Schaeffer's Trading Floor Blog

Analyst Update: The Clorox Co, Dick's Sporting Goods Inc, and Transocean LTD

Analysts adjusted their ratings on CLX, DKS, and RIG

by 9/23/2014 2:48 PM
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Analysts are weighing in today on household products maker The Clorox Co (NYSE:CLX), retailer Dick's Sporting Goods Inc (NYSE:DKS), and drilling services provider Transocean LTD (NYSE:RIG). Here's a quick look at today's brokerage notes on CLX, DKS, and RIG.

  • CLX received downgrades from both B. Riley, which cut its rating to "sell" from "neutral," and Citigroup, which downgraded it to "neutral" from "buy." Currently, the shares are trading at $95.33, down almost 2% for the session -- but the stock reached an all-time high of $98.31 yesterday after news of the company shuttering operations in Venezuela. Analysts covering The Clorox Co are skewed toward the bearish end of the spectrum, with six "hold" and five "sell" recommendations, compared to just one "buy." However, CLX's Schaeffer's put/call open interest ratio (SOIR) of 0.18 is at an annual low. In other words, short-term options traders have never been more call-heavy during the past year.

  • William Blair weighed in on a number of retailers today, and cut its rating for DKS to "market perform" from "outperform." Dick's Sporting Goods Inc has shed 24.6% since the beginning of the year, and is down 1.5% today to trade at $43.81. On the charts, DKS has been churning between $41 and $47 since suffering an earnings-related bearish gap at the end of May. The lackluster price action may be what has prompted 12 out of 21 covering analysts to dole out "hold" recommendations, compared to nine "buys."

  • RIG had its price target cut by both Credit Suisse (to $30 from $35) and Cowen (to $39 from $43) today, after idling one of its rigs. After hitting a 10-year low of $33.14 earlier, Transocean LTD shares are now down 0.4% to trade at $33.49, bringing its year-to-date loss to 32.2%. Short sellers have taken an interest in RIG, as roughly 21% of the equity's float is sold short. At RIG's average daily trading volume, it would take almost 13 sessions to cover these bearish bets. Option traders are also looking for the negative performance to continue, as the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio is at an annual peak of 2.11, meaning puts have been bought to open over calls more quickly than any other time this year. Likewise, RIG's SOIR of 1.86 is only 3 percentage points away from an annual high, meaning short-term options traders are heavily put-skewed compared to other readings from this year.

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Stocks On the Move: Ascena Retail Group Inc, AstraZeneca plc (ADR), and CarMax, Inc

ASNA, AZN, and KMX are moving sharply in Tuesday's trading

by 9/23/2014 11:44 AM
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Around midday, three of the top market movers are Lane Bryant parent Ascena Retail Group Inc (NASDAQ:ASNA), pharmaceutical issue AstraZeneca plc (ADR) (NYSE:AZN), and used car dealer CarMax, Inc (NYSE:KMX). Here's a quick roundup of how ASNA, AZN, and KMX are performing on the charts so far.

  • ASNA has tumbled 17% to rest at $13.72 -- which also represents a new two-year low -- after announcing a lower-than-expected fiscal fourth-quarter profit and weak forward guidance. The shares also received a price-target cut to $18 from $22 at Piper Jaffray. Taking a step back, Ascena Retail Group Inc has shed more than 35% of its value in 2014. Option traders have responded by upping the bearish ante at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The equity's 50-day put/call volume ratio across this trio of exchanges is 11.77 -- just 4 percentage points from an annual high.

  • AZN is down 3%, as the U.S. Treasury's crackdown on tax inversions may stop Pfizer Inc. (NYSE:PFE) from placing another takeover bid on its smaller rival. Despite today's losses, AstraZeneca plc (ADR) remains up 22% year-to-date to trade at $72.47. In options land, the stock's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.40 registers in the bearishly skewed 83rd percentile of its 12-month range.

  • KMX has given back 9% today to hover near $48.07, thanks to a poorly received fiscal second-quarter earnings report. With this move lower, the equity is barely in the green year-to-date, up just 2.1%. Meanwhile, bearish betting on CarMax Inc has picked up during the past two weeks. The security's 10-day put/call volume ratio of 2.47 at the ISE, CBOE, and PHLX stands just 9 percentage points shy of a 52-week peak.

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Analyst Downgrades: Pandora Media Inc, Bed Bath & Beyond Inc., and AutoZone, Inc.

Analysts downwardly revised their ratings on P, BBBY, and AZO

by 9/23/2014 9:27 AM
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Analysts are weighing in today on streaming music concern Pandora Media Inc (NYSE:P), home goods retailer Bed Bath & Beyond Inc. (NASDAQ:BBBY), and car parts specialist AutoZone, Inc. (NYSE:AZO). Here's a quick roundup of today's bearish brokerage notes on P, BBBY, and AZO.

  • Since early July, P has been churning between $24 and $28, with the equity closing last night's session near the lower end of this range, at $25.43. This lackluster price action may have been what prompted Topeka to start the stock with a tepid "hold" rating. Overall, both analysts and option traders have displayed optimism toward Pandora Media Inc, which is off 4.4% year-to-date. Specifically, 73% of covering analysts maintain a "buy" or better rating. Elsewhere, the security's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.23 ranks in the 98th percentile of its annual range. Should the shares continue to struggle, an unwinding of this bullish sentiment could apply additional pressure to P.

  • William Blair weighed in on a number of retailers this morning, and for BBBY, the brokerage firm cut its outlook to "market perform" from "outperform." On the charts, the equity has shed nearly 21% in 2014 to trade at $63.69, and could be poised to extend these losses when Bed Bath & Beyond Inc. unveils its fiscal second-quarter earnings report tonight. In fact, following its last turn in the earnings confessional in late June, the stock shed 7.2% in the subsequent session. Additionally, with six out of 20 analysts still maintaining a "strong buy" recommendation, the security could be poised for another round of downgrades, should its earnings once again disappoint.

  • AZO, meanwhile, offered up a poorly received earnings report yesterday morning, sending the shares down 4% to $505.38 -- their lowest daily close since Feb. 5 -- and this morning, AutoZone, Inc. received price-target cuts from Deutsche Bank (to $500 from $520), J.P. Morgan Securities (to $562 from $590), and Raymond James (to $600 from $620). On the options front, short-term speculators have shown a distinct preference for AZO puts over calls of late. Specifically, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.38 ranks just 2 percentage points from an annual peak, meaning traders have rarely been more put-skewed toward options set to expire in the next three months.

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Buzz Stocks: Allergan, Inc., Koninklijke Philips NV (ADR), and Starbucks Corporation

Today's stocks to watch in the news include AGN, PHG, and SBUX

by 9/23/2014 9:19 AM
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The major market indexes are sitting lower ahead of the bell, as investors digest news that the U.S. and several Middle Eastern allies carried out airstrikes against the Islamic State last night. In company news, today's stocks to watch include Botox maker Allergan, Inc. (NYSE:AGN), diversified healthcare and tech firm Koninklijke Philips NV (ADR) (NYSE:PHG), and coffee king Starbucks Corporation (NASDAQ:SBUX).

  • AGN is reportedly attempting to acquire Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP), though an agreement is not imminent. If Allergan, Inc. can pull the deal off, it would likely derail a hostile $53 billion bid from Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Pershing Square Capital Management. All of this takeover talk has had a positive effect on AGN shares, which are up nearly 50% year-to-date to rest at $166.12. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have shown a strong preference of late for long puts over calls -- per the stock's 50-day put/call volume ratio of 0.90, which ranks in the 80th percentile of its annual range. However, given AGN's technical tenacity, some of these bearish bets may have been at the hands of shareholders hedging against a pullback.

  • PHG announced plans to split into two companies. One will focus on health care and consumer technology -- dubbed HealthTech -- and the other will specialize in LED components and automotive lighting. The news comes amid a rough year for shares of Koninklijke Philips NV (ADR), which are down 18.5% in 2014 to last night's perch at $30.14. Accordingly, options traders have been scooping up long puts over calls at a faster-than-usual clip in recent months, per the equity's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.24 -- which is higher than more than two-thirds of all other readings from the past year.

  • Finally, SBUX is testing a stout-flavored latte, which contains whipped cream, dark caramel drizzle, and "chocolatey stout flavored sauce," among other ingredients. However, the beverage is non-alcoholic. Technically speaking, Starbucks Corporation is sitting about 5% below breakeven on a year-to-date basis to trade at $74.60, yet remains beloved on the Street. In fact, 16 out of 20 covering analysts have doled out "buy" or better opinions on the shares, and the equity's consensus 12-month price target resides in record-high territory, at $90.32. If SBUX continues to struggle on the charts, a round of downgrades and/or price-target reductions could pressure the stock lower.

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Analyst Upgrades: Canadian Solar Inc., EMC Corporation, and FedEx Corporation

Analysts upwardly revised their ratings on CSIQ, EMC, and FDX

by 9/23/2014 9:11 AM
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Analysts are weighing in today on alternative energy concern Canadian Solar Inc. (NASDAQ:CSIQ), tech issue EMC Corporation (NYSE:EMC), and package delivery giant FedEx Corporation (NYSE:FDX). Here's a quick roundup of today's bullish brokerage notes on CSIQ, EMC, and FDX.

  • Canaccord Genuity raised its price target on CSIQ to $48 from $44, representing expected upside of 27.7% to last night's closing price of $37.60. The brokerage firm also maintained its "buy" rating on the equity, echoing the opinion of all five analysts covering the stock. Year-to-date, shares of Canadian Solar Inc. have tacked on 26.1%, yet CSIQ has recently run headlong into congestion near $40. Option traders have switched sides in recent weeks, and are betting on the security to continue to struggle near this round-number mark. Specifically, CSIQ's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.51 ranks in the bearishly skewed 69th annual percentile.

  • It was a big day for EMC on Monday, which rallied to a fresh 13-year peak of $30.18 before settling the session 0.5% higher at $29.68, amid a bevy of M&A-related rumors. Against this backdrop, Macquarie upped its price target for the shares to $32 from $28, although kept its tepid "neutral" rating. Overall, most analysts maintain a bullish outlook on EMC Corporation -- which is up 18% this year -- with more than 83% of covering brokerage firms maintaining a "buy" or "strong buy" recommendation, and not a single one doling out a "sell."

  • Ahead of FDX's annual shareholder meeting -- slated for next Monday morning -- Nomura boosted its target price for the shares to $155 from $145. Since taking a sharp bounce off its 40-day moving average in mid-June, FDX has added more than 14% to trade at $157.86, and just last Wednesday, hit its highest mark on record following a well-received earnings report. Elsewhere, FedEx Corporation's Schaeffer's put/call open interest ratio (SOIR) of 0.72 ranks lower than 92% of similar readings taken in the past year, meaning short-term speculators have rarely been as call-skewed toward the stock as they are now.

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