Schaeffer's Trading Floor Blog

Stocks On the Move: Bally Technologies Inc., GoPro Inc, and Pixelworks, Inc.

BYI, GPRO, and PXLW are moving sharply in Friday's trading

by 8/1/2014 1:43 PM
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U.S. stocks are extending yesterday's losses, pressured by a disappointing payrolls report for July. Among the names making notable moves are takeover target Bally Technologies Inc. (NYSE:BYI), photo equipment firm GoPro Inc (NASDAQ:GPRO), and semiconductor stock Pixelworks, Inc. (NASDAQ:PXLW). Here's a quick look at how BYI, GPRO, and PXLW are faring on the charts today.

  • BYI has bounced more than 29% today to trade at $77.70, with the shares vaulting higher on the heels of a buyout bid from Scientific Games Corp (NASDAQ:SGMS). Earlier in the session, BYI tagged a new record high of $84.66 -- north of the $83.30-per-share bid from SGMS. In light of today's M&A developments, Bally Technologies Inc. is likely benefiting from a short-squeeze situation. Following a 5.5% increase during the most recent reporting period, short interest now accounts for 11.3% of the stock's float -- or 9.2 times BYI's average daily trading volume.

  • GPRO has tanked 14.5% to $41.01, as last night's second-quarter earnings report failed to impress. Baird today upped its price target on GoPro Inc shares to $45 from $43, but that moderately bullish note hasn't done much to stem the bleeding.

    The big post-earnings decline has triggered a short-selling restriction for GPRO, and option volume is running at triple the intraday norm, as opportunistic traders look to place their bets. The most active option is the stock's weekly 8/1 43-strike call, which expires at today's close. According to the International Securities Exchange (ISE), some disheartened GPRO bulls are selling to close their out-of-the-money bets here, while others are writing new short calls at a volume-weighted average price of $0.13 per contract.

  • PXLW is also getting smacked by selling pressure following its latest turn in the earnings spotlight, despite a price-target hike to $12 from $10 at Roth Capital. The stock is down 23.1% at $6.05, paring its year-to-date gain to 25.5%. Pixelworks, Inc. is now on track to end the session below its 50-day and 80-day moving averages for the first time since May 9. Downgrades aren't too much of a risk going forward, as Roth Capital is the only firm following PXLW, and reiterated its "buy" rating with today's target hike. However, this under-the-radar stock could get hit with fresh bearish notes if more analysts decide to initiate coverage in the weeks ahead.

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Analyst Update: Expedia Inc, LinkedIn Corp, and L-3 Communications Holdings, Inc.

Analysts adjusted their ratings on EXPE, LNKD, and LLL

by 8/1/2014 12:12 PM
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Analysts are weighing in today on travel website Expedia Inc (NASDAQ:EXPE), professional networking resource LinkedIn Corp (NYSE:LNKD), and aerospace contractor L-3 Communications Holdings, Inc. (NYSE:LLL). Here's a quick look at today's brokerage notes on EXPE, LNKD, and LLL.

  • EXPE has tacked on 5.7% to trade at $83.95 -- after earlier hitting a record high of $84.85 -- following last night's second-quarter earnings beat and a subsequent rush of bullish brokerage attention. Specifically, the shares received price-target hikes from no fewer than 13 firms -- including Ascendiant (to $95 from $90) and UBS (to $95 from $85) -- and an upgrade to "outperform" from "market perform" at Raymond James. Additional upgrades could be forthcoming on Expedia Inc, too, given its more than 70% year-over-year advance. Currently eight out of 15 covering analysts still maintain a tepid "hold" opinion of the stock.

  • LNKD is streaking higher around midday, up more than 9% at $197.41 after briefly exploring territory north of the double-century mark. The shares are benefiting from a successful turn in the earnings confessional, and no fewer than 18 price-target hikes, including those from Jefferies (to $300 from $280) and Piper Jaffray (to $282 from $270). Overall, however, it's been a rough year for LinkedIn Corp, which is down nearly 9% in 2014. Not surprisingly, short interest on the equity -- which represents 5.2% of its float -- is approaching levels not seen since in over 1.5 years.

  • LLL is receiving mixed attention from Wall Street, after yesterday firing four employees for misconduct related to an internal audit review. While Credit Suisse and RBC cut their respective price targets to $131 (from $145) and $113 (from $123), J.P. Morgan Securities raised its target to $140 from $135. Elsewhere, L-3 Communications Holdings, Inc. shares are up more than 2% today to hover near $107.12, bringing them back into the green on a year-to-date basis -- though the equity hasn't come close to recovering from yesterday's 12.3% loss. Broadly speaking, sentiment on LLL is mixed. For example, six out of 11 covering analysts have given the shares a "hold" rating (versus five "strong buys"); however, the stock's consensus 12-month price target of $127.42 stands at a significant premium to current trading levels.

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Earnings on Deck: Michael Kors Holdings Ltd, Coach Inc, and CVS Caremark Corporation

Taking a closer look at KORS, COH, and CVS ahead of their earnings results

by 8/1/2014 10:47 AM
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While next week is light on the economic front, there will be plenty of earnings reports to capture traders' attention. Kicking things off bright and early Monday morning will be apparel issue Michael Kors Holdings Ltd (NYSE:KORS), while accessories designer Coach Inc (NYSE:COH) and pharmacy name CVS Caremark Corporation (NYSE:CVS) will take to the stage ahead of Tuesday's open. Here's a quick look at KORS, COH, and CVS as earnings approach.

  • KORS has struggled in recent months, with the shares off 18% from their most recent high of $98.96, tagged in late May. However, this pullback was contained by the equity's 320-day moving average, and at last check, the stock was lingering near $81.14. If past is prologue, KORS could be poised to extend its rebound after the company steps into the earnings confessional Monday morning. Specifically, the stock has averaged a single-session post-earnings gain of 7.2% over the past eight quarters, which widens to 9.2% going out one week. Plus, the security could benefit from a round of upgrades, should Michael Kors Holdings Ltd (NYSE:KORS) turn in another earnings win. At present, 56% of covering analysts maintain a "hold" or "sell" suggestion toward the stock, leaving the door wide open for a re-evaluation of ratings.

  • COH's post-earnings price action over the past eight quarters paints a decidedly different picture, with the shares averaging a loss of 6.1% in the session subsequent to reporting. This only highlights the equity's withstanding technical troubles, though, with COH down nearly 39% year-to-date to trade at $34.29. Not surprisingly, sentiment is tilted toward the skeptical side, with 74% of covering analysts levying a "hold" or "sell" suggestion toward Coach Inc, and 11.2% of the stock's float sold short. For Coach's fiscal fourth quarter, Wall Street is calling for a per-share profit of 53 cents -- a 36-cent decline from what the company banked one year ago.

  • Following recent reports of a fresh acquisition, CVS will unveil earnings Tuesday morning. Over the past eight quarters, the company has matched or exceeded analysts' bottom-line estimates seven times, resulting in an average single-session post-earnings gain of 0.2%. On the charts, shares of CVS have been guided higher by their 80-day moving average since mid-October, with the equity last seen lingering near $76.84. Analysts, meanwhile, aren't expecting much more upside for the stock, considering its consensus 12-month price target of $81.39 stands at a slim 6% premium to current trading levels.

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Analyst Downgrades: Alcatel Lucent SA (ADR), 3D Systems Corporation, and Valeant Pharmaceuticals Intl Inc

Analysts downwardly revised their ratings on ALU, DDD, and VRX

by 8/1/2014 9:30 AM
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Analysts are weighing in today on France-based networking name Alcatel Lucent SA (ADR) (NYSE:ALU), 3-D printing expert 3D Systems Corporation (NYSE:DDD), and specialty drug maker Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Here's a quick roundup of today's bearish brokerage notes on ALU, DDD, and VRX.

  • ALU has had a rough 2014, down 22% so far, and gapping 10.7% lower yesterday to finish at $3.43, as weaker demand for its core networking products eclipsed an earnings report that largely met expectations. Alcatel Lucent SA (ADR) was subsequently slapped with price-target cuts from MKM Partners (to $4 from $4.50), Nomura (to 3.50 euros from 4 euros), and SocGen (to 3 euros from 3.25 euros) -- though Deutsche Bank upped its own target slightly to 2.90 euros from 2.80 euros. In general, the Street has taken a mixed view of the shares. While 60% of covering analysts have given the stock a "hold" or worse rating, ALU's consensus 12-month price target of $4.79 stands at a roughly 40% premium to current trading levels.

  • DDD shed 10.6% yesterday to close at $50.13, following a lackluster quarterly earnings report. These technical troubles prompted a round of bearish notes from no fewer than six brokerage firms, including downgrades today from RBC (to "sector perform" from "outperform") and Piper Jaffray (to "neutral" from "overweight"). Additional downgrades could be on the way, too, as two-thirds of 3D Systems Corporation's 15 covering analysts have handed out "buy" or better recommendations. In addition, the stock's consensus 12-month price target of $63.84 represents a 27.3% premium to Thursday's closing price.

  • Finally, VRX suffered a nearly 7% loss yesterday and closed at $117.39, after the firm cut its full-year profit and revenue forecast. As a result, the company saw its price target slashed at Cantor (to $167 from $209), CIBC (to $155 from $160), Piper Jaffray (to $135 from $151), and Susquehanna (to $160 from $170). Meanwhile, short sellers were likely cheering Valeant Pharmaceuticals Intl Inc's Thursday sell-off; 6.3% of the equity's float is sold short, which would take more than 13 sessions to cover, at VRX's typical daily trading volume.

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U.S. stock futures are wading in red ink this morning, pressured by a softer-than-forecast jobs report for July. In company news, today's stocks to watch include gaming specialists Scientific Games Corp (NASDAQ:SGMS) and Bally Technologies Inc. (NYSE:BYI), electronics retailer RadioShack Corporation (NYSE:RSH), and Wall Street newcomer Mobileye NV (NYSE:MBLY).

  • Scientific Games Corp (NASDAQ:SGMS) has offered to pay roughly $3.3 billion, or $83.30 per share, to acquire sector peer Bally Technologies Inc. (NYSE:BYI). Including the assumption of BYI debt, the deal is valued at $5.1 billion. SGMS is up 23.3% ahead of the open, while BYI has bounced 31.2%. (AP, via Yahoo! Finance)

  • RadioShack Corporation (NYSE:RSH) is in its death throes, according to CNNMoney. RSH shares on Thursday tumbled to an all-time low of $0.62, and the retail chain reportedly has only $62 million in cash on hand -- which means it's not even liquid enough to shutter underperforming locations. Representatives for RSH did not comment for the story. (CNNMoney)

  • Israeli software firm Mobileye NV (NYSE:MBLY) is set to make its trading debut on the Big Board today, after raising $890 million through its initial public offering (IPO). MBLY sold 35.6 million shares at $25 each, topping its upwardly revised price range of $21 to $23 per share. (Bloomberg)

  • Apple Inc. (NASDAQ:AAPL) is planning to cut 200 employees from its freshly acquired Beats division, representing roughly 29% of the unit's work force. Sources say most of the layoffs will be made to eliminate redundancies with the current AAPL payroll, such as positions in the human resources and finance areas. (Mashable)

  • On the earnings front, The Procter & Gamble Company (NYSE:PG), Tesla Motors Inc (NASDAQ:TSLA), LinkedIn Corp (NYSE:LNKD), and GoPro Inc (NASDAQ:GPRO) were among the big names to report their latest quarterly results. (CNBC; Business Insider)

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