Schaeffer's Trading Floor Blog

Stocks on the Move: Chipotle Mexican Grill, Inc., Crocs, Inc., and Harley-Davidson Inc

CMG, CROX, and HOG are moving sharply in Tuesday's trading

by 7/22/2014 12:42 PM
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U.S. markets are moving higher today, thanks to a round of upbeat earnings and economic reports. Two names that are seeing big moves to the upside in the wake of their quarterly reports are burrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG) and footwear concern Crocs, Inc. (NASDAQ:CROX). Conversely, motorcycle maven Harley-Davidson Inc (NYSE:HOG) has taken a turn for the worse in the wake of its results. Here's a quick roundup of how this trio of names is performing on the charts so far.

  • CMG rallied to a new record peak of $667.90 earlier in the wake of a strong earnings report and subsequent round of bullish brokerage attention. At last check, the stock was still enjoying a comfortable lead over previous resistance in the $600 area -- up 13.2% to trade at $667.80. From a contrarian perspective, a continued round of price-target hikes could help fuel the equity's fire. At present, the consensus 12-month price target for Chipotle Mexican Grill, Inc. stands at $618.04 -- well below present trading levels.

  • Also enjoying a post-earnings lift is CROX, which was last seen 11.2% higher at $16.50. In addition to the better-than-expected report, traders are also cheering the company's cost-cutting measures, which include a round of layoffs and store closings. This bullish gap has the potential to spark a short-covering rally, considering a healthy 6% of the security's float is sold short, representing more than four sessions' worth of pent-up buying demand. Meanwhile, in the stock's options pits, volume has soared to eight times what is typically seen at this point in the day, with sell-to-close activity detected at the August 14 call.

  • HOG, on the other hand, is having a decidedly different day, with the shares off 6% in the wake of the company's quarterly results. Specifically, Harley-Davidson Inc's second-quarter profit arrived well above expectations, but a downwardly revised full-year shipment forecast has traders hitting the exits. Going forward, the stock could continue to be pressured lower, should any brokerage firms re-evaluate their upbeat rankings. Half of covering analysts maintain a "buy" or better rating toward the equity, with not a single "sell" to be found. Plus, the consensus 12-month price target of $76.21 stands at a stiff 21% premium to the security's current price of $63.05.

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How Apple Inc. (AAPL) Option Players Are Preparing for Earnings

AAPL will unveil its fiscal third-quarter earnings report after tonight's close

by 7/22/2014 11:21 AM
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Tech titan Apple Inc. (NASDAQ:AAPL) will take its turn on the earnings stage after tonight's close, and ahead of the highly anticipated event, the stock was seen 0.4% higher at $94.33. Longer term, AAPL has been doing well since getting an 8.2% single-session post-earnings boost in late April, with the shares up 26% from their April 23 close at $74.96. Not surprisingly, calls have been preferred over puts, and in today's session, the former are outpacing the latter by a nearly 3-to-1 margin.

What's more, traders are showing a preference for short-term contracts, as evidenced by the stock's 30-day at-the-money (ATM) implied volatility (IV), which is up 1.3% today to 28.3%. However, this reading is far from an annual peak of 35.6% reached on Oct. 25, which immediately preceded AAPL's fiscal fourth-quarter earnings report.

Drilling down on specific strikes in both the weekly 7/25 and August series of options, the 95 level has been popular among call players. Specifically, 44,771 contracts currently reside at the weekly 7/25 95-strike call, while 50,310 calls make up open interest at the August 95 strike. For those buying to open the contracts, the goal is for AAPL to rally back above $95 -- and through its 10-day moving average, currently hovering at $94.79 -- by the respective expiration dates. Conversely, for those selling to open the contracts, the expectation is for AAPL to remain south of the strike throughout the options' lifetimes.

Outside of the options pits, sentiment remains bullish toward the iPhone peddler. Short interest, for example, accounts for a low 1.9% of the stock's float, and would take 2.5 days to cover, at AAPL's average daily pace of trading. Meanwhile, 79% of analysts covering the equity maintain a "buy" or "strong buy" rating, and the consensus 12-month price target of $99.57 stands in territory not charted by the stock since September 2012.

Looking back over the past eight quarters, AAPL has had some big single-session post-earnings price swings in both directions, including the previously mentioned 8.2% pop in April, as well as an 8% plunge in January. On average, though, the stock has shed 1.9% in the session subsequent to earnings, which swings to a 0.8% gain when going out one week. For Apple Inc.'s (NASDAQ:AAPL) fiscal third quarter, the consensus estimate is for a per-share profit of $1.23 -- a 16-cent improvement over the company's year-ago results.

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Buzz Stocks: Herbalife Ltd., Facebook Inc (FB), CIT Group Inc., and Yahoo! Inc.

Today's stocks to watch in the news are HLF, FB, CIT, and YHOO

by 7/22/2014 9:26 AM
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Futures for U.S. markets are in the green this morning, as geopolitical fears subside. In company news, here are some stocks to watch today.

  • All eyes will be on Herbalife Ltd. (NYSE:HLF) today, after hedge fund manager Bill Ackman of Pershing Square promised on Monday that he will "expose an incredible fraud"on the part of the nutritional supplements company. Ackman is slated to give a presentation in New York at 10 a.m. ET. (USA Today)

  • Facebook Inc (NASDAQ:FB) announced yesterday it has launched a "Save" feature for its iOS, Android, and website that will allow users to store links to view later. While the new feature will give Facebook users the ability to quickly find links and content that they may not have time to read at present, it could also give the company insight into what subscribers deem most important. (TechCrunch)

  • In M&A news, CIT Group Inc. (NYSE:CIT) has agreed to buy the parent company of OneWest Bank in a cash-and-stock deal totaling $3.4 billion, as it looks to boost its lending capabilities. Elsewhere, Yahoo! Inc. (NASDAQ:YHOO) will purchase mobile ad issue Flurry for an undisclosed sum. (The New York Times; Forbes)

  • Jana Partners LLC is pushing for a change at Apache Corporation (NYSE:APA), of which it holds a more than $1 billion stake. In a letter to shareholders on Monday, the hedge fund said, "Investors are unimpressed by [Apache]'s global diversification and have voted with their feet." Specifically, Jana wants APA to unload its two projects in Canada and Australia, and focus more on domestic drilling. (MarketWatch)

  • Meanwhile, earnings reports were issued from McDonald's Corporation (NYSE:MCD), Verizon Communications Inc. (NYSE:VZ), Chipotle Mexican Grill, Inc. (NYSE:CMG), Comcast Corporation (NASDAQ:CMCSA), Netflix, Inc. (NASDAQ:NFLX), and Texas Instruments Incorporated (NASDAQ:TXN). (CNBC; USA Today; CNN, MarketWatch; Bloomberg Businessweek; FOX Business)

  • Finally, Apple Inc. (NASDAQ:AAPL) -- which unveils its quarterly earnings results after tonight's close -- has reportedly snagged its biggest initial order yet for the iPhone 6. Specifically, sources at The Wall Street Journal say the company's orders for the two newest iterations of the iPhone are up roughly 20 million to 30 million units from last year's release of the iPhone 5s and 5c. (TechCrunch)

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Analyst Downgrades: Chesapeake Energy Corporation, Sarepta Therapeutics Inc, and Blue Nile Inc

Analysts downwardly revised their ratings on CHK, SRPT, and NILE

by 7/22/2014 9:17 AM
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Analysts are weighing in today on commodity concern Chesapeake Energy Corporation (NYSE:CHK), drug maker Sarepta Therapeutics Inc (NASDAQ:SRPT), and online jeweler Blue Nile Inc (NASDAQ:NILE). Here's a quick roundup of today's bearish brokerage notes.

  • Global Hunter Securities trimmed its price target on CHK to $34 from $38 this morning. The stock has tacked on more than 26% during the past year, but is now testing support atop its 10-month moving average. Although Chesapeake Energy Corporation tagged a multi-year peak of $29.92 earlier this month, most analysts are in the bearish camp. Just seven out of 32 brokerage firms consider CHK worthy of a "buy" or better rating. Ahead of the bell, CHK -- which closed at $26.76 on Monday -- is poised to shrug off today's downbeat note, with the stock headed 0.6% higher.

  • BofA-Merrill Lynch initiated coverage of SRPT with a tepid "neutral" rating. The stock is still treading water after its July 10 bear gap -- the result of disappointing data for its eteplirsen drug -- and finished at $21.57 on Monday. The security has lost more than half its value over the past year, and an extended retreat could trigger more negative analyst notes. The consensus 12-month price target of $38.08 represents expected upside of nearly 77% to Sarepta Therapeutics Inc's current price, and more than half the analysts covering the shares maintain "buy" or better opinions.

  • Finally, NILE was slapped with a pair of downgrades this morning, with both Wunderlich and William Blair revising their ratings to "market perform" from "outperform." The negative notes come as no surprise, as Blue Nile Inc has surrendered more than 42% in 2014, and touched a new annual low of $26.55 just last week. What's more, the shares could be vulnerable to additional downgrades and/or price-target reductions. Four of the nine analysts following NILE offer up "buy" or better endorsements, and the average 12-month price target of $37.88 represents expected upside of 39% from the stock's closing price of $27.21 on Monday. In pre-market action, NILE is pointed 2% lower.

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Analyst Upgrades: Chipotle Mexican Grill, Inc., Netflix, Inc., and Texas Instruments Incorporated

Analysts upwardly revised their ratings on CMG, NFLX, and TXN

by 7/22/2014 8:59 AM
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Analysts are weighing in today on fast-casual restaurateur Chipotle Mexican Grill, Inc. (NYSE:CMG), streaming video provider Netflix, Inc. (NASDAQ:NFLX), and semiconductor concern Texas Instruments Incorporated (NASDAQ:TXN), which all stepped into the earnings confessional last night. Here's a quick roundup of today's bullish brokerage notes.

  • CMG said second-quarter profit rose almost 26% to $3.50 per share, while revenue surged a year-over-year 29% to $1.05 billion, topping expectations. Furthermore, the company saw same-store sales rally 17.3%, as traffic increased in spite of higher menu prices, and lifted its forecast for current-quarter same-store sales growth. As such, Chipotle Mexican Grill, Inc. scored a bevy of upbeat analyst attention, with no fewer than 13 brokerage firms hiking their price targets. Among them were Barclays and Baird, which lifted their targets to $690 and $800, respectively. After closing at $589.93 on Monday, the shares of CMG are pointed more than 10% higher ahead of the bell, and could surge into record-high territory north of $650.

  • NFLX said its second-quarter profit more than doubled from the year-ago period, to $1.15 per share, as the number of global subscribers topped 50 million for the first time. Revenue rose to $1.34 billion from $1.07 billion. The results were roughly in line with expectations for a per-share profit of $1.16 on sales of $1.34 billion. On the analyst front, no fewer than 12 brokerage firms lifted their price targets on NFLX, including J.P. Morgan Securities, which hiked its outlook to $550 from $500. However, Netflix, Inc. shares have lost some steam in pre-market action, after the company increased its monthly rate by $1 for new subscribers. At last check, NFLX -- which settled Monday at $451.95 -- is pointed 1% lower.

  • Finally, TXN reported stronger-than-expected per-share earnings for the second quarter, and said revenue rose 8% to $3.3 billion -- in line with the Street's consensus estimate. In addition, Texas Instruments Incorporated hiked its third-quarter sales forecast, citing improving demand for chips in the automotive industry. As such, Jefferies and Deutsche Bank were among the handful of brokerage firms to upwardly revise their price targets on the stock, to $60 and $45, respectively. Nevertheless, the low end of the company's third-quarter outlook is well below the consensus estimate, and TXN is poised to drop 0.8% out of the gate, after settling at $49.17 on Monday.

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