Schaeffer's Trading Floor Blog

Analyst Downgrades: Bed Bath & Beyond Inc., eBay Inc, and Walgreen Company

Analysts downwardly revised their ratings on BBBY, EBAY, and WAG

by 10/1/2014 9:41 AM
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Analysts are weighing in today on home retailer Bed Bath & Beyond Inc. (NASDAQ:BBBY), e-commerce issue eBay Inc (NASDAQ:EBAY), and pharmacy chain Walgreen Company (NYSE:WAG). Here's a quick roundup of today's bearish brokerage notes on BBBY, EBAY, and WAG.

  • Credit Suisse assumed coverage on BBBY with a "neutral" rating. This is fairly typical for the stock, which has received 12 "holds" and two "sell" recommendations from the Street, versus just six "strong buy" endorsements. On the charts, Bed Bath & Beyond Inc. has had a rough go of it, tumbling 18.5% this year to trade at $65.46, and could continue to struggle on any additional bearish brokerage attention that comes down the pike.

  • Despite gapping 7.5% higher yesterday after announcing spinoff plans for PayPal, EBAY is in the Street's bearish crosshairs this morning. The stock received no fewer than four downgrades, as well as a price-target cut to $62 from $65 at Wedbush, which also removed the equity from its "Best Ideas" list. At the same time, however, eBay Inc saw its price target raised at Barclays (to $64 from $54), J.P. Morgan Securities (to $61 from $56), and SunTrust Robinson (to $60 from $58). In the options pits, sentiment has been decisively negative, per the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.71, which ranks just 14 percentage points from a 12-month peak. Meanwhile, on the charts, EBAY is up just 3.2% year-to-date, and closed Tuesday at $56.63.

  • Finally, WAG saw its price target reduced to $70 from $71 at J.P. Morgan Securities, and to $67 from $69 at Jefferies. However, the firms maintained "overweight" and "buy" ratings, respectively. Pessimism is prevalent in the stock's options pits, per Walgreen Company's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.20, which is higher than 87% of all other readings from the last year. On the fundament front, the health-focused retailer has entered into a new Medicare prescription drug plan with Express Scripts Holding Company (NASDAQ:ESRX), and a partnership with The Western Union Company (NYSE:WU), allowing customers to send or receive money at any WAG or Duane Reade location. On the charts, the stock has added just 3.2% in 2014, and closed at $59.27 yesterday.

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Buzz Stocks: Tekmira Pharmaceuticals Corporation, BioCryst Pharmaceuticals, Inc., and NewLink Genetics Corp

Today's stocks to watch in the news include TKMR, BCRX, and NLNK

by 10/1/2014 8:56 AM
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U.S. stocks are cautiously higher this morning, after news of the first confirmed case of Ebola in the U.S. Poised to capitalize on the headlines is drugmaker Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR), as well as sector peers BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) and NewLink Genetics Corp (NASDAQ:NLNK).

  • TKMR is about to make some recent call buyers happy. After settling Tuesday at $21.14, the shares are pointed nearly 27% higher in pre-market action, and should easily take out the $26 level for the first time in more than nine months. Tekmira Pharmaceuticals Corporation -- whose Ebola treatment was just approved for emergency use in the U.S. -- has advanced more than 165% in 2014 alone, and has outperformed the broader S&P 500 Index (SPX) by nearly 98 percentage points during the past three months.

  • BCRX -- which also has an experimental Ebola treatment -- is flirting with a 9% gain ahead of the bell, after landing at $9.78 yesterday. Unlike TKMR, BioCryst Pharmaceuticals, Inc. has been a broad-market laggard, underperforming the SPX by nearly 19 percentage points during the past two months. Today's anticipated rally will likely leave a few recent option buyers in the lurch, too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.61 stands higher than 73% of all other readings from the past year, pointing to a healthier-than-usual appetite for bearish bets over bullish during the past two weeks.

  • Finally, NLNK -- which is also dabbling with an Ebola vaccine -- is headed 10.6% higher at the open, and could enjoy a short-squeeze situation, should be bears abandon ship. Short interest soared 19.3% during the past two reporting periods, and now accounts for more than 29% of NewLink Genetics Corp's total available float. In fact, at the equity's average pace of trading, it would take nearly a month to buy back all of these bearish bets. NLNK finished at $21.42 on Tuesday.

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Analyst Upgrades: BlackBerry Ltd, Gilead Sciences, Inc., and Orbitz Worldwide, Inc.

Analysts upwardly revised their ratings on BBRY, GILD, and OWW

by 10/1/2014 8:51 AM
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Analysts are weighing in today on Passport maker BlackBerry Ltd (NASDAQ:BBRY), biopharmaceutical firm Gilead Sciences, Inc. (NASDAQ:GILD), and online travel company Orbitz Worldwide, Inc. (NYSE:OWW). Here's a quick roundup of today's bullish brokerage notes on BBRY, GILD, and OWW.

  • Exane BNP Paribas upped its price target on BBRY to $10.50 from $8.50, although the brokerage firm didn't budge from its "neutral" rating. Positive attention has been hard to find on Wall Street, where all 21 covering analysts have slapped the shares with a "hold" or worse assessment. Plus, BlackBerry Ltd's consensus 12-month price target stands at $10.19, or just 2.5% from the stock's current perch at $9.94. This, despite the shares rallying 33.6% year-to-date. If BBRY continues to run up the charts, it could benefit from a round of upgrades and/or additional price-target hikes.

  • BofA-Merrill Lynch reinstated coverage on GILD with a "buy" opinion. This is par for the course, as the equity has received 14 "buy" or better ratings from the brokerage bunch, compared to just two "holds" and not a single "sell" opinion. This optimism is warranted, considering Gilead Sciences, Inc. has tacked on nearly 42% in 2014 to trade at $106.45, and early last month hit a record high of $110.64.

  • Finally, OWW saw its rating increased to "outperform" from "perform" at Oppenheimer. Elsewhere, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been picking up calls over puts at a breakneck pace in recent months. Orbitz Worldwide, Inc.'s 50-day call/put volume ratio across this trio of exchanges comes in at a brow-raising 68.97, which registers in the bullishly skewed 98th annual percentile. This is surprising, considering the shares have been locked in a downtrend in recent months -- shedding 15.4% since their August high of $9.30, to rest at $7.87. Of course, some of these long calls may have been initiated by short sellers looking for an upside hedge, as short interest ramped up 17% during the two most recent reporting periods.

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Analyst Update: eBay Inc, GT Advanced Technologies Inc, and AOL, Inc.

Analysts offered their two cents on EBAY, GTAT, and AOL

by 9/30/2014 1:13 PM
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U.S. stocks are higher at midday, as end-of-quarter positioning trumps lackluster economic data. Meanwhile, among the equities in focus are e-commerce concern eBay Inc (NASDAQ:EBAY), solar-wafer maker GT Advanced Technologies Inc (NASDAQ:GTAT), and Internet issue AOL, Inc. (NYSE:AOL), which have all attracted analyst attention.

  • EBAY is up 8.6% at $57.16, as traders -- and Carl Icahn -- applaud the company's plans to spin off PayPal next year. Following the news, brokerage action has been mixed. Canaccord Genuity downgraded EBAY to "hold" from "buy," while Susquehanna upped its price target to $56 from $52. The shares of eBay Inc are now in the black on a year-to-date basis, and options traders are rushing to place their bets on the surging stock. Intraday call activity is running at six times the average pace today, and is outpacing put volume by a margin of more than 2-to-1.

  • GTAT is bucking the broad-market trend higher, down 3.7% at $10.85, after UBS cut its price target to $13 from $17 and underscored a tepid "neutral" rating. The stock earlier today fell as low as $10.70 -- in territory not charted since mid-February -- extending its slide in the wake of an Apple Inc. (NASDAQ:AAPL) snub. In fact, the stock is on pace for a monthly deficit of 39%, pressured lower beneath its 10-day moving average. Against this backdrop, option players have grown increasingly bearish, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.07 sits just 1 percentage point from an annual peak. Echoing that, GT Advanced Technologies Inc sports a Schaeffer's put/call open interest ratio (SOIR) of 1.47 -- higher than 98% of all comparable readings from the past year, suggesting short-term options traders have rarely been more put-biased.

  • Finally, AOL is up 1.4% at $45.02, after Nomura hiked its price target to $48 from $43, and maintained a "neutral" rating. Since Sept. 25, AOL, Inc. shares have advanced 4.8% amid hopes for a merger with Yahoo! Inc. (NASDAQ:YHOO) -- the latter of which has been active among short-term options traders of late -- and an exodus of bears could add more fuel to AOL's fire. Currently, short interest represents more than a week's worth of pent-up buying demand, at AOL's average pace of trading, and six out of 13 covering analysts maintain "hold" or worse opinions.

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Stocks On the Move: Teekay Corporation, PDF Solutions, Inc., and China Finance Online Co. (ADR)

TK, PDFS, and JRJC are moving sharply in Tuesday's trading

by 9/30/2014 12:22 PM
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Around midday, three of the market's biggest movers are offshore shipping concern Teekay Corporation (NYSE:TK), semiconductor issue PDF Solutions, Inc. (NASDAQ:PDFS), and integrated financial services specialist China Finance Online Co. (ADR) (NASDAQ:JRJC). Here's a quick roundup of how TK, PDFS, and JRJC are performing on the charts so far.

  • TK hit a fresh record peak of $67.98 this morning, but was last seen 14.7% higher at $66.92, following an upgrade to "buy" from "hold" and a price-target hike to $90 from $68 at Deutsche Bank, with the brokerage firm citing the company's new dividend policy. Year-to-date, the shares of Teekay Corporation are up more than 39%, and option traders think there's more room to run. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 50-day call/put volume ratio of 4.98 ranks in the 86th annual percentile. Simply stated, calls have been bought to open over puts with more rapidity just 14% of the time within the past year.

  • D.A. Davidson cut its price target for PDFS to $24 from $30 (although it maintained its "buy" rating), after the company projected the dissolution of two contract negotiations, and said it expects full-year revenue to arrive flat as a result. As such, the stock has plunged 27.2% today to $12.84, and earlier notched a new two-year low of $12.63. This negative price action is more of the same for an equity that's surrendered 50% of its value in 2014. Should PDF Solutions, Inc. continue to struggle, an additional round of bearish brokerage notes could be on the horizon. At present, only two analysts cover the security, and both have levied a "strong buy" rating toward PDFS.

  • JRJC has surrendered almost 16% to churn near $7.37, after the company reported a wider-than-expected loss in its fiscal second quarter. The stock is now testing support at its 40-day moving average -- a trendline (currently located at $7.62) that has served as a foothold for JRJC since early June. On the sentiment front, traders have been optimistic toward a security that was up more than 39% heading into today's session. At the ISE, CBOE, and PHLX, speculators have bought to open 3.88 calls for each put over the past 20 sessions. Elsewhere, China Finance Online Co.'s (ADR) Schaeffer's put/call open interest ratio (SOIR) of 0.49 shows call open interest more than doubles put open interest among options set to expire in three months or less.

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