Schaeffer's Trading Floor Blog

Analyst Downgrades: Cyberark Software Ltd, Advanced Micro Devices, Inc., and The Boeing Company

Analysts downwardly revised their ratings on Cyberark Software Ltd (CYBR), Advanced Micro Devices, Inc. (AMD), and Boeing Co (BA)

by 2/23/2015 9:19 AM
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Analysts are weighing in today on cybersecurity stock Cyberark Software Ltd (NASDAQ:CYBR), chipmaker Advanced Micro Devices, Inc. (NASDAQ:AMD), and blue chip Boeing Co (NYSE:BA). Here's a quick roundup of today's bearish brokerage notes on CYBR, AMD, and BA.

  • CYBR is down 4.4% in electronic trading, after J.P. Morgan Securities downgraded the stock to "underweight" from "neutral," explaining, "A lot needs to go right to justify [the] current share price." The stock has been in rally mode in 2015 -- and more so, this month -- adding 77.4%, and hit a record high of $70.48 on Friday, before settling at $70.35. Against this backdrop, Cyberark Software Ltd's 14-day Relative Strength Index (RSI) has jumped to 89 -- comfortably in overbought territory -- suggesting a near-term pullback may have been in the cards.

  • Exane BNP Paribas started AMD with a lukewarm "underperform" rating, and a price target of $2.30 -- representing expected downside of nearly 25% to last Friday's close at $3.06. Although the stock has made some headway in 2015 -- tacking on 14.6% -- AMD remains a long-term laggard. Specifically, since hitting a two-year high of $4.80 last July, the equity has shed more than 36%. As such, put players have been betting big. In fact, Advanced Micro Devices, Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 2.33 ranks in the 97th annual percentile, meaning short-term speculators have been more put-heavy just 3% of the time within the past year.

  • An upbeat analyst note sent BA to its highest perch on record of $158.83 Friday, before the stock settled at $158.31. Today, the shares are poised to pull back from this notable milestone, after Goldman Sachs cut its outlook on BA to "sell" from "neutral." (Stifel, meanwhile, upped its price target on Boeing Co by $15 to $175.) For the most part, the majority of analysts are optimistic toward a stock that's added 21.8% year-to-date. Of the 17 analysts covering the shares, 12 maintain a "strong buy" rating, versus five "holds," and not a single "sell" to be found.

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Buzz Stocks: Ocwen Financial Corporation, Bristol-Myers Squibb Company, and Spectrum Pharmaceuticals, Inc.

Today's stocks to watch include Ocwen Financial Corp (OCN), Bristol-Myers Squibb Co (BMY), and Spectrum Pharmaceuticals, Inc. (SPPI)

by 2/23/2015 9:18 AM
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U.S. benchmarks are poised to pull back from new highs, as traders keep an eye trained on the Greece situation. Among the equities in focus are loan issuer Ocwen Financial Corp (NYSE:OCN), as well as drugmakers Bristol-Myers Squibb Co (NYSE:BMY) and Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI).

  • OCN is set to soar 7.5% out of the gate, after the firm said it will sell $9.8 billion in residential mortgage servicing rights to Nationstar Mortgage Holdings Inc (NYSE:NSM). OCN has struggled on the charts in 2015, down 36.4% at $9.60, and short-term options players haven't been more put-heavy during the past year; the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.80 sits at an annual high. In the same vein, nearly one-third of Ocwen Financial Corp's float is dedicated to short interest, and just one out of seven analysts deems OCN worthy of a "strong buy."

  • BMY is also making M&A waves, after the company said it will buy privately held Flexus Biosciences for up to $1.25 billion. Separately, Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is set to soar after announcing a potentially lucrative collaboration with BMY. The shares of Bristol-Myers Squibb Co are sitting at $60.52 -- up 11.8% year-over-year, and just north of support at their 80-day moving average. Analysts are split when it comes to BMY, with eight out of 17 doling out "hold" or worse ratings. Meanwhile, the average 12-month price target of $63.88 sits within striking distance of the stock's current perch. Should BMY extend its steady trend higher, a round of price-target hikes could propel the equity into new-high territory.

  • Finally, fellow biotech issue SPPI is bracing for a 25% drop to multi-year lows at the open, after a Nevada court deemed two of its Fusilev patents "invalid" -- a ruling Spectrum Pharmaceuticals, Inc. said it intends to appeal. As a result, analysts at Roth Capital lowered their rating on SPPI to "neutral" from "buy," and more than halved their price target to $7 from $15. There could be more cuts on the way for SPPI, which settled Friday at $7.46, as the stock's consensus 12-month price target sits at $13.25. One group likely celebrating, though: short sellers. Short interest accounts for 33.7% of SPPI's total available float, representing more than four weeks' worth of pent-up buying demand, at the security's average pace of trading.

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The Week Ahead: The Home Depot, Inc. and Hewlett-Packard Company Report; Plus, Yellen Testimony and GDP

Next week's calendar features Yellen testimony, the release of fourth-quarter GDP and earnings from Home Depot Inc (HD) and Hewlett-Packard Company (HPQ)

by 2/20/2015 1:52 PM
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Fed Chair Janet Yellen's trip to Capitol Hill and Friday's release of fourth-quarter gross domestic product (GDP) data will highlight next week's economic docket. Reporting earnings are a slew of retailers, including Home Depot Inc (NYSE:HD), Macy's , Inc. (NYSE:M), Gap Inc (NYSE:GPS), and Target Corporation (NYSE:TGT); television providers Dish Network Corp (NASDAQ:DISH) and Comcast (NASDAQ:CMCSA); solar concerns First Solar, Inc. (NASDAQ:FSLR) and SunPower Corporation(NASDAQ:SPWR); and computer maker Hewlett-Packard (NYSE:HPQ).

Below is a brief list of some key market events scheduled for the upcoming week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Monday

  • Existing home sales and the Dallas Fed's manufacturing index kick off a busy week of economic news. On the earnings front, we'll hear from Agrium (AGU), Cooper Tire (CTB), Dish Network (DISH), and Express Scripts (ESRX).

Tuesday

  • On Tuesday, the S&P/Case-Shiller home price index is due out, along with the Conference Board's latest consumer confidence index. Meanwhile, Fed Chair Janet Yellen will deliver her semi-annual testimony on monetary policy to the Senate Banking Committee. Earnings are expected from Home Depot (HD), Hewlett-Packard (HPQ), Comcast (CMCSA), Cracker Barrel (CBRL), Domino's Pizza (DPZ), Dreamworks Animation (DWA), First Solar (FSLR), Macy's (M), MannKind (MNKD), Office Depot (ODP), SunPower (SPWR), Toll Brothers (TOL), and Valeant Pharmaceuticals (VRX).

Wednesday

  • New home sales and crude inventories headline Wednesday's docket, while Yellen concludes her two-day tour of Capitol Hill by addressing the House Financial Services Committee. Cablevision (CVC), Campbell Soup (CPB), Chesapeake Energy (CHK), Dollar Tree (DLTR), Gulfport Energy (GPOR), Lowe's (LOW), Salesforce.com (CRM), SodaStream (SODA), Sturm Ruger (RGR), Target (TGT), and Transocean (RIG) will report earnings.

Thursday

  • Traders on Thursday will be reacting to the latest reports on durable goods and jobless claims, along with the consumer price index (CPI). Around midday, Atlanta Fed President Dennis Lockhart will take the podium at a banking conference. Among the day's earnings reporters are 3D Systems (DDD), Crocs (CROX), Cyberonics (CYBX), Gap (GPS), Gogo (GOGO), Herbalife (HLF), Kohl's (KSS), J.C. Penney (JCP), Mobileye (MBLY), Monster Beverage (MNST), OmniVision Technologies (OVTI), Seadrill (SDRL), Sears (SHLD), SeaWorld (SEAS), Splunk (SPLK), and Weight Watchers (WTW).

Friday

  • The preliminary fourth-quarter gross domestic product (GDP) hits the Street on Friday. Also on the agenda are pending home sales, the Chicago purchasing managers index (PMI), and the Thomson Reuters/University of Michigan consumer sentiment index. More remarks on monetary policy could impact markets, with Fed Vice Chair Stanley Fischer, New York Fed President William Dudley, and Cleveland Fed President Loretta Mester all slated to speak at a forum in New York. Rounding out the week's slate of earnings reports are Goodrich Petroleum (GDP), ISIS Pharmaceuticals (ISIS), and NRG Energy (NRG).

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Is More Upside Ahead for Cyberark Software Ltd (CYBR)?

Cyberark Software Ltd (CYBR) hit its highest perch on record today

by 2/20/2015 1:48 PM
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Cybersecurity stocks have been all the rage of late, as evidenced by the massive year-to-date gains in sector components Cyberark Software Ltd (NASDAQ:CYBR) and FireEye Inc (NASDAQ:FEYE). In fact, amid calls from Washington for stricter cybersecurity measures and a slew of data breaches on big companies -- most recently insurance giant Anthem Inc (NYSE:ANTM) -- shares of CYBR have more than doubled in value this month to trade at $68.47, and hit a record high of $68.80 earlier. In the options pits, speculators have been scrambling to get a piece of the pie.

Daily Chart of CYBR Since January 2015

Today, in fact, overall options volume is running at nearly five times the expected intraday amount, with calls having the slight edge over puts. By the numbers, 8,249 calls have been exchanged, versus 7,112 puts. Short-term contracts are in high demand, too, per CYBR's 30-day at-the-money implied volatility, which has jumped 8.3% to 77.0%.

Widening the sentiment scope reveals today's call-skewed session is just more of the same. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CYBR's 10-day call/put volume ratio rests at 2.22, meaning more than two calls have been bought to open for each put over the past two weeks. Regardless, CYBR's call and put open interest are each resting at record levels, with more than 19,000 of the former and 16,600 of the latter outstanding.

Outside of the options pits, sentiment is skewed more toward the skeptical side. For starters, a healthy 9.6% of the stock's float is sold short -- suggesting that some of the recent call buying may be at the hands of shorts hedging against any additional upside. Elsewhere, roughly two-thirds of covering analysts maintain a tepid "hold" recommendation, and the average 12-month price target of $45.86 stands at a steep discount to current trading levels. Should Cyberark Software Ltd (NASDAQ:CYBR) continue to rally, a round of short-covering and/or some upwardly revised analyst notes could add fuel to the fire.


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Analyst Update: The Boeing Company, Avis Budget Group Inc., and Zillow Group, Inc.

Analysts adjusted their ratings on Boeing Co (BA), Avis Budget Group Inc. (CAR), and Zillow Group Inc (Z)

by 2/20/2015 12:12 PM
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Analysts are weighing in today on aerospace titan Boeing Co (NYSE:BA), car rental concern Avis Budget Group Inc. (NASDAQ:CAR), and online real estate firm Zillow Group Inc (NASDAQ:Z). Here's a quick look at today's brokerage notes on BA, CAR, and Z.

  • BA announced a new $30 million contract to develop laser weapons for the U.S. Navy earlier this week, which may have prompted Sterne Agee to up its price target on the equity by $32 to $196 this morning. The shares of Boeing Co are up over 2.8% this afternoon to trade at $158.18 -- and earlier notched an all-time high of $158.58 -- adding to an impressive 21.7% year-to-date gain. Surprisingly, sentiment in the stock's options pits is nearing a bearish peak, as BA's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.00 sits just 2 percentage points away from an annual high.

  • Following Wednesday night's impressive earnings release, no fewer than three brokerage firms have adjusted their ratings on CAR. Specifically, Credit Suisse raised its price target to $76 from $72 while underscoring an "outperform" rating, J.P. Morgan Securities upped its price target to $70 from $68 while reiterating an "overweight" rating, and Avondale Partners cut its recommendation to "market perform" from "market outperform." Although the shares of Avis Budget Group Inc. are down 2.9% today to hit $62.97, the equity has been trending upwards overall, advancing more than 40% year-over-year. Accordingly, sentiment in the stock's options pits is bullish, as CAR's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.97 sits higher than three-fourths of all similar annual readings.

  • Z, which acquired Trulia Inc. earlier this week, received attention from Craig-Hallum this morning, which raised its price target to $110 from $100 while reiterating a "hold" rating. Today, the shares are up about 3.4% to reach $125.41, adding to a 19% week-to-date gain. What's more, sentiment in Zillow Group Inc's options pits is bullish, with the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.78 standing in the 91st percentile of its annual range. However, outside of the options pits, over half of the stock's available float is sold short, representing nearly 15 sessions' worth of pent-up buying demand, at average trading volumes.

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