Schaeffer's Trading Floor Blog

Analyst Upgrades: BlackBerry Ltd, Ctrip.com International, Ltd. (ADR), and EMC Corporation

Analysts upwardly revised their ratings on BBRY, CTRP, and EMC

by 7/29/2014 8:52 AM
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Analysts are weighing in today on mobile phone maker BlackBerry Ltd (NASDAQ:BBRY), China-based travel website Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP), and hardware issue EMC Corporation (NYSE:EMC). Here's a quick roundup of today's bullish brokerage notes.

  • BBRY has pulled back since hitting a year-to-date high of $11.65 earlier this month, and currently rests at $9.95. However, the shares seem to have found a floor in the $9.75 neighborhood, which emerged as support in mid-June. Against this backdrop, Wells Fargo lifted its price-target range on the cell phone firm by $1, to $9.50-$10.50, while maintaining its "market perform" rating. This is a pretty typical evaluation of BlackBerry Ltd, which has received 21 "hold" opinions from 25 covering analysts, as well as a 12-month price target of $10.04. In other words, the Street isn't expecting much upside from BBRY; should the stock add to its year-to-date gain of more than 33%, additional bullish notes could follow.

  • CTRP -- which is slated to step into the earnings confessional tomorrow afternoon -- saw its price target upped to $78 from $53 at Barclays, to go along with an "overweight" endorsement. This isn't entirely surprising, considering the equity has advanced 34.5% year-to-date, and has rallied 89% over the past year. Additional bullish brokerage notes could be on the way, too, should the shares keep trucking higher. Right now, Ctrip.com International, Ltd.'s (ADR) consensus 12-month price target sits at $61.21 -- below Monday's closing price of $66.73.

  • Finally, EMC had its price target lifted by $1 to $33 at UBS, which also reiterated its "buy" rating on the stock. On the charts, the security has performed admirably, adding nearly 18% in 2014 -- helped by a news-induced gap higher early last week. This technical tenacity is reflected on Wall Street, where 21 out of 25 covering analysts give EMC Corporation a "buy" or better assessment, compared to four holds and not a single "sell" recommendation. Yesterday, the shares closed at $29.67.

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Stocks On the Move: Trulia Inc, El Pollo Loco Holdings Inc, and First Solar, Inc.

TRLA, LOCO, and FSLR are moving sharply in Monday's trading

by 7/28/2014 1:42 PM
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U.S. stocks are trading south of breakeven this afternoon, though they've pared the worst of their pre-market losses and are fighting back toward the breakeven line. Among the names making notable moves are real estate site Trulia Inc (NYSE:TRLA), chicken chain El Pollo Loco Holdings Inc (NASDAQ:LOCO), and alternative energy name First Solar, Inc. (NASDAQ:FSLR). Here's a quick look at how TRLA, LOCO, and FSLR are faring on the charts today.

  • TRLA has spiked 17.2% to $66.05, with traders responding to a buyout bid from Zillow, Inc. (NASDAQ:Z) that's expected to close in early 2015. Earlier in the session, TRLA tagged a new all-time high of $66.68, while the bid from Zillow values the stock at about $70.53 per share. Today's M&A news likely caught Trulia Inc bears off-guard; currently, short interest accounts for 38.6% of the stock's float, or 10.7 times its average daily trading volume.

  • Wall Street newcomer LOCO has spiked 29.6% to trade at $31.15 this afternoon, down from a record high of $32.82 earlier in the day. California-based El Pollo Loco Holdings Inc made its public trading debut last Friday, with the stock opening at $19 per share -- well above LOCO's initial public offering (IPO) price of $15 per share.

  • FSLR has jumped 3.5% to trade at $66.28, boosted by a deal to supply XSOL Co. with 100 megawatts of solar modules annually for projects in the Japanese market. Shares of First Solar, Inc. have already rallied more than 21% so far in 2014, but most analysts remain skeptical. Among 13 brokerage firms tracking FSLR, only 38% have deemed the stock worthy of a "buy" rating.

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Analyst Update: Dollar General Corp., Pitney Bowes Inc., and Travelers Companies Inc

Analysts adjusted their ratings on DG, PBI, and TRV

by 7/28/2014 1:32 PM
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Analysts are weighing in today on discount retailer Dollar General Corp. (NYSE:DG), office equipment expert Pitney Bowes Inc. (NYSE:PBI), and blue-chip insurance issue Travelers Companies Inc (NYSE:TRV). Here's a quick look at today's brokerage notes on DG, PBI, and TRV.

  • DG is getting a lift, after a pair of rivals decided to join forces. Specifically, the shares are 1.7% higher at $56.58 -- though they remain roughly 6% lower on a year-to-date basis. On the sentiment front, Dollar General Corp. was started at "hold" by Argus; however, this skepticism isn't seen in the options pits. In fact, DG's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio registers at a brow-raising 135.35 -- higher than any other reading taken in the past year, hinting at extreme optimism among traders.

  • PBI is off slightly at $26.90, despite being raised to "buy" from "hold" at Brean Capital. On a longer-term basis, the equity is an outperformer, tacking on nearly 87% since this time last year. However, short sellers aren't sold on Pitney Bowes Inc. -- specifically, 9.2% of the stock's float is sold short, which would take 12.5 sessions to buy back, at average daily trading levels. In other words, there's plenty of sideline cash available to fuel a big short-covering rally, should PBI continue to trek higher on the charts. A potential catalyst is coming up, too, with the company slated to report second-quarter earnings on Wednesday morning.

  • Finally, Dow component TRV saw its rating cut to "hold" from "buy" at Sandler O'Neill, and is currently down 1% at $91.18. With the move lower, the stock is approaching its year-to-date breakeven level, located at $90.54. However, that hasn't stopped short-term options traders from gravitating toward calls. Travelers Companies Inc's Schaeffer's put/call open interest ratio (SOIR) of 0.41 rests just 6 percentage points from an annual low, suggesting speculators have rarely preferred calls over puts more strongly, among options set to expire in the next three months.

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Earnings on Deck: Merck & Co., Inc., Level 3 Communications, Inc., and United States Steel Corporation

Taking a closer look at MRK, LVLT, and X ahead of their earnings results

by 7/28/2014 11:53 AM
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This week's slate of quarterly earnings reports picks up the pace tomorrow when global health care concern Merck & Co., Inc. (NYSE:MRK), integrated communications specialist Level 3 Communications, Inc. (NYSE:LVLT), and industrial metals name United States Steel Corporation (NYSE:X) unveil their results. Here's a quick look at this trio of names as earnings approach.

  • Over the past eight quarters, MRK has exceeded analysts' bottom-line estimates seven times; however, in the subsequent session, the stock has averaged a loss of 0.2% (which widens to 0.5% going out one week). Overall, the shares have added roughly 16% in 2014, but since late May, have been churning between $57.50 and $59.50. Against this backdrop, the equity has garnered six "strong buy" ratings from analysts, compared to six tepid "holds," while the consensus 12-month price target of $60.94 stands at a slim 5% premium to Merck & Co., Inc.'s current perch at $57.99. For tomorrow morning's second-quarter results, analysts are calling for a per-share profit of 81 cents -- a 3-cent decline over the company's year-ago results.

  • LVLT will also report second-quarter earnings tomorrow morning, and despite falling short of consensus profit estimates in four of the previous seven quarters, the security has gone on to average a single-session post-earnings pop of 3.1% -- which includes its 16% rally this past April. This post-earnings price action only highlights the stock's withstanding technical tenacity, with the shares more than doubling in value year-over-year to trade at $45.17. Another well-received earnings report could help the stock extend this upward momentum by sparking a short-covering rally. At Level 3 Communications, Inc.'s average daily trading volume, it would take 8.5 sessions to buy back all of the security's shorted shares.

  • Wall Street has forecast a loss of 29 cents per share for X's second quarter, and if past is prologue, the company could be due for another earnings beat. Over the past eight quarters, X has only fallen short of analysts' bottom-line estimates one time, and, on average, the stock is sitting 3.1% higher one week after reporting. Ahead of tomorrow evening's report, call buying has picked up the pace, per X's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.33, which ranks in the 82nd annual percentile. With more than one-quarter of the equity's float sold short, though, a portion of this activity could be a result of shorts hedging against any future upside. In today's session, in fact, United States Steel Corporation is bucking the broad-market trend lower, up 0.5% at last check to trade at $27.86.

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Analyst Downgrades: Cisco Systems, Inc., Outerwall Inc, and Whole Foods Market, Inc.

Analysts downwardly revised their ratings on CSCO, OUTR, and WFM

by 7/28/2014 9:04 AM
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Analysts are weighing in today on networking giant Cisco Systems, Inc. (NASDAQ:CSCO), Redbox parent Outerwall Inc (NASDAQ:OUTR), and organic grocer Whole Foods Market, Inc. (NASDAQ:WFM). Here's a quick roundup of today's bearish brokerage notes.

  • CSCO hasn't done much over the past year, up less than 2%. Accordingly, Pacific Crest cut its rating on the stock to "sector perform" from "outperform." Additional downgrades are possible, too, as Cisco Systems, Inc. has received "buy" or better opinions from over 60% of covering analysts. On Friday, the shares closed at $25.97, as they continue to battle overhead resistance at the $26 level.

  • OUTR was hit with a price-target cut to $64 from $76 at B. Riley, with the firm backing its "neutral" rating. The kiosk operator has struggled in 2014, shedding 20.2% to trade at $53.66. In fact, during the past two months, the stock has underperformed the broader S&P 500 Index (SPX) by 26.2 percentage points. It's no surprise, therefore, that bearish betting has picked up among short sellers. During the last two reporting periods, short interest on Outerwall Inc increased 25.3%, and now makes up nearly half of the stock's available float. At the security's average daily trading volume, it would take nearly two weeks to buy back these shorted shares.

  • Finally, WFM saw its price target cut by $10 to $45 at Oppenheimer (though the firm maintained its "outperform" rating on the grocery chain). This downward revision is to be expected, seeing as how the shares have shed 36.2% year-to-date to rest at $36.88. Meanwhile, over at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), sentiment is tilted in a decidedly negative direction. Whole Foods Market, Inc.'s 10-day put/call volume ratio across this trio of exchanges checks in at 1.45 -- or just 8 percentage points shy of a 12-month bearish peak.

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