Schaeffer's Trading Floor Blog

Monster Beverage Corporation, Netflix, Inc. Execs Crack Forbes List

A look at Monster Beverage Corp (MNST) and Netflix, Inc. (NFLX) -- two underloved outperformers

by 3/4/2015 2:36 PM
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Forbes came out with its annual billionaires list this week. Of course, the list was full of the usual suspects, including Microsoft Corporation's (NASDAQ:MSFT) Bill Gates -- the world's richest man -- and Facebook Inc's (NASDAQ:FB) Mark Zuckerberg, the wealthiest person under 40. However, there were a couple newcomers worth noting, including the CEOs of Monster Beverage Corp (NASDAQ:MNST) and Netflix, Inc. (NASDAQ:NFLX).

Rodney Sacks of MNST appeared on the list with a net worth of $1.5 billion. Shares of his company have been locked in an uptrend, adding 90% year-over-year to trade at $139.90. The stock is off to a fast start in 2015, too, outperforming the broader S&P 500 Index (SPX) by more than 23 percentage points over the last 40 sessions.

However, not everyone is in MNST's bullish corner, yet. Seven out of 13 covering analysts have doled out tepid "hold" ratings, and the equity's average 12-month price target of $144.93 represents a less than 4% premium to current trading levels. In other words, a round of bullish brokerage attention could intensify buying power on the shares.

What's more, put buying has been running fast and furious in Monster Beverage Corp's (NASDAQ:MNST) options pits. The security's 50-day put/call volume ratio of 1.44 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands in the 90th annual percentile. While a portion of these wagers may be the work of shareholders hedging, a capitulation among "vanilla" bears could lead to tailwinds.

Moving along, NFLX's Reed Hastings squeaked onto the Forbes list with a net worth of $1 billion. Shares of his company have been on the up-and-up, too, tacking on more than 37% year-to-date to trade at $469.69. Sparking the rally was an earnings beat in late January. Notably, the security is once again approaching its Sept. 9 record high of $489.29.

Netflix, Inc. (NASDAQ:NFLX) still has plenty of detractors, though. Half of the analysts tracking the shares rate them a "hold" or worse, and the stock's consensus 12-month price target of $445.51 is at a discount to the current price. In other words, NFLX could benefit from a series of upgrades and/or price-target hikes.


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Earnings Preview: Costco Wholesale Corporation, Canadian Solar Inc., and Joy Global Inc.

Analyzing recent option activity on Costco Wholesale Corporation (COST), Canadian Solar Inc. (CSIQ), and Joy Global Inc. (JOY)

by 3/4/2015 12:21 PM
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Among the stocks gearing up to report earnings tomorrow morning are retailer Costco Wholesale Corporation (NASDAQ:COST), alternative energy concern Canadian Solar Inc. (NASDAQ:CSIQ), and mining equipment maker Joy Global Inc. (NYSE:JOY). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on COST, CSIQ, and JOY.

  • COST has been a technical outperformer, with the shares up 26.3% year-over-year to reach $147.08. However, put buying has been popular in the stock's options pits ahead of tomorrow morning's earnings report. Drilling down, Costco Wholesale Corporation's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.96 sits in the 89th percentile of its annual range. Meanwhile, in the session immediately following its last four earnings reports, COST has shed an average of 0.53%, including a 2% dip in December. Traders are paying inflated prices for their near-term bets on the equity, as its Schaeffer's Volatility Index (SVI) of 21% sits in the 69th percentile of its annual range.

  • CSIQ will follow its sector peers into the earnings confessional, and ahead of the event, the stock has been in recovery mode. Specifically, the shares are up 61.6% since hitting an annual low of $18.68 on Jan. 22 to trade near $30.19. Despite this uptrend, sentiment is still pessimistic in the options pits, as Canadian Solar Inc.'s 50-day ISE/CBOE/PHLX put/call volume ratio of 0.65 sits in the 79th percentile of all similar readings taken over the past year. Traders hoping for a negative post-earnings move tomorrow have history on their side -- in the session immediately following its last four earnings reports, CSIQ has lost an average of 2.5%. Short-term options are currently available for average prices, as CSIQ's SVI of 75% sits in the 47th percentile of its annual range.

  • On the other hand, the shares of JOY have been sliding, with the equity down 35.9% since hitting an annual high of $65.36 on July 16 to reach $41.92 -- including today's 2.5% drop. Meanwhile, calls are currently popular in the stock's options pits, as Joy Global Inc.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 2.98 sits in the 76th percentile of all similar readings taken over the past year. Looking elsewhere, in the session immediately following its last four earnings reports, JOY has advanced an average of 1.7%, including a 6.7% gain in June of last year. Traders are paying middling prices for their short-term bets on the security, as its SVI of 40% sits squarely in the 50th percentile of its annual range.


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Analyst Update: DHT Holdings, Inc., NeoPhotonics Corporation, and Smith & Wesson Holding Corp

Analysts adjusted their ratings on DHT Holdings Inc (DHT), NeoPhotonics Corp (NPTN), and Smith & Wesson Holding Corp (SWHC)

by 3/4/2015 11:26 AM
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Analysts are weighing in today on crude oil transporter DHT Holdings Inc (NYSE:DHT), circuit maker NeoPhotonics Corp (NYSE:NPTN), and firearm concern Smith & Wesson Holding Corp (NASDAQ:SWHC). Here's a quick look at today's brokerage notes on DHT, NPTN, and SWHC.

  • Last night, DHT announced that Rolf Wikborg has stepped down from its board of directors. In response, GMP Securities initiated coverage on the equity with a $10 price target -- in territory not charted in almost three years -- and a "buy" rating. At last check, the shares were up 1.9% to hit $7.05, bring the stock's year-to-date loss to 3.6%. Despite DHT Holdings Inc's technical woes, the brokerage bunch is universally optimistic on the stock, as all four covering analysts have doled out a "strong buy" rating. What's more, DHT's consensus 12-month price target of $11.03 stands at a 56.5% premium to current trading levels.

  • NPTN released an upbeat fourth-quarter earnings report last night, prompting B. Riley and Piper Jaffray to hike their price targets to $7.75 and $5, respectively. Today, the shares are up 14.6% to hit $4.01, bringing the security's year-to-date gain to 18.6%. Accordingly, sentiment among the brokerage bunch is bullish, as 75% of covering analysts rate the stock a "strong buy," without a single "sell" or worse recommendation to be found. Furthermore, NeoPhotonics Corp's consensus 12-month price target of $6.13 is a 52.9% premium to its current price.

  • SWHC scored a fiscal third-quarter earnings beat and issued a better-than-expected guidance. Reacting were no fewer than three brokerage firms, which all lifted their price targets on the equity. Specifically, CRT Capital hiked its price target to $16, Wunderlich raised its price target to $17, and Cowen and Company increased its price target to $18 (all three firms reiterated "buy" or equivalent ratings). This morning, the shares of Smith & Wesson Holding Corp are up over 11% to reach $14.49, for an impressive 53% year-to-date gain. However, there are plenty of SWHC skeptics that could be spooked, as its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.12 sits in the 79th percentile of its annual range. Meanwhile, 18.6% of the equity's available float is sold short, which would take over 10 sessions to cover, at average daily trading volumes.

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Traders Active as American Eagle Outfitters, Inc. (AEO), Abercrombie & Fitch Co. (ANF) Diverge

American Eagles Outfitters (AEO), Abercrombie & Fitch Co. (ANF) head in different directions after earnings

by 3/4/2015 10:45 AM
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American Eagles Outfitters (NYSE:AEO) and Abercrombie & Fitch Co. (NYSE:ANF) are both moving sharply -- albeit in different directions -- after earlier reporting earnings. As such, options activity has ramped up on the two retail stocks.

Diving right in, AEO topped fourth-quarter estimates and offered encouraging first-quarter guidance, boosting the shares to an annual high of $16.27 out of the gate. At last check, the stock was up 8.3% at $16.05.

Meanwhile, AEO options are crossing at 12 times the expected intraday rate, with calls more than doubling puts. The March 15 call is seeing possible sell-to-close activity, as traders may be locking in paper profits on the now in-the-money contract. Also, it appears speculators are buying to open AEO's January 2017 15-strike call, in the hopes of additional upside over the long term.

On the other side of the ledger, ANF is crumbling on a poorly received earnings report, in which the company expressed concerns about the negative impact of a strong dollar and lackluster demand for logo-centric apparel. The shares are currently off 13.1% at $20.85 -- landing ANF on the short-sale restricted list -- and earlier hit a nearly six-year low of $20.76.

In options land, intraday volume is at eight times expected levels, with puts handily outpacing calls. Buy-to-open activity is detected at the weekly 3/6 20-, 21-, and 22-strike puts, as short-term traders roll the dice on additional downside through week's end, when the series expires.

From a longer-term perspective, American Eagle Outfitters (NYSE:AEO) and Abercrombie & Fitch Co. (NYSE:ANF) have both seen high levels of put buying recently. AEO's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 2.53 -- in the 91st percentile of its annual range. Similarly, ANF's 50-day ISE/CBOE/PHLX put/call volume ratio of 2.01 ranks just 8 percentage points from a 12-month high.


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Analyst Upgrades: Ambarella, Inc., Orexigen Therapeutics, Inc., and Target Corporation

Analysts upwardly revised their ratings on Ambarella Inc (AMBA), Orexigen Therapeutics, Inc. (OREX), and Target Corporation (TGT)

by 3/4/2015 9:21 AM
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Analysts are weighing in today on semiconductor concern Ambarella Inc (NASDAQ:AMBA), drugmaker Orexigen Therapeutics, Inc. (NASDAQ:OREX), and retailer Target Corporation (NYSE:TGT). Here's a quick roundup of today's bullish brokerage notes on AMBA, OREX, and TGT.

  • AMBA is up 8.3% in electronic trading -- and poised to hit a fresh record high -- after the company's better-than-expected fourth-quarter earnings and upwardly revised guidance was met with no fewer than six price-target hikes. Included in the bunch were Pacific Crest, which boosted its price target by $6 to $76, and Topeka Capital, which raised its target price by $13 to $75. Year-to-date, the shares have already tacked on an impressive 24.3% -- which hasn't gone unnoticed in the options pits -- and a continued surge could prompt another round of upbeat analyst notes. Currently, five out of nine covering analysts maintain a "hold" or worse suggestion toward Ambarella Inc, while the average 12-month price target of $59.17 stands at a discount to last night's close at $63.05.

  • Leerink upped its price target for OREX to $11 from $8 -- and underscored its "outperform" recommendation -- after yesterday's upbeat news regarding the firm's obesity drug, Contrave. Specifically, the brokerage firm said it sees signs of stronger reimbursement and sales for diet drugs if previous cardiovascular concerns continue to improve. Technically speaking, OREX has tacked on 26.1% in 2015 -- and hit a four-year peak of $9.37 yesterday -- to trade at $7.64. The stock is poised to extend this momentum today, which could shake some of the weaker bearish hands loose. Currently, around one-third of Orexigen Therapeutics, Inc.'s float is sold short, and it would take more than 30 sessions to cover these shorted shares, at average daily trading volumes.

  • TGT received upwardly revised price targets from Sterne Agee (to $71), Barclays (to $80), and J.P. Morgan Securities (to $79), after the company unveiled a new round of restructuring efforts yesterday. On the charts, TGT has been a technical standout, rallying more than 27% year-over-year, and based on last night's settlement at $78, the stock is within a chip-shot of its Feb. 25 all-time peak of $78.40. In light of this, there's plenty of room on TGT's bullish bandwagon. Of the 20 analysts covering Target Corporation, 70% maintain a "hold" or "strong sell" suggestion. Plus, the consensus 12-month price target of $74.68 stands at a discount to current trading levels.

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