Schaeffer's Trading Floor Blog
Stocks quoted in this article:

U.S. stocks are mixed at midday, with blue-chips enjoying a halo lift from Visa Inc (NYSE:V), while tech stocks are sticking close to the flat line. Among equities attracting the attention of analysts are electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA), as well as battered commodity concerns Barrick Gold Corporation (USA) (NYSE:ABX) and Goldcorp Inc. (USA) (NYSE:GG).

  • TSLA is down 0.4% at $237.15, despite a fresh "buy" initiation and $320 price target at Ascendiant Capital. The brokerage firm opined that TSLA's "valuation will increase on growth from new product introductions and geographic expansions," and said it's "remarkable … that the traditional automobile industry is unable or unwilling to respond to this clear threat" from Tesla Motors Inc's Model S. On the charts, TSLA remains nearly 58% higher year-to-date, but option traders have grown increasingly put-heavy ahead of the company's earnings release next Tuesday night. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.54 sits just 3 percentage points from a 12-month peak, suggesting short-term traders have rarely been more put-biased during the past year.

  • ABX is down 4% at $12.32, and earlier touched a new 22-year low of $12.20, due to the combination of sinking gold prices and concerns about the company's Lumwana copper mine. While Barrick Gold Corporation (USA) reported stronger-than-expected quarterly earnings, the firm said it will cut debt next year to curb weak gold prices, and warned that it may be forced to close its Zambia-based mine if the government executes a plan to hike mineral royalties. While Cowen and Company lifted its price target on ABX to $10.96 from $10.90, BMO trimmed its target to $17 and reiterated a "market perform" rating. Outside of the analyst community, ABX's recent crop of option bears are likely cheering today's post-earnings swoon, though the stock has yet to breach the recently popular 12 strike.

  • In similar fashion, GG is 10.2% lower at $19.33, and earlier touched a near-six-year low of $19.19, after confessing to weaker-than-expected third-quarter earnings. The stock is now 10.8% lower year-to-date, yet analysts at J.P. Morgan Securities said now could be an opportune time to buy Goldcorp Inc. (USA) on a dip. "The market should look through this result to the stronger company with a portfolio of young, lower-cost assets that should crystallize by year-end market," the brokerage firm said. Most analysts are already in GG's bullish camp, as the stock boasts 10 "buy" or better endorsements, compared to five "holds" and just one "sell." Likewise, the consensus 12-month price target of $36.02 represents a premium of 86.3% to GG's current price. Should the shares extend their retreat, a round of downgrades and/or price-target cuts could exacerbate selling pressure on the equity.

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Stocks On the Move: Visa Inc, TASER International, Inc., and Twitter Inc

V, TASR, and TWTR are moving sharply in Thursday's trading

by 10/30/2014 12:44 PM
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Markets are mostly higher at midday, with credit card concern Visa Inc (NYSE:V) helping send the Dow to a triple-digit lead. Among other equities seeing notable moves are stun gun maker TASER International, Inc. (NASDAQ:TASR) and microblogging giant Twitter Inc (NYSE:TWTR). Here's a quick look at how V, TASR, and TWTR are performing on the charts so far.

  • V's better-than-expected fiscal fourth-quarter earnings report -- and upbeat outlook for the mobile payment industry -- was met with a round of price-target hikes, including one from Morgan Stanley, which upped its outlook by $22 to $270, while underscoring its "overweight" rating. FBR also weighed in, raising its recommendation on Visa Inc to "outperform" from "market perform." Against this backdrop, the shares have surged 9% to trade at $234.06 -- into the black on a year-to-date basis -- after earlier tagging a fresh record peak of $235.53. Today's bullish gap is most likely disappointing option traders, who had grown increasingly bearish on the equity in the months leading up to last night's report. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 50-day put/call volume ratio of 0.98 ranks just 6 percentage points from a 52-week peak.

  • Also surging in the wake of a strong earnings report is TASR, which was last seen 7.3% higher at $17.67. Heading into today's session, the stock was sitting on a modest 3.7% year-to-date gain, and should the security continue its post-earnings momentum, a capitulation from some of the weaker bearish hands could help propel TASR higher. On the options front, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.58 ranks in the 89th percentile of its annual range, meaning short-term speculators have rarely been as put-skewed toward TASR as they are now. Elsewhere, short interest jumped 28.2% over the past two reporting periods, and now accounts for more than 16% of the stock's available float. What's more, it would take more than four sessions to cover these bearish bets, at TASER International, Inc.'s average daily pace of trading.

  • TWTR is still reeling in the wake of its earnings report , and last night, was dealt another fundamental blow when it was reported two of the company's key executives were hitting the bricks. The stock is down 0.8% at $41.73 as a result, and earlier breached the round-number $40 mark for the first time since late July. Thanks to today's slide, the equity is on pace to log a weekly loss of more than 16%. Given Twitter Inc's recent struggles, the door is wide open for a round of downgrades and/or price-target cuts, which could pressure the shares even lower. In fact, more than half of analysts covering the security maintain a "buy" or "strong buy" rating, while the consensus 12-month price target of $52.06 stands at a 24.3% premium to current trading levels.

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Analyst Upgrades: F5 Networks, Inc., RF Micro Devices, Inc., and Take-Two Interactive Software, Inc.

Analysts upwardly revised their ratings on FFIV, RFMD, and TTWO

by 10/30/2014 9:35 AM
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Analysts are weighing in today on IT issue F5 Networks, Inc. (NASDAQ:FFIV), radio frequency solutions specialist RF Micro Devices, Inc. (NASDAQ:RFMD), and video game maker Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Here's a quick roundup of today's bullish brokerage notes on FFIV, RFMD, and TTWO.

  • A rash of brokerage firms weighed in on FFIV this morning, after the company posted fiscal fourth-quarter earnings and revenue that exceeded estimates, and announced the retirement of CEO John McAdam. The most optimistic of outlooks came from Pacific Crest, which raised its price target to $153 from $151 -- and underscored its "outperform" rating -- representing expected upside of 30.6% to last night's closing price of $117.12. On the sentiment front, option traders displayed a slight bearish bias toward F5 Networks, Inc. in the weeks leading up to last night's results. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.83 ranks in the 66th percentile of its annual range.

  • RFMD received no fewer than four price-target hikes after unveiling its fiscal second-quarter earnings report, including one from Canaccord Genuity. Specifically, the brokerage firm upped its price target to $16 from $12.50, and raised its outlook to "buy" from "hold." The shares have more than doubled in value on a year-to-date basis, and closed last night at $12.05. In the options pits, traders have been scooping up bullish bets in a flurry, as evidenced by the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 97.09, which ranks higher than 92% of similar readings taken in the past year. With 24.2% of RFMD's float sold short, though, a portion of this call buying could be at the hands of shorts hedging their bearish bets against any post-earnings upside. In early trading, RF Micro Devices, Inc. is up about 1%.

  • TTWO popped 5% out of the gate to explore six-year highs near $24.50. Take-Two Interactive Software, Inc. last night reported a narrower-than-expected fiscal second-quarter loss, and lifted its fiscal-year outlook. No fewer than 10 brokerage firms hiked their price targets on TTWO, with the most ambitious being MKM, which lifted its target to $30 from $27 -- representing expected upside of 31.6% to the stock's Wednesday close at $22.80, and in record-high territory. In addition, Brean upgraded its opinion to "buy" from "hold." One group not celebrating TTWO's earnings victory? Short sellers. Short interest accounts for 18.7% of the stock's total available float, representing nearly eight sessions' worth of pent-up buying demand, at the stock's average pace of trading -- plenty of fuel for a short-covering rally.

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Analyst Downgrades: DreamWorks Animation SKG, Inc., SunPower Corporation, and Glu Mobile Inc.

Analysts downwardly revised their ratings on DWA, SPWR, and GLUU

by 10/30/2014 9:23 AM
Stocks quoted in this article:

Analysts are weighing in today on movie studio DreamWorks Animation SKG, Inc. (NASDAQ:DWA), alternative energy concern SunPower Corporation (NASDAQ:SPWR), and mobile game maker Glu Mobile Inc. (NASDAQ:GLUU). Here's a quick roundup of today's bearish brokerage notes on DWA, SPWR, and GLUU.

  • DWA is pointed 1.8% higher ahead of the bell, after the firm said the blockbuster performance of "How to Train Your Dragon 2" translated into stronger-than-expected third-quarter earnings. Nevertheless, Janney downgraded DWA to "neutral" from "buy," echoing the already bearish tone among the brokerage bunch. In fact, DreamWorks Animation SKG, Inc. boasts just one "strong buy," compared to six tepid "holds" and two "sell" or worse ratings. Likewise, the consensus 12-month price target of $22.22 represents a discount to DWA's closing price of $23.29 on Wednesday. Short-term option players, on the other hand, are likely applauding the earnings beat. The stock's Schaeffer's put/call open interest ratio (SOIR) sits at an annual low of 0.42, suggesting DWA's near-term traders haven't been more call-heavy during the past year.

  • SPWR is flirting with breakeven at $30.31 in pre-market action, even as analysts continue to react to yesterday's lackluster earnings guidance. Specifically, Cowen cut its price target to $46 from $50, but maintained an "outperform" rating, while RBC trimmed its price target by $1 to $35, and reiterated a "sector perform" opinion. (Canaccord Genuity, meanwhile, upgraded SPWR to "buy" from "hold.") In the options pits, SunPower Corporation traders were picking up puts over calls at an annual-high pace ahead of earnings, as the stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at a 12-month high of 2.20. The stock's post-earnings reaction was relatively tame, however, as the shares dipped just 1.7% Wednesday, and remain in the black on a year-to-date basis.

  • Finally, GLUU is poised to plummet 16% out of the gate, as analysts pan the company's current-quarter forecast. Canaccord Genuity reduced its price target on the stock to $6 from $8, but upheld a "buy" rating, while Piper Jaffray cut its target to $5 from $7, while maintaining an "overweight" opinion. As of last night, the shares of Glu Mobile Inc. were up 16.8% year-to-date to trade at $4.53, but were struggling to topple their 50-week moving average. More negative analyst notes could exacerbate post-earnings selling pressure on the stock, which boasts six "strong buys" and two "holds," with not a single "sell" in sight. Plus, the consensus 12-month price target of $7.82 represents a steep premium to GLUU's current price.

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Buzz Stocks: Microsoft Corporation, Lakeland Industries, Inc., and Level 3 Communications, Inc.

Today's stocks to watch include MSFT, LAKE, and LVLT

by 10/30/2014 9:10 AM
Stocks quoted in this article:

Futures have pared the worst of their losses this morning, as the advance reading on third-quarter gross domestic product (GDP) surpassed expectations. Among equities in focus are blue chip Microsoft Corporation (NASDAQ:MSFT), protective gear maker Lakeland Industries, Inc. (NASDAQ:LAKE), and integrated communications specialist Level 3 Communications, Inc. (NYSE:LVLT).

  • MSFT officially threw its hat in the digital health ring, announcing a wearable device that will monitor the sleep and exercise of the user, with the data stored in the company's new app called "Microsoft Health." The band will be available in limited amounts starting today at a price of $199. Technically speaking, it's been a standout year for Microsoft Corporation, with the shares up nearly 25% to trade at $46.62. Not everyone has climbed on board the equity's uptrend, which could spell additional gains for the shares down the road. In fact, the majority of analysts covering the stock maintain a tepid "hold" rating, while the consensus 12-month price target of $49.21 stands at a slim 5.6% premium to current trading levels. Simply stated, the door is wide open for a round of upgrades and/or price-target hikes, which could translate into a fresh wave of buying power.

  • LAKE is poised to pop nearly 40% out of the gate, after the company said it has received orders for roughly 1 million protective suits amid the global Ebola crisis. Additionally, Lakeland Industries, Inc. expects two of its protective suit lines to double in capacity by January. Today's projected price movement is just more of the same for a stock that's up almost 67% month-to-date to linger at $11.58. Traders seem to be bracing for a steep fall from grace, though. Short interest rose exponentially over the past two reporting periods, and now accounts for nearly 48% of the stock's available float.

  • LVLT is up 3% in pre-market trading, following news the stock has earned a spot on the S&P 500 Index (SPX), and will replace Jabil Circuit, Inc. (NYSE:JBL) after next Tuesday's close. Year-to-date, the shares have tacked on 34.4% to trade at $44.59, and should the stock continue this uptrend, a shift in sentiment could help propel it even higher. Short interest, for example, accounts for 10.6% of the stock's available float, and would take nearly seven sessions to cover, at average daily trading levels. Elsewhere, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.70 ranks in the 80th percentile of its annual range, meaning short-term traders are more put-skewed than usual toward Level 3 Communications, Inc.

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