Schaeffer's Trading Floor Blog

Earnings on Deck: General Electric Company, Advanced Micro Devices, Inc., and Chipotle Mexican Grill, Inc.

Previewing GE, AMD, and CMG ahead of their upcoming earnings reports

by 4/16/2014 1:30 PM
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Earnings season is heating up, with a pair of tech-sector earnings helping to light up the charts today. Still slated to report this week are blue-chip conglomerate General Electric Company (NYSE:GE), semiconductor concern Advanced Micro Devices, Inc. (NYSE:AMD), and restaurateur Chipotle Mexican Grill, Inc. (NYSE:CMG). Here's a quick look at these names as earnings approach.

  • General Electric Company (NYSE:GE) will report first-quarter earnings before the open tomorrow. The firm has matched or topped analysts' per-share profit predictions in each of the past eight quarters, yet averages a one-week post-earnings gain of just 0.3%. Ahead of tomorrow's report, options players have picked up GE puts over calls at a slightly accelerated clip, as the stock's 10-day put/call volume ratio of 0.32 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 61% of all comparable readings from the past year. In today's action, however, calls are the options of choice, with intraday volume running at a 52% mark-up to GE's average pace. Digging deeper, it seems eleventh-hour bulls are buying to open the April 26 and 26.50 calls, which expire at the close tomorrow. At last check, GE is 0.8% higher at $26.02.

  • Advanced Micro Devices, Inc. (NYSE:AMD) will unveil its first-quarter figures after the close tomorrow. The company has topped the Street's bottom-line estimates in six of the past eight quarters, yet averages a hefty loss of 10% in the week after reporting. Despite their limited profit potential -- AMD is trading at $3.76, a 0.9% drop -- puts are picking up steam on the long side. The security's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.39 sits just 13 percentage points from an annual high. Echoing this, intraday put volume is running at twice the norm today, with potential buy-to-open activity spotted at the May 3 strike. Elsewhere, short interest accounts for more than 20% of the stock's total available float, representing six sessions' worth of pent-up buying demand, at AMD's average daily trading volume.

  • Finally, Chipotle Mexican Grill, Inc. (NYSE:CMG) is slated to report first-quarter earnings ahead of the bell tomorrow. The firm has matched or exceeded analysts' per-share predictions in five of the past eight quarters, averaging a one-week post-earnings gain of 1%. As such, CMG calls have grown increasingly popular during the past couple of weeks, as the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 0.89 registers in the 82nd percentile of its annual range. Plus, the equity's Schaeffer's put/call open interest ratio (SOIR) stands at a 12-month low of 0.91, implying that short-term options players haven't been more call-skewed during the past year. In today's session, CMG is 1.8% higher at $549.99, and call volume is running at twice the normal clip.

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Midday Market Stats: Dow Jones Industrial Average Poised for Third Straight Win

St. Jude Medical, Inc. sees post-earnings call trading, while Nimble Storage Inc enjoys an upgrade

by 4/16/2014 12:04 PM
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The Dow Jones Industrial Average (INDEXDJX:.DJI) jumped triple digits out of the gate, and was last seen 106 points, or 0.7%, higher at 16,368.53. A pair of solid tech-sector earnings reports from Intel Corporation (NASDAQ:INTC) and Yahoo! Inc. (NASDAQ:YHOO) has stoked the bullish flames, and an encouraging report on industrial production has overshadowed a slimmer-than-anticipated rise in March housing starts. This afternoon, Wall Street will digest a speech from Fed Chair Janet Yellen, as well as the central bank's Beige Book.

Here are a few noteworthy stats at midday:

  1. The equity put/call volume ratio across all 12 options exchanges is currently perched at 0.87, with calls outpacing puts. So far today, 3.74 million calls have changed hands, compared to 3.26 million puts.

  2. One name seeing heavy call trading today is heart device maker St. Jude Medical, Inc. (NYSE:STJ), which is down 3.2% at $61.17, despite reporting stronger-than-expected first-quarter earnings and lifting its full-year guidance. So far, nearly 86% of today's option volume has traded on the call side.

  3. The advance/decline ratio on the New York Stock Exchange (NYSE) stands at 2.67, with advancing stocks more than doubling declining issues.

  4. The biggest upward mover on the exchange so far today is data storage provider Nimble Storage Inc (NYSE:NMBL), which is up 8.6% at $33.74 after an upgrade to "buy" from "neutral" at UBS. (The brokerage firm, however, reduced its price target for NMBL to $45 from $53.)

  5. The CBOE Volatility Index (VIX) is down 0.9 point, or 5.6%, at 14.74. The "fear barometer" is on pace to end the holiday-shortened week with a 13.5% deficit.

  6. Today's put/call volume ratio on the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) stands at 1.34, with put volume outpacing call volume so far. The ETN has shed 1.7% at midday to $43.17.

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

Unusual Option Volume at Midday

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Buzz Stocks: General Motors Company, Starbucks Corporation, SodaStream International Ltd, and Google Inc

Today's stocks to watch in the news include GM, SBUX, SODA, and GOOGL

by 4/16/2014 9:25 AM
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Futures are pointed higher this morning, as investors digest the latest batch of earnings reports. In company news, here are some stocks to watch today:

  • General Motors Company (NYSE:GM) CEO Mary Barra made her first public appearance yesterday since taking part in a series of congressional hearings earlier this month. Barra said that GM has begun to fix the more than 2.6 million faulty cars that were linked to 13 deaths, and intends to launch a "global product integrity" unit to ensure the automaker meets the highest safety standards going forward. (The New York Times)

  • Amid political pressure over alleged tax avoidance, Starbucks Corporation (NASDAQ:SBUX) announced plans to relocate its European home office to London from Amsterdam later this year. "This move will mean we pay more tax in the U.K.," the coffee giant said. (BBC News)

  • SodaStream International Ltd (NASDAQ:SODA) shares are soaring in pre-market trading after a Calcalist report said the home carbonation issue may be considering selling a major stake to a larger competitor. Counted among the potential suitors are PepsiCo, Inc. (NYSE:PEP), Dr Pepper Snapple Group Inc. (NYSE:DPS), and SBUX. (Bloomberg Businessweek)

  • Google Inc (NASDAQ:GOOGL) unveiled its new Project Ara smartphone, which features an "endoskeleton" frame that can accommodate various hardware modules, each designed for a specific task. If all goes according to plan, GOOGL will manage the endoskeleton design, while third-party developers will make modules that will be sold on an online marketplace. (MarketWatch)

  • Also, Intel Corporation (NASDAQ:INTC), Bank of America Corp (NYSE:BAC), and Yahoo! Inc. (NASDAQ:YHOO) reported quarterly earnings. (Reuters; USA Today)

  • Finally, the IRS recently audited supermodel Gisele Bundchen. The former Victoria's Secret Angel responded by blaming Forbes -- which ranked Bundchen the highest paid model in the world, with $42 million in 2013 earnings -- for the audit, claiming the publication inflated her income. Regardless, the IRS found nothing amiss with her taxes. (Orlando Sentinel)

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Analyst Downgrades: UnitedHealth Group Inc., Transocean LTD, and Autodesk, Inc.

Analysts downwardly revised their ratings on UNH, RIG, and ADSK

by 4/16/2014 9:23 AM
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Analysts are weighing in today on health care services provider UnitedHealth Group Inc. (NYSE:UNH), offshore drilling concern Transocean LTD (NYSE:RIG), and software designer Autodesk, Inc. (NASDAQ:ADSK). Here's a quick roundup of today's bearish brokerage notes.

  • Citigroup downgraded UNH to "neutral" from "buy" ahead of the company's first-quarter earnings report tomorrow morning. In the options pits, meanwhile, short-term speculators have been more call-heavy than usual toward UnitedHealth Group Inc. -- which is up just 5.6% in 2014 to trade at $79.51. This is evidenced by the fact that the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.61 ranks in the bottom quartile of its 12-month range.

  • RIG -- which has shed about 16% since the start of the year to trade at $41.49 -- saw its price target dropped to $36 and $39 from $40 at Bernstein and UBS, respectively, this morning. Short interest on the stock climbed 29.3% during the past two reporting periods, and now accounts for 13.3% of RIG's available float. At the shares' average pace of trading, it would take more than eight sessions to cover these bearish bets.

  • Baird downwardly adjusted its position on nearly a dozen tech stocks this morning, including ADSK, which received a $4 price-target cut to $56 from the brokerage firm. Autodesk, Inc. -- which is sitting about 7% below its year-to-date breakeven level to trade at $46.82 -- sports a SOIR of 0.36, which ranks just 4 percentage points from a 12-month low. In other words, call open interest (relative to put open interest) is nearing annual-high levels among options expiring within the next three months.

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Analyst Upgrades: Intel Corporation, Yahoo! Inc., and Yelp Inc

Analysts upwardly revised their ratings on INTC, YHOO, and YELP

by 4/16/2014 9:19 AM
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Analysts are weighing in today on tech heavyweight Intel Corporation (NASDAQ:INTC), Internet issue Yahoo! Inc. (NASDAQ:YHOO), and online review forum Yelp Inc (NYSE:YELP). Here's a quick roundup of today's bullish brokerage notes.

  • A number of brokerage firms applauded INTC's first-quarter earnings win, including Deutsche Bank and Topeka Capital, which both lifted their price targets to $30 from $28 this morning. (B. Riley was the only firm to downwardly adjust its position, lowing its rating to "neutral" from "buy.") On the charts, Intel Corporation is up 13.9% from its Feb. 5 year-to-date low of $23.50 to trade at $26.77, and is poised for more gains in today's session. As such, INTC may receive more upgrades and/or price-target hikes in the near term, which could give the shares an extra boost. Currently, 17 of the 29 covering analysts maintain "hold" or worse ratings, while the average 12-month price target of $25.42 denotes a slight discount to the shares' current price.

  • Meanwhile, a handful of brokerage firms weighed in on YHOO's first-quarter revenue growth. This includes Susquehanna, which raised its price target by $3 to $42, and Jefferies, which resumed coverage on the stock with a "buy" rating and a price target of $50. (CRT Capital, on the other hand, cut its price target by $2 to $45.) Year-over-year, Yahoo! Inc. is up 43.8% to trade at $34.21, and is looking at a potential 8% gain out of the gate this morning. Considering, 13 of the 27 covering analysts have dished out "hold" suggestions on YHOO, the door is wide open for more upgrades in the near future, which could create additional technical tailwinds.

  • Although YELP is down 38% from its March 5 record high of $101.75 to trade at $63.06, Citigroup upped its rating on the stock to "buy" from "neutral" this morning. Meanwhile, in Yelp Inc's options pits, short-term speculators are choosing calls over puts at a greater-than-usual rate, as the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.59 ranks lower than 79% of comparable readings from the past year.

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