Schaeffer's Trading Floor Blog

Analyst Upgrades: Alibaba Group Holding Ltd, BlackBerry Ltd, and Facebook Inc (FB)

Analysts upwardly revised their ratings on BABA, BBRY, and FB

by 9/29/2014 9:19 AM
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Analysts are weighing in today on Chinese e-commerce firm Alibaba Group Holding Ltd (NYSE:BABA), mobile phone maker BlackBerry Ltd (NASDAQ:BBRY), and social network Facebook Inc (NASDAQ:FB). Here's a quick roundup of today's bullish brokerage notes on BABA, BBRY, and FB.

  • BABA, which will hit the options markets today after recently going public, received a pair of bullish brokerage notes over the weekend. Susquehanna initiated coverage of the shares with a "positive" rating and $110 price target, while Wedbush lifted its price target to $105 from $80. This is more of the same for Alibaba Group Holding Ltd, as all of the brokerage firms covering the equity recommend buying it. BABA closed Friday at $90.46

  • Analysts barraged BBRY with positive attention in the wake of last Friday's well-received earnings report. In fact, no fewer than six firms doled out price-target hikes, the most ambitious of which came from Nomura, which raised its target to $10.60 from $10. All in all, it's been a good year for BlackBerry Ltd -- up 37.9% in 2014 to trade at $10.26. Should this upside momentum continue, additional bullish brokerage notes could ensue, as all 22 analysts following BBRY have given it a "hold" or worse rating. Plus, the stock's consensus 12-month price target of $10.01 stands at a discount to current trading levels.

  • Finally, Needham upped its price target on FB to $93 from $80, and reaffirmed its "buy" opinion of the shares. This upwardly revised assessment is well deserved, considering the security has rallied 44.2% year-to-date to rest at $78.79. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), however, traders have targeted long puts over calls at an annual-high clip in recent weeks. Specifically, Facebook Inc's 10-day put/call volume ratio across these three exchanges is 0.67, which ranks at the top of its annual range. Some of this put buying may have been at the hands of FB shareholders looking to hedge against a potential pullback in the technical outperformer.

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Why It's Just a Matter of Time Until VXX Tanks Again

Examining an unusual lack of failure for the iPath S&P 500 VIX Short-Term Futures ETN (VXX)

by 9/29/2014 8:48 AM
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We haven't commented much about the iPath S&P 500 VIX Short-Term Futures ETN (VXX) lately. I've unfortunately subscribed to the school of blog-thought that says "If you can't find something snarky to say about something, don't say it." And I have nothing snarky to say about VXX.

It has hit new all-time lows on 311 of the 1,423 trading days since it began trading five and a half years ago, but last made the bad kind of history on July 3*. That's almost three calendar months, and 60 trading days, ago.

VXX hit a low of 26.95 that day, so it's up about 9% as of Friday's close. Just for reference, the CBOE Volatility Index (VIX) closed at 10.32 that day, the lowest close since February 2007.

That stacks up as one of the longer runs of competence in VXX history. Here's a table of some VXX streaks, along with the duration (in trading days). Just for laughs, I included the adjusted price of the new low at the end of the streak.

Notable VXX Streaks

So, if we can hang in for another two and a half weeks, VXX will notch the third-longest competence streak in its illustrious history. Interestingly, it will surpass the run from this spring, which begs the question of whether there's a trend going on. Is VXX poised to stay better going forward?

Well, maybe VIX bottomed, but VXX can defy the laws of math forever. So long as the VIX futures curve stays in contango, and at a premium to VIX itself, then VXX will have a tough time not drifting. And, the futures curve is still in contango, and still above VIX -- so it's still just a matter of time before VXX tanks yet again.

I will say this though: it's worked unusually well as a portfolio hedge since that last low. The SPDR S&P 500 ETF Trust (SPY) closed at 198.20 that day, which means it's basically unchanged, while the "hedge" lifted 9%. Not bad. What's more, you've gotten SPY dividends, so net-net you would have earned on both sides of the position. It's not often you can say that about a permanently decaying asset.

But again, don't expect that sort of past performance to continue forever. It's easy to look good when going forward from a cherry-picked date. VIX wasn't likely to go down much more from that reading near 10, considering it rarely gets that low. But, VXX didn't necessarily have to follow suit, as VIX could have just flat-lined, also. And remember, you can't actually buy VIX.

*So, it turns out VXX hit a new all-time low on Sept. 19 and I missed it -- my bad. It will go in the books as the 5th longest streak of VXX competence ever (the table has been updated to reflect this). My non-snarky point was that VXX has indeed performed relatively well for three months now, but that's unlikely to persist over time. The market is tanking as I type this, so today is clearly not the day to worry about VXX eventually disappointing.

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.


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Analyst Update: Citigroup Inc, The Coca-Cola Company, and Intel Corporation

Analysts adjusted their ratings on C, KO, and INTC

by 9/26/2014 11:57 AM
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Analysts are weighing in today on financial firm Citigroup Inc (NYSE:C), blue-chip beverage concern The Coca-Cola Company (NYSE:KO), and tech titan Intel Corporation (NASDAQ:INTC). Here's a quick look at today's brokerage notes on C, KO, and INTC.

  • C had its price target cut to $62 from $63 by Nomura today. Right now, C shares are up 0.2% to trade at $52.05, roughly 11% below the stock's 12-month consensus price target of $58.75. Analysts covering Citigroup Inc are skewing to the bullish side of the spectrum, as 14 out of 20 maintain a "buy" or better rating on the equity, with only one "sell" to be found. On the charts, C has been trending upwards since bouncing off support at its 20-month moving average at the beginning of August.

  • J.P. Morgan Securities reiterated its "neutral" rating on KO today, but raised its price target to $46 from $43. The Coca-Cola Company's shares are up almost 0.1% today to trade at $41.77, adding to their slim year-to-date gain of 1.1%. On the options front, KO's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 7.31 is 2 percentage points away from an annual bullish peak. Analysts are split on KO, however, as eight out of 15 have handed out "buy" or better ratings.

  • Baird raised its price target for INTC to $35 from $32, after news of the company investing $1.5 billion in Chinese mobile chipmaker Tsinghua Unigroup Ltd. Currently, INTC shares are trading at $33.95 -- down almost 1% today, but up almost 31% year-to-date. Sixteen analysts have doled out "strong buys" on Intel Corporation, while 15 maintain "hold" or worse ratings. Long puts are being bought to open over calls at a rate of 1.52, according to the security's 10-day ISE/CBOE/PHLX put/call volume ratio, which is in the bearishly skewed 97th annual percentile.

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Stocks On the Move: AcelRx Pharmaceuticals Inc, Agios Pharmaceuticals Inc, and LinkedIn Corp

ACRX, AGIO, and LNKD are moving sharply in Friday's trading

by 9/26/2014 11:17 AM
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Around midday, three of the top market movers are drug makers AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) and Agios Pharmaceuticals Inc (NASDAQ:AGIO), as well as professional networking site LinkedIn Corp (NYSE:LNKD). Here's a quick roundup of how ACRX, AGIO, and LNKD are performing on the charts so far.

  • ACRX has tumbled more than 20% to trade at $5.37, and earlier hit an annual low of $5.27, after the company announced it will delay resubmitting its pain management device Zalviso for Food and Drug Administration (FDA) approval. The sell-off likely has short sellers cheering. A mind-numbing 43.5% of AcelRx Pharmaceuticals Inc's float is sold short, which would take more than 13 sessions to buy back, at the stock's average daily trading volume.

  • AGIO is soaring, up 21.6% to trade at $65, after announcing it will present clinical data from its Phase 1 study of blood cancer treatment AG-120 next month. In fact, the equity earlier touched a record high of $66.98. This sharp positive move could prompt heavy short-covering activity, as 14.4% of Agios Pharmaceuticals Inc's float is dedicated to short interest. At the stock's average daily trading levels, it would take nearly nine sessions to cover these bearish bets.

  • Finally, LNKD has tacked on 3.3% to churn near $212.85, after Cowen upped its price target on the shares to $253 from $195, and increased its rating to "outperform" from "market perform." The brokerage firm cited the networking site's Sales Navigator lead-generation app as the reason for the upward revisions. Despite the uptick, shares of LinkedIn Corp are still sitting slightly in the red in 2014. Meanwhile, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been betting bearishly of late. The security's 10-day put/call volume ratio of 1.09 across this trio of exchanges is higher than 88% of all other readings taken in the past 12 months.

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Analyst Downgrades: United Technologies Corporation, Diamond Foods, Inc., and Juniper Networks, Inc.

Analysts downwardly revised their ratings on UTX, DMND, and JNPR

by 9/26/2014 9:54 AM
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Analysts are weighing in today on blue chip United Technologies Corporation (NYSE:UTX), snack maker Diamond Foods, Inc. (NASDAQ:DMND), and network specialist Juniper Networks, Inc. (NYSE:JNPR). Here's a quick roundup of today's bearish brokerage notes on UTX, DMND, and JNPR.

  • Morgan Stanley cut its price target for UTX to $124 from $129, while underscoring its "overweight" rating, saying the company's concerns over China's real estate market are overblown. This new price target still represents a nearly 19% premium to United Technologies Corporation's current price of $104.39, and given the stock's 8.3% year-to-date deficit, another round of downwardly revised revisions could be on the horizon. In fact, 12 out of 18 covering analysts maintain a "buy" or better rating on the equity, with not a single "sell" to be found.

  • DMND jumped nearly 9% out of the gate to $28.90, after a better-than-expected fiscal fourth-quarter earnings report overshadowed a price-target cut to $33 from $35 at BB&T. On the charts, the stock has tacked on 12% year-to-date, and -- while call selling was present ahead of last night's event -- most option traders have been optimistic. In fact, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 7.04 ranks in the bullishly skewed 92nd percentile of its annual range. With 14.2% of Diamond Foods, Inc.'s float sold short, though, a portion of this activity could be a result of shorts hedging against a post-earnings pop.

  • Barclays cut its price target on JNPR to $29 from $32, although this still represents a nearly 31% premium to the stock's current perch at $22.21. This glass-half-full approach toward a stock that's sitting roughly 2% below its year-to-date breakeven line is evident elsewhere on the Street, as well. Short interest, for example, accounts for just 1.3% of Juniper Networks, Inc.'s available float, and the security's 10-day ISE/CBOE/PHLX call/put volume ratio of 11.00 ranks higher than 85% of similar readings taken in the past year.

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