Schaeffer's Trading Floor Blog

Analyst Update: Groupon Inc, The Home Depot, Inc., and TripAdvisor Inc

Analysts adjusted their ratings on GRPN, HD, and TRIP

by 11/17/2014 1:16 PM
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Analysts are weighing in today on daily deals site Groupon Inc (NASDAQ:GRPN), home improvement retailer The Home Depot, Inc. (NYSE:HD), and online travel portal TripAdvisor Inc (NASDAQ:TRIP). Here's a quick look at today's brokerage notes on GRPN, HD, and TRIP.

  • GRPN is down 1.8% this afternoon at $7.70, despite receiving an upward price-target revision to $9 from $8 -- to go along with an "outperform" rating -- at Barrington Research. This only adds to the stock's long-term technical struggles, as the shares have lost more than one-third of their value in 2014 -- even after their recent post-earnings surge. On the sentiment front, more than 21% of Groupon Inc's float is sold short, which would take nearly a week to cover, at typical daily trading levels.

  • HD, which will step up to the earnings plate bright and early tomorrow, is fractionally higher at $98.43 -- as Canaccord Genuity's $15 price-target hike to $93 (and reiterated "hold" opinion) has had little impact. Longer term, however, the shares have advanced nearly 20% year-to-date, and recently took a strong bounce off their 20-week moving average. In spite of this technical tenacity, 45% of the analysts following The Home Depot, Inc. have handed out tepid "hold" suggestions, and the equity's consensus 12-month price target is just a stone's throw away at $99.04. In other words, HD could be on the verge of additional bullish brokerage notes, assuming its recent uptrend continues. For the company's third quarter, the Street is projecting a per-share profit of $1.13.

  • TRIP is off 1.7% this afternoon to trade at $68.70, following Oppenheimer's price-target reduction to $90 from $99 -- though the firm also underscored its "outperform" rating. Longer term, the stock is off about 17% in 2014, and more recently, has underperformed the broader S&P 500 Index (SPX) by about 33 percentage points during the previous three months. Not surprisingly, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open puts over calls at a faster-than-usual rate in recent weeks. Specifically, TripAdvisor Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.50 outranks four-fifths of readings recorded in the last 12 months.

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Stocks On the Move: Amicus Therapeutics, Inc., Inovio Pharmaceuticals Inc, and Sky-mobi Ltd (ADR)

FOLD, INO, and MOBI are moving sharply in Monday's trading

by 11/17/2014 11:27 AM
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Around midday, three of the top market movers are drugmakers Amicus Therapeutics, Inc. (NASDAQ:FOLD) and Inovio Pharmaceuticals Inc (NASDAQ:INO), as well as China-based app store Sky-mobi Ltd (ADR) (NASDAQ:MOBI). Here's a quick roundup of how FOLD, INO, and MOBI are performing on the charts so far.

  • FOLD has rallied 16% to trade at $6.60, following promising Phase 3 trial results for its Fabry disease treatment. Year-to-date, the shares have now tacked on more than 180%. In the options pits, however, short-term traders have been more put-focused than usual toward Amicus Therapeutics, Inc. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.06 ranks in the 89th percentile of its annual range.

  • INO is down 8.2% to hover near $10.10, after ending its collaboration with Roche on a prostate cancer drug. The move lower has the equity now staring at a 2014 loss of roughly 13%, and at risk of closing below its 50-day moving average for the first time since Oct. 10. Should these technical struggles continue, Inovio Pharmaceuticals Inc could face a round of potential downgrades and/or price-target reductions. After all, each of the analysts covering the shares rate them a "strong buy," and INO's consensus 12-month price target of $21 is more than double the current stock price.

  • MOBI is also deep in the red today, shedding 15.3% of its value to perch at $5.92. Pressuring the shares are a poorly received third-quarter earnings report, as well as the surprise resignation of the company's chief financial officer. Nevertheless, Sky-mobi Ltd (ADR) maintains a year-to-date advance of more than 58%. Not surprisingly, short-term speculators have been focused on calls relative to puts recently. MOBI's SOIR of 0.17 indicates call open interest is more than five times put open interest, among options expiring in the next three months. Plus, this reading is lower than 88% of comparable metrics from the past year.

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Analyst Downgrades: J C Penney Company Inc, CBS Corporation, and Marvell Technology Group Ltd.

Analysts downwardly revised their ratings on JCP, CBS, and MRVL

by 11/17/2014 9:31 AM
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Analysts are weighing in today on retailer J C Penney Company Inc (NYSE:JCP), broadcasting giant CBS Corporation (NYSE:CBS), and semiconductor concern Marvell Technology Group Ltd. (NASDAQ:MRVL). Here's a quick roundup of today's bearish brokerage notes on JCP, CBS, and MRVL.

  • JCP surrendered 5.6% last week to finish at $7.38, after the company's third-quarter earnings report was met with a bearish brokerage note at Morgan Stanley. The stock is adding to these losses today, after Goldman Sachs cut its price target to $5.50 from $6.00. This skepticism toward a stock that's shed 19.3% year-to-date is shared elsewhere on the Street. In the options pits, for example, JCP's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.00 ranks in the bearishly skewed 80th annual percentile. Additionally, 34.2% of J C Penney Company Inc's float is sold short, and would take nearly eight sessions to cover, at average daily trading levels.

  • Evercore ISI followed in the footsteps of Bernstein, and reduced its price target on CBS to $63 from $65 -- citing lower revenue from political ads, and a drop-off in "profitable entertainment programming." However, this new target price still represents expected upside of roughly 18% to Friday's closing price of $53.41. Year-to-date, CBS Corporation is down 16.2%, yet option traders have kept the faith. At the ISE, CBOE, and PHLX, the equity's 10-day call/put volume ratio of 6.03 ranks higher than 72% of similar readings taken in the past year. Echoing this call-skewed trend is CBS' Schaeffer's put/call open interest ratio (SOIR) of 0.30, which ranks just 4 percentage points from a 52-week low. In other words, short-term speculators have rarely been as call-biased toward CBS as they are now. An unwinding of these bullish bets in the face of CBS' technical struggles could translate into a fresh wave of selling pressure.

  • J.P. Morgan Securities trimmed its price target on MRVL to $19 from $20 (but maintained an "overweight" opinion). Technically speaking, Marvell Technology Group Ltd. has shed 8.6% in 2014, with recent rebound attempts rejected at its 20-week moving average. Additional price-target cuts could be in store, too, if MRLV extends its retreat or reports disappointing earnings after the close on Thursday. The average 12-month price target on the equity sits at $16.24, representing expected upside of 23.6% to the stock's current perch at $13.14. Likewise, nine out of 20 analysts maintain "buy" or better opinions, leaving the door wide open for potential downgrades to exacerbate selling pressure on the shares.

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Buzz Stocks: Allergan, Inc., DreamWorks Animation SKG, Inc., and Baker Hughes Incorporated

Today's stocks to watch in the news include AGN, DWA, and BHI

by 11/17/2014 9:29 AM
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U.S. stocks are pointed lower this morning, due to a surprise drop in Japan's gross domestic product (GDP). Among the equities in focus are drugmaker Allergan, Inc. (NYSE:AGN), entertainment issue DreamWorks Animation SKG, Inc. (NASDAQ:DWA), and oil-and-gas concern Baker Hughes Incorporated (NYSE:BHI), which are headlining Merger Monday.

  • AGN is headed 5% higher, on reports that the firm is on the cusp of being acquired by Actavis plc (NYSE:ACT) for about $62.5 billion, or $210 per share -- trumping Valeant Pharmaceuticals Intl Inc's (NYSE:VRX) bid of $200 per share. AGN ended last week at $198.65, and has spent most of November dawdling just below the VRX bid price. In light of today's expected uptick, Allergan, Inc. will be sitting in record-high territory, much to the delight of recent option buyers. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 3.62 stands higher than 91% of all other readings from the past year, pointing to a healthier-than-usual appetite for long calls over puts during the past two weeks.

  • DWA is poised to drop 14% out of the gate, amid reports that toymaker Hasbro, Inc. (NASDAQ:HAS) has backed out of talks to buy the studio. Sources say HAS turned tail after failed price negotiations and a negative shareholder reaction to the news -- which hit the Street last Thursday, and translated into a two-day drop of 6% for HAS. The shares of DreamWorks Animation SKG, Inc., meanwhile, soared 16.3% in the same span, settling at $26.02 on Friday. This morning's anticipated drop could catch some DWA options traders off-guard. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.46 stands just 8 percentage points from a 12-month low, suggesting short-term speculators are more call-biased than usual. Relatively speaking, buyers are paying up for their near-term contracts, too, as the security's Schaeffer's Volatility Index (SVI) of 60% ranks in the 74th percentile of its annual range.

  • Finally, BHI is on pace for an 11% jump, after the firm said it reached a definitive agreement to be bought by Halliburton Company (NYSE:HAL) for close to $35 billion, or $78.62 per share -- a premium of 31.3% to BHI's closing price of $59.89 on Friday. The deal -- which has been approved unanimously by both companies' boards -- confirms chatter from late last week, before which Baker Hughes Incorporated was lingering just north of $50. Short-term options traders are likely cheering the news, as the equity's SOIR of 0.61 sits higher than just 19% of all other readings from the past year.

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Analyst Upgrades: BlackBerry Ltd, Chesapeake Energy Corporation, and Salesforce.com, inc.

Analysts upwardly revised their ratings on BBRY, CHK, and CRM

by 11/17/2014 9:16 AM
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Analysts are weighing in today on mobile phone maker BlackBerry Ltd (NASDAQ:BBRY), oil-and-gas issue Chesapeake Energy Corporation (NYSE:CHK), and cloud concern Salesforce.com, inc. (NYSE:CRM). Here's a quick roundup of today's bullish brokerage notes on BBRY, CHK, and CRM.

  • BBRY rallied 6.4% last week to settle at $11.20, following a round of well-received fundamental developments. The equity is poised to extend these gains today in the wake of a price-target hike to $13 from $12 at TD Securities (although the brokerage firm maintained its tepid "hold" rating) and the welcoming of the newest member to its executive ranks. Should the stock maintain this upward momentum, another round of upwardly revised brokerage notes may be on the horizon, which could translate into a fresh wave of buying power. At present, all 20 analysts covering BlackBerry Ltd maintain a "hold" or worse suggestion, while the consensus 12-month price target of $10.79 stands at a discount to current trading levels.

  • Bernstein raised its outlook on CHK to "outperform" from "market perform," and boosted its price target by $6 to $32, representing expected upside of nearly 38% to Friday's closing price of $23.21. This upbeat outlook is a bit surprising, given the stock's 9.5% year-to-date deficit -- and runs counter to CHK's withstanding sentiment backdrop. In fact, two-thirds of covering analysts have levied a "hold" or "strong sell" recommendation toward the stock. Elsewhere, CHK's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.05 ranks higher than all other readings taken in the past year. Simply stated, puts have been bought to open over calls on Chesapeake Energy Corporation at an annual-high clip in recent weeks.

  • Ahead of CRM's turn in the earnings confessional this Wednesday evening, D.A. Davidson upped its price target on the shares to $65 from $60, and underscored its "neutral" rating. While the stock has jumped more than 25% from its mid-October low of $51.04 to its present perch at $63.91, CRM's historical post-earnings price action isn't so rosy. Over the past four quarters, specifically, the shares have averaged a loss of 2.2% in the session subsequent to reporting. Accordingly, option traders have taken the bearish route in recent weeks, as evidenced by Salesforce.com, inc.'s 10-day ISE/CBOE/PHLX put/call volume ratio of 0.89, which ranks in the 78th annual percentile. It's a sentiment shared outside of the options pits, as well, with short interest accounting for a healthy 6.5% of the stock's available float. Additionally, it would take more than eight sessions to cover these bearish bets, at CRM's average daily pace of trading.

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