Schaeffer's Trading Floor Blog

Earnings Preview: Halozyme Therapeutics Inc., Palo Alto Networks, Inc., and Stratasys, Ltd.

Analyzing recent option activity on Halozyme Therapeutics, Inc. (HALO), Palo Alto Networks Inc (PANW), and Stratasys, Ltd. (SSYS)

by 2/27/2015 2:34 PM
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Among the stocks gearing up to report earnings on Monday are biopharmaceutical firm Halozyme Therapeutics, Inc. (NASDAQ:HALO), network security firm Palo Alto Networks Inc (NYSE:PANW), and 3-D printing specialist Stratasys, Ltd. (NASDAQ:SSYS). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on HALO, PANW, and SSYS.

  • HALO, which will release its fourth-quarter earnings report Monday night, has been on a hot streak, with the shares up 54.9% year-to-date -- despite a 2.1% drop so far today -- to hit $14.95. Accordingly, call activity is popular in Halozyme Therapeutics, Inc.'s options pits, as its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 11.89 sits in the 68th percentile of its annual range. Meanwhile, in the session following its last four earnings reports, the shares of HALO have dropped an average of 3%. Traders are paying below-average prices for their near-term bets on the stock, as its Schaeffer's Volatility Index (SVI) of 62% sits in the 30th percentile of all similar readings taken over the past year.

  • PANW has also been a technical outperformer, with the shares notching a fresh all-time high of $146.28 yesterday. In today's session, the stock was last seen lingering near $142.36, which translates into a 99.1% year-over-year gain. Not surprisingly, sentiment in the Palo Alto Networks Inc's options pits is nearing a bullish peak ahead of Monday night's fiscal second-quarter earnings report. Specifically, the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.98 sits just 8 percentage points away from the highest similar reading taken over the past year. Traders hoping for PANW to continue its uptrend may have history on their side -- in the session following its last four earnings reports, the shares have advanced 6.6%, with the equity failing to have a negative post-earnings session since May 31, 2013. Historically speaking, speculators are paying inexpensive prices for their bets on the stock, as its SVI of 45% sits in the 27th percentile of its annual range.

  • On the other hand, SSYS, with the shares down 53.3% year-over-year to trade near $61.23. However, sentiment in the stock's options pits is call-heavy ahead of Monday morning's fourth-quarter earnings report -- which the company offered up a poorly received outlook for earlier this month. Drilling down, Stratasys, Ltd.'s 50-day ISE/CBOE/PHLX call/put volume ratio of 1.71 sits in the 79th percentile of its annual range. Additionally, in the session following its last eight earnings reports, SSYS has gained an average of about 3%, including a 14.9% pop on Aug. 7, 2014. Near-term options for the security are available for slightly above-average prices, as its SVI of 54% sits in the 60th percentile of its annual range.

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Analyst Update: Aruba Networks, Inc., Infoblox Inc., and Potbelly Corporation

Analysts adjusted their ratings on Aruba Networks, Inc. (ARUN), Infoblox Inc (BLOX), and Potbelly Corp (PBPB)

by 2/27/2015 11:52 AM
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Analyst Update: Aruba Networks, Inc., Infoblox Inc., and Potbelly Corporation Subtitle: Analysts adjusted their ratings on Aruba Networks, Inc. (ARUN), Infoblox Inc (BLOX), and Potbelly Corp (PBPB) Description: Analysts adjusted their ratings on Aruba Networks, Inc. (NASDAQ:ARUN), Infoblox Inc (NYSE:BLOX), and Potbelly Corp (NASDAQ:PBPB) Keywords: Aruba Networks Inc, ARUN, Infoblox Inc, BLOX, Potbelly Corp, PBPB

Analysts are weighing in today on network solutions providers Aruba Networks, Inc. (NASDAQ:ARUN) and Infoblox Inc (NYSE:BLOX), as well as restaurant chain Potbelly Corp (NASDAQ:PBPB). Here's a quick look at today's brokerage notes on ARUN, BLOX, and PBPB.

  • ARUN has had a big week in the news, as the company released an impressive fiscal second-quarter earnings report last night, following earlier rumors that Hewlett-Packard Company (NYSE:HPQ) might buy the company out. In response, no fewer than 14 brokerage firms upped their price targets on the equity, boosting the shares to hit an annual high of $24.48 before falling to $24 for a 6.2% gain. Drilling down, the loftiest hikes came from Cowen and Company and Dougherty & Company, which raised their respective price targets to $34 and $29. Aruba Networks, Inc. has been skyrocketing on the charts lately, with the shares up 32.3% year-to-date. However, traders have been buying to open puts over calls, as ARUN's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.60 sits in the 71st percentile of its annual range. What's more, short interest accounts for over 10% of the stock's available float, which would take more than four days to cover, at average daily trading volumes.

  • BLOX reported a fiscal second-quarter earnings beat last night, prompting no fewer than eight brokerage firms to raise their price targets on the equity. Specifically, the most ambitious targets came from Cowen and Company and JMP Securities, which upped their respective price targets to $30 and $29, with both firms keeping a "market outperform" rating. This morning, the shares of Infoblox Inc hit an annual high of $25 before settling at $23.55 for a 10.7% gain. Year-to-date, the equity is up about 16.5%. Despite BLOX's technical fortune, sentiment in the options pits is put-skewed, as its 50-day ISE/CBOE/PHLX put/call volume ratio of 0.18 sits in the 78th percentile of its annual range.

  • Last night, PBPB announced that Chief Financial Officer Charles Talbot is resigning from his position to take a job outside of the restaurant business. Reacting was Piper Jaffray, which cut its price target to $12 from $16 and downgraded its opinion to "underweight" from "overweight," sending the shares 7.4% lower this morning to hit $13.60. Looking back, Potbelly Corp has been struggling, down about 36.5% year-over-year. Surprisingly, calls are popular in the options pits, as PBPB's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.48 sits in the bullishly-skewed 78th percentile of its annual range. However, short interest accounts for almost 24% of the stock's available float, which would take nearly 22 trading days to cover, at average daily trading volumes. In other words, some of the call buyers may be short sellers picking up insurance against an upside move in PBPB.

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Buzz Stocks: Biogen Idec Inc., Vitae Pharmaceuticals, Inc., and Horizon Pharma Public Limited Company

Today's stocks to watch include Biogen Idec Inc (BIIB), Vitae Pharmaceuticals Inc (VTAE), and Horizon Pharma PLC (HZNP)

by 2/27/2015 9:51 AM
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U.S. benchmarks are slightly lower this morning, as traders take in an in-line fourth-quarter gross domestic product (GDP). Among the equities in focus are drugmakers Biogen Idec Inc (NASDAQ:BIIB), Vitae Pharmaceuticals Inc (NASDAQ:VTAE) and Horizon Pharma PLC (NASDAQ:HZNP).

  • This morning, BIIB and Swedish Orphan Biovitrum AB announced positive top-line efficacy and safety results for the hemophilia drug, alprolix, in their phase 3 pediatric study. The news has the shares of the former stock up slightly out of the gate, gaining 0.2% at $410.19. Biogen Idec Inc's year-to-date lead now stands at roughly 21%, yet put buyers have been piling on recently. BIIB's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.09 ranks higher than 71% of all similar readings from the past year. In other words, puts have been bought to open over calls at a faster-than-normal rate recently. Meanwhile, analysts have shown confidence in the security, with 76% of covering brokerage firms calling it a "buy" or better.

  • VTAE is getting walloped this morning, down 13.3% at $11.51, after partner Boehringer Ingelheim put a temporary clinical hold on its experimental Alzeimer's drug to investigate potential side effects. The stock is used to disappointment, considering it's lost 51% since hitting an all-time high of $23.35 on Dec. 11. Brokerage firms have maintained their faith, though. All the analysts covering Vitae Pharmaceuticals Inc say it's a "strong buy," while the equity's consensus 12-month price target of $21.75 comes in at a 47% premium to current trading levels. However, just this morning, JMP Securities reduced its price target on VTAE to $16 from $21.

  • Last night, HZNP reported fourth-quarter net sales and profit that beat analysts' expectations, and also upped its full-year revenue forecast. As such, the stock is up 11.9% this morning at $21.33 -- and earlier touched a record high of $21.39. The shares have been blazing a path higher for some time now, tacking on 74.5% year-over-year. In the options pits, call open interest outweighs put open interest by a wide margin among options with a lifespan of three months of less, per Horizon Pharma PLC's Schaeffer's put/call open interest ratio (SOIR) of 0.18. This reading ranks in the 29th percentile of its annual range, meaning short-term speculators are more call-skewed than normal.

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Analyst Upgrades: FedEx Corporation, CSX Corporation, and ACADIA Pharmaceuticals Inc.

Analysts upwardly revised their ratings on FedEx Corporation (FDX), CSX Corporation (CSX), and ACADIA Pharmaceuticals Inc. (ACAD)

by 2/27/2015 9:41 AM
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Analysts are weighing in today on package delivery expert FedEx Corporation (NYSE:FDX), transportation supplier CSX Corporation (NYSE:CSX), and drugmaker ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). Here's a quick roundup of today's bullish brokerage notes on FDX, CSX, ACAD.

  • Credit Suisse upgraded FDX to "outperform" from "neutral" -- and raised its price target to $203 from $177 -- citing improving returns and demand. As such, the shares are up 1.1% this morning to trade at $176.53, bringing their year-over-year advance to 32.4%. For comparison's sake, rival United Parcel Service, Inc. (NYSE:UPS) has gained less than 7% on an annual basis, after recently getting hit by a weak fourth-quarter outlook. Looking more closely at the charts, FedEx Corporation is resting atop its rising 80-day moving average (located at $174.50) -- a trendline that's served as support for nearly a year, and could continue to do so going forward. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has seen near-extreme levels of put buying in recent weeks. FDX's 10-day put/call volume ratio of 2.04 is just 1 percentage point shy of a 12-month peak. However, some of these positions may have been initiated by shareholders hedging against unexpected downside.

  • CSX saw its rating bumped to "outperform" from "market perform" at BMO, which also upped its price target by $2 to $40. The bullish note is well deserved, considering the stock has tacked on 23.6% over the last year -- though it was last seen slightly lower at $34.26. Not surprisingly, option bulls have taken a shine to CSX Corporation. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio is 10.56 -- meaning nearly 11 calls have been bought to open for every put. What's more, this ratio outstrips 92% of similar readings from the past 12 months.

  • Despite reporting a wider-than-expected fourth-quarter loss yesterday, ACAD has received additional bullish brokerage attention. Specifically, JMP Securities, Cowen and Company, and Ladenburg Thalmann raised their respective price targets to $50, $49, and $43. As such, ACADIA Pharmaceuticals Inc. is 0.9% higher at $38.10, which is good news for this group of option bulls. Longer term, ACAD has gained 34.6% year-over-year. Analysts have recognized this technical prowess, doling out eight "strong buy" ratings, compared to one "hold" and not a single "sell."

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Analyst Downgrades: Bank of America Corporation, TubeMogul, Inc., and Pharmacyclics, Inc.

Analysts downwardly revised their ratings on Bank of America Corp (BAC), TubeMogul Inc (TUBE), and Pharmacyclics, Inc. (PCYC)

by 2/27/2015 9:25 AM
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Analysts are weighing in on financial firm Bank of America Corp (NYSE:BAC), digital branding specialist TubeMogul Inc (NASDAQ:TUBE), and drugmaker Pharmacyclics, Inc. (NASDAQ:PCYC). Here's a quick roundup of today's bearish brokerage notes on BAC, TUBE, and PCYC.

  • BAC has had a solid month, tacking on nearly 6% to trade at $16.04 -- thanks to a lift from its 20-day moving average. In spite of this recent flexing of technical muscle, UBS cut its outlook on the shares to "neutral" from "buy," and lowered its price target to $16 from $20. While the options crowd has been all in on the equity, the brokerage bunch is mixed, with nine maintaining a "strong buy" rating, versus nine that have levied a "hold" or worse suggestion toward Bank of America Corp. Should the shares extend their momentum into March, a round of upgrades could help fuel their fire. Meanwhile, BAC announced yesterday that a trio of top leaders will be departing.

  • TUBE is bracing for an 18% plunge out of the gate, after the firm's lower-than-expected full-year forecast was met with price-target cuts at RBC (to $20) and JMP Securities (to $21), although both brokerage firms underscored their respective "outperform" ratings. Overall, analysts have been pretty upbeat toward the shares -- despite their 20.4% year-to-date deficit -- as evidenced by the 80% of brokerage firms that maintain a "buy" or better, with not a single "sell" to be found. Additionally, TubeMogul Inc's average 12-month price target of $22.22 stands at a steep 24% premium to last night's close at $17.94, and in territory not charted since the start of the year.

  • It's been quite a week for PCYC, as the stock has added 22.7% to trade at $217.82, amid reports the company could be flirting with potential suitors. In spite of this surge, Goldman Sachs overnight lowered its rating on the security to "neutral" from "buy," and removed PCYC from its "America's Buy List." In the options pits, the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.69 ranks in the 93rd annual percentile, meaning puts have been bought to open over calls at a near-annual-high clip. Echoing this put-skewed bias is PCYC's Schaeffer's put/call open interest ratio (SOIR) of 1.31, which rests higher than all comparable readings taken in the past 12 months. Simply stated, short-term speculators are more put-heavy now toward Pharmacyclics, Inc. than they've been at any other time during the last year.

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