Schaeffer's Trading Floor Blog

Analyst Update: Illumina, Inc., Lowe's Companies, and Marriott International Inc

Analysts offered their two cents on ILMN, LOW, and MAR

by 8/20/2014 1:56 PM
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U.S. stocks are modestly higher this afternoon, as Wall Street awaits the latest Federal Open Market Committee (FOMC) meeting minutes. Meanwhile, among the equities in focus are molecular diagnostics concern Illumina, Inc. (NASDAQ:ILMN), home improvement retailer Lowe's Companies, Inc. (NYSE:LOW), and hotel chain Marriott International Inc (NASDAQ:MAR), which have all attracted analyst attention.

  • ILMN is up 2% at $173.89, after Wedbush upgraded the stock to "outperform" from "neutral," and hiked its price target to $200 from $165. The new target implies expected upside of 15% from Illumina, Inc.'s current perch, and stands in uncharted territory for the shares. On the charts, ILMN has soared more than 57% in 2014, yet eight out of 18 analysts maintain tepid "hold" opinions, leaving the door open for additional upgrades to lure more buyers.

  • After plunging out of the gate, the shares of LOW have clawed their way to a fractional gain, with the stock last seen at $51.65. The stock initially retreated in the wake of Lowe's Companies, Inc.'s downwardly revised sales guidance, but traders appear to have adopted the glass-half-full approach, after CEO Robert Niblock waxed optimistic on spending heading into the holidays. Meanwhile, Canaccord Genuity increased its price target on LOW to $40 from $37 -- though the new target still represents a steep discount to the stock's current price -- and underscored its "sell" suggestion.

  • Finally, MAR has added 0.5% to wink at $68.50, and earlier notched a fresh all-time high of $68.53, thanks to a price-target hike to $68 from $64 at Morgan Stanley. The equity has advanced nearly 39% year-to-date, yet Wall Street remains skeptical. Nine out of 20 analysts maintain "hold" or "sell" opinions, and short interest represents more than a week's worth of pent-up buying demand, at Marriott International Inc's average pace of trading. Plus, option buyers have been picking up MAR puts over calls at an annual-high clip, 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 52-week peak of 11.53. A flood of upgrades, a short-squeeze situation, or a mass exodus of option bears could usher MAR even higher.

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Stocks On the Move: The Hain Celestial Group, Inc., Amicus Therapeutics, Inc., and American Eagle Outfitters

HAIN, FOLD, and AEO are moving sharply in Wednesday's trading

by 8/20/2014 12:58 PM
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Markets are trading modestly higher ahead of this afternoon's release of the Federal Open Market Committee's (FOMC) latest meeting minutes. Among specific equities, however, three of the day's biggest market movers are organic food issue The Hain Celestial Group, Inc. (NASDAQ:HAIN), biopharmaceutical firm Amicus Therapeutics, Inc. (NASDAQ:FOLD), and retailer American Eagle Outfitters (NYSE:AEO). Here's a quick roundup of how HAIN, FOLD, and AEO are performing on the charts so far.

  • HAIN is up 10.9% today to trade at $96.36, as a record showing in the earnings confessional overshadows a nut butter recall. Ahead of today's bull gap, the stock was sitting on a 4.2% year-to-date loss, yet HAIN's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 3.15 -- in the 78th annual percentile -- indicates a preference for long calls over long puts in recent weeks. With a healthy 7.4% of the equity's float sold short, though, a portion of this activity may have been a result of shorts hedging against any earnings-induced upside. At present, it would take more than seven sessions to cover these shorted shares, at the security's average daily pace of trading, meaning if The Hain Celestial Group, Inc. continues its run up the charts, there is plenty of room for a short-covering rally to ensue.

  • Positive late-stage drug trial results and a pair of price-target hikes from Cowen and Company (to $14 from $9) and Leerink (to $9 from $6) have sent shares of FOLD nearly 30% higher today. At last check, the equity was lingering near $5.94, after earlier tagging a fresh 52-week peak of $5.99. Today's upward trajectory is just more of the same for Amicus Therapeutics, Inc., which is up 153% in 2014, so it's not surprising to see sentiment tilted toward the bullish side. All three covering analysts maintain a "strong buy" recommendation toward the stock, and, although short interest accounts for 24% of the equity's available float, it would take less than one session to cover, at FOLD's average pace of trading.

  • Jefferies this morning raised its price-target on AEO to $20 from $17 and reiterated its "buy" rating, after the company posted a better-than-expected second-quarter earnings report. Against this backdrop, the stock has rallied more than 8%, and is lingering near levels not seen since April. Additional bullish brokerage notes could be on the horizon, should American Eagle Outfitters maintain this momentum. No fewer than 75% of covering analysts maintain a "hold" or worse suggestion toward the stock, and the consensus 12-month price target of $11.98 stands at a discount to the security's current perch at $12.56.

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Analyst Downgrades: DreamWorks Animation SKG, Inc., Real Goods Solar, Inc., and Youku Tudou Inc (ADR)

Analysts downwardly revised their ratings on DWA, RGSE, and YOKU

by 8/20/2014 9:22 AM
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Analysts are weighing in today on film firm DreamWorks Animation SKG, Inc. (NASDAQ:DWA), alternative energy concern Real Goods Solar, Inc. (NASDAQ:RGSE), and China-based Internet issue Youku Tudou Inc (ADR) (NYSE:YOKU). Here's a quick roundup of today's bearish brokerage notes on DWA, RGSE, and YOKU.

  • Janney cut its fair value target on DWA to $27 from $29 this morning, but maintained its "buy" rating on the stock. The shares have advanced 6.4% so far this week, settling Tuesday at $21.93, after DreamWorks Animation SKG, Inc. named a new chief financial officer. However, the security has run into a wall in the form of its 10-week moving average, which -- along with its 20-week cohort -- has ushered DWA 38.2% lower in 2014. Against this backdrop, it's no surprise to find most analysts in the bears' corner, as DWA boasts just one "strong buy" opinion, compared to six "holds" and two "sell" or worse ratings.

  • RGSE is bracing for a 15% plunge out of the gate, as speculators and analysts pan the company's steeper-than-expected per-share loss for the second quarter. Canaccord Genuity trimmed its price target by $1 to $3, and Cowen and Company reduced its price target to $2.50 from $2.60. Roth Capital made the most dramatic move, slashing its price target to $1.85 from $6, and downgrading RGSE to "neutral" from "buy." On the charts, Real Goods Solar, Inc. has surrendered 26.5% in 2014, and finished at $2.22 on Tuesday.

  • Finally, YOKU -- which closed at $21.52 on Tuesday -- is headed for a 7% drop at the open, after the firm reported weaker-than-expected second-quarter earnings, and offered lackluster current-quarter sales guidance. As such, Brean Capital reduced its price target on the shares to $24 from $27, but maintained a "buy" recommendation. More negative analyst notes could be on the way for Youku Tudou Inc (ADR), as four out of seven brokerage firms maintain "strong buy" opinions. A round of downgrades could exacerbate YOKU's year-to-date loss of nearly 29%.

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Futures are little changed this morning, as traders await this afternoon's release of the minutes from the latest Federal Open Market Committee (FOMC) meeting. In company news, here are some names to watch today.

  • Hertz Global Holdings, Inc. (NYSE:HTZ) is down nearly 13% ahead of the bell, after the car rental company withdrew its fiscal 2014 forecast. Citing this year's glut of auto recalls and an internal audit, HTZ projected earnings to arrive "well below" its previous estimate. (Bloomberg)

  • In the wake of its second-quarter earnings results, PetSmart, Inc. (NASDAQ:PETM) said it could potentially put itself up on the block as part of its larger plan to explore strategic alternatives. The retailer has been pressured lately by activist investor Jana Partners -- which owns a 10% stake in PETM -- has been pushing the company to put itself up for sale. (Reuters)

  • Following an 18-month investigation, Macy's, Inc. (NYSE:M) has agreed to pay a $650,000 fine to settle a racial bias investigation. The company was accused of increasing its surveillance on minority shoppers at its flagship store in Manhattan. In response to the settlement, New York Attorney General Eric T. Schneiderman said, "This agreement will help ensure that no one is unfairly singled out as a suspected criminal when they shop in New York." (The New York Times)

  • Amicus Therapeutics, Inc. (NASDAQ:FOLD) said that its treatment for Fabry disease -- an inherited disorder that creates a buildup of fat in the body's cells -- met its primary goals in a late-stage trial. The company said it will now take steps to gain regulatory approval for migalastat in both the U.S. and Europe. (MarketWatch)

  • AT&T Inc. (NYSE:T) is taking its ultra-fast Internet service to Cupertino, California -- home to tech titan Apple Inc. (NASDAQ:APPL). The city will be the first in the state to receive the T's GigaPower fiber optic broadband service, with hopes for strong demand from the tech-savvy customer base. Looking ahead, the company said it expects to roll out the service in other U.S. cities, including Houston. (CNET)

  • Former Microsoft Corporation (NASDAQ:MSFT) CEO Steve Ballmer has officially resigned from the company's board of directors. Ballmer spent more than 30 years being actively involved in MSFT, and still remains the firm's top individual stakeholder. (Bloomberg)

  • A number of retailers reported earnings, including Lowe's Companies, Inc. (NYSE:LOW), Staples, Inc. (NASDAQ:SPLS), Target Corporation (NYSE:TGT), and American Eagle Outfitters (NYSE:AEO). (CNBC; MarketWatch; USA Today)

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Analyst Upgrades: Dunkin Brands Group Inc, Panera Bread Co, and JetBlue Airways Corporation

Analysts upwardly revised their ratings on DNKN, PNRA, and JBLU

by 8/20/2014 8:51 AM
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Analysts are weighing in today on doughnut titan Dunkin Brands Group Inc (NASDAQ:DNKN), fast-casual chain Panera Bread Co (NASDAQ:PNRA), and airline issue JetBlue Airways Corporation (NASDAQ:JBLU). Here's a quick roundup of today's bullish brokerage notes on DNKN, PNRA, and JBLU.

  • DNKN is pointed modestly higher ahead of the bell, after Barclays upgraded the stock to "overweight" from "equal weight" and issued a $51 price target -- a premium of 15.8% to the equity's current perch at $44.05. The shares of Dunkin Brands Group Inc are down 8.6% year-to-date, and are struggling to topple their 10-week moving average, which has contained most of the stock's rebound attempts since late March. Meanwhile, option buyers are betting on more downside for DNKN, 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 an annual peak of 2.74.

  • Barclays also weighed in on PNRA, upping its opinion to "overweight" from "equal weight" and offering a $175 price target -- representing expected upside of 15.3% to the security's current price of $151.74. PNRA has shed 14.1% in 2014, but is on pace to end the week atop its 10-week trendline for the first time since mid-March. As with DNKN, Panera Bread Co's option traders are skeptical, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.95 sits just 7 percentage points from a 12-month high. Likewise, the equity's Schaeffer's put/call open interest ratio (SOIR) stands at an annual peak of 2.28, indicating that short-term options players haven't been more put-heavy during the past year.

  • Finally, JBLU -- which settled at $12.33 after touching a seven-year peak of $12.42 on Tuesday -- is set to open 1.2% higher, thanks to an upgrade to "outperform" from "market perform" at Cowen. The analysts also hiked their price target on the stock by 50% to $15. The shares of JetBlue Airways Corporation have tacked on more than 15% so far in August, as airline stocks ride a wave of lower crude prices. Nevertheless, six out of 10 brokerage firms maintain "hold" or worse opinions on JBLU, and short interest represents nearly eight sessions' worth of pent-up buying demand, at the stock's average pace of trading. Additional upgrades or a short-covering rally could propel JBLU even higher.

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