoming earnings release, scheduled for Monday night. Specifically, QIHU's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.93 is the highest such reading taken over the past year. However, in the session immediately following its last eight earnings reports, QIHU has advanced an average of 0.4%. Near-term options on the security are currently available for above-average prices, as its SVI of 69% sits in the 74th percentile of its annual range.

  • 2015 has been an interesting year for SPLS so far, as news of a merger with Office Depot Inc (NASDAQ:ODP) propelled the shares to a three-year high of $19.40 on Feb. 3. Since then, the shares have retreated 14.6% to hit $16.56, and yesterday activist investor Starboard Value LP requested that Staples, Inc. "improve" the makeup of its board in order to finish its acquisition of ODP. Sentiment in the stock's options pits is bearish, as SPLS' 10-day ISE/CBOE/PHLX put/call volume ratio of 4.52 sits in the 95th percentile of its annual range. Traders hoping for additional downside after tomorrow morning's earnings release have history on their side -- in the session immediately following its last four earnings reports, SPLS has shed an average of 5.3%. Short-term options for the stock are currently available for historically fair prices, as its SVI of 38% sits in the 43rd percentile of all similar readings taken over the past year.

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Analyst Update: Bristol-Myers Squibb Company, Green Dot Corporation, and Sirius XM Holdings, Inc.

Analysts adjusted their ratings on Bristol-Myers Squibb Co (BMY), Green Dot Corporation (GDOT), and Sirius XM Holdings Inc. (SIRI)

by 3/5/2015 12:11 PM
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Analysts are weighing in today on pharmaceutical firm Bristol-Myers Squibb Co (NYSE:BMY), prepaid debit card provider Green Dot Corporation (NYSE:GDOT), and satellite radio concern Sirius XM Holdings Inc. (NASDAQ:SIRI). Here's a quick look at today's brokerage notes on BMY, GDOT, and SIRI.

  • Yesterday, the Food and Drug Administration (FDA) approved BMY's lung cancer drug Opdivo. Additionally, the company announced a new licensing agreement with Danish biotech firm Bavarian Nordic. These two fundamental developments may have been what prompted J.P. Morgan Securities and Credit Suisse to hike their price targets on the stock to $75 and $70, respectively. Additionally, both firms reiterated "overweight" or equivalent ratings. So far today, the shares of Bristol-Myers Squibb Co have tacked on 0.4% to trade at $65.96, and earlier hit a 14-year high of $67.18. Year-to-date, the equity is up about 11.8%, however, the brokerage bunch is still divided on BMY, as nearly half of covering analysts rate the stock a "hold" or worse. What's more, BMY's consensus 12-month price target of $64.31 sits below current trading levels, leaving the door wide open for another round of bullish analyst attention to provide tailwinds.

  • This morning, Credit Suisse upwardly revised its outlook on GDOT, raising its price target on the security by $6 to $25 and its rating to "outperform" from "neutral." What's more, the brokerage firm named GDOT its top small-cap pick for 2015, citing strong earnings expectations. In response, the shares are up 7.1% today to reach $16.98. However, the stock has been a technical underperformer lately, as the shares are down 17.1% year-to-date. Not surprisingly, short sellers have been active on the stock, as over 11% of Green Dot Corporation's available float is sold short. Meanwhile, it would take these bearish investors nearly four sessions to cover their bets, at average daily trading volumes.

  • Deutsche Bank initiated coverage on SIRI this morning, doling out a $4 price target and a tepid "hold" rating. Looking back, the shares are up about 12% year-to-date, despite a 0.5% loss so far today that has SIRI churning near $3.92. Furthermore, the shares notched an annual high of $4.04 on Tuesday -- good news for this recent batch of option bulls. In fact, sentiment in Sirius XM Holdings Inc.'s options pits is decidedly bullish, as its 10-day ISE/CBOE/PHLX call/put volume ratio of 24.14 sits just 10 percentage points away from an annual peak. Simply stated, calls have been bought to open at a near-annual-high clip over the past two weeks.

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Analyst Upgrades: Celladon Corporation, American Eagle Outfitters, and Dunkin' Brands Group, Inc.

Analysts upwardly revised their ratings on Celladon Corp (CLDN), American Eagle Outfitters (AEO), and Dunkin Brands Group Inc (DNKN)

by 3/5/2015 9:28 AM
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Analysts are weighing in today on biotechnology firm Celladon Corp (NASDAQ:CLDN), retailer American Eagle Outfitters (NYSE:AEO), and quick-service restaurateur Dunkin Brands Group Inc (NASDAQ:DNKN). Here's a quick roundup of today's bullish brokerage notes on CLDN, AEO, and DNKN.

  • CLDN is poised to pop more than 11% out of the gate -- and to a new record peak -- after Roth Capital started coverage on the shares with a "buy" rating and a $70 price target, representing expected upside of 256% to last night's close at $19.64. On the charts, the equity has performed well, tacking on 73.8% over the past 52 weeks. Meanwhile, in the options pits, traders have shown a preference for calls over puts. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 1.56 calls for each put over the past month. Echoing this call-skewed bias is Celladon Corp's Schaeffer's put/call open interest ratio (SOIR) of 0.54, which suggests call open interest nearly doubles put open interest among options set to expire in three months or less.

  • It was a big day for AEO yesterday, which hit a fresh annual high of $16.36, before settling up 7.7% at $15.96 -- thanks to a well-received earnings report. Against this backdrop, no fewer than 10 brokerage firms weighed in on the stock overnight. Stifel, for example, raised its rating to "buy" from "hold," saying "AEO was able to drive sales while successfully reducing promotions. Evidence to us that the customer is responding favorably to the company's improved merchandise." Elsewhere, SunTrust Robinson boosted its price target by $2 from $17, explaining the firm's quarterly earnings report is proof "American Eagle's turnaround is tangible." Should the shares extend this momentum, another round of bullish brokerage notes could come down the pike. Currently, 61% of analysts maintain a "hold" or worse suggestion toward American Eagle Outfitters, while the average 12-month price target of $16.21 is within a chip-shot of the equity's present perch.

  • DNKN is 2% higher in electronic trading, after Goldman Sachs upped its rating on the shares to "buy" from "neutral," and raised its price target by $7 to $54 -- representing a 19.6% premium to last night's close at $45.14, as well as territory yet to be charted. Year-to-date, the shares have added 5.8%, but not everyone is convinced they can sustain this uptrend. Short interest surged over the latest reporting period, and now accounts for a healthy 10.3% of the equity's available float. What's more, at Dunkin Brands Group Inc's average daily pace of trading, it would take more than seven sessions to cover these shorted shares. Meanwhile, the company will make an appearance today at the UBS Global Consumer Conference.

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Buzz Stocks: AbbVie Inc., The Macerich Company, and Canadian Solar Inc.

Today's stocks to watch in the news include AbbVie Inc (ABBV), Macerich Co (MAC), and Canadian Solar Inc. (CSIQ)

by 3/5/2015 9:22 AM
Stocks quoted in this article:

U.S. stocks are primed to run higher out of the gate, following some encouraging interest rate developments from across the pond. In company news, today's stocks to watch include pharmaceutical firm AbbVie Inc (NYSE:ABBV), real estate investment trust (REIT) Macerich Co (NYSE:MAC), and alternative energy concern Canadian Solar Inc. (NASDAQ:CSIQ).

  • ABBV has agreed to acquire Pharmacyclics, Inc. (NASDAQ:PCYC), maker of blood-cancer drug Imbruvica, for $21 billion, or $261.25 per share -- a 13.4% premium to PCYC's closing price on Wednesday. AbbVie Inc CEO Richard Gonzalez called the purchase a "strategically compelling opportunity" that will "add enormous value to AbbVie." PCYC was also reportedly being pursued by Johnson & Johnson (NYSE:JNJ) and others. On the charts, ABBV has struggled, losing 7.9% in 2015 to trade at $60.27, and is poised to drop nearly 5% out of the gate. Accordingly, option bears have honed in on the stock, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). ABBV's 50-day put/call volume ratio across this trio of exchanges is 0.62, which rests just 14 percentage points from a 12-month peak.

  • MAC is being courted by Simon Property Group Inc (NYSE:SPG), according to The Wall Street Journal. While sources say a formal offer has yet to be tendered, Macerich Co has already discussed potential takeover defense strategies, the Journal said. Technically speaking, MAC's momentum has slowed in 2015, with the shares up just 0.5% at $83.80 -- though that could change today, with the stock pointed 2% higher in premarket trading. Meanwhile, short sellers have been piling on. During the latest reporting period, short interest on MAC soared almost 141% to roughly 6.4 million shares -- which would take seven sessions to cover, at typical daily trading levels.

  • Finally, CSIQ posted better-than-expected fourth-quarter earnings this morning, as the company's net profit more than tripled year-over-year. CEO Shawn Qu also announced potential plans to list the firm's power plant-building unit in a yield co. As such, the shares are up 5% ahead of the open, poised to add to the equity's year-to-date advance of 24.8%. Meanwhile, the brokerage bunch has jumped on Canadian Solar Inc.'s bullish bandwagon, with 100% of covering analysts issuing a "buy" or better recommendation. What's more, CSIQ's average 12-month price target of $43.33 stands in territory not charted in nearly a year, and represents a 43.6% premium to Wednesday's close at $30.18. However, such optimism isn't reflected in the stock's options pits.

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