Schaeffer's Trading Floor Blog

Analyst Update: OvaScience Inc, Bristol-Myers Squibb Co, and Cepheid

Analysts adjusted their ratings on OVAS, BMY, and CPHD

by 12/18/2014 2:07 PM
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Analysts are weighing in today on fertility concern OvaScience Inc (NASDAQ:OVAS), pharmaceutical firm Bristol-Myers Squibb Co (NYSE:BMY), and molecular diagnostics company Cepheid (NASDAQ:CPHD). Here's a quick look at today's brokerage notes on OVAS, BMY, and CPHD.

  • OVAS gapped up to touch an all-time high of $49.94 this morning after news that it achieved its 2014 corporate goals by advancing three of its fertility treatments. The announcement prompted no fewer than six brokerage firms to raise their outlook on the equity, including H.C. Wainwright, which raised its price target to $100 from $40, while reaffirming a "buy" rating. There's room for additional bullish brokerage notes to send the shares even higher, as 50% of covering analysts maintain a tepid "hold" recommendation. Plus, OvaScience Inc has easily surpassed its consensus 12-month price target of $34.20, meaning potential price-target hikes could add fuel to the stock's fire. The stock has added 40% today to trade at $48.81, putting its year-to-date advance over 436%.

  • Credit Suisse weighed in on several pharmaceutical companies today, including BMY. The brokerage firm raised its price target on the stock by $1 to $66, while reiterating its "outperform" rating. Bristol-Myers Squibb Co has since added 1.8% to its current perch at $60.22. With eight of the 17 covering firms maintaining a "hold" or worse recommendation, the equity could see more bullish brokerage notes if it adds to its 13.3% year-to-date gain. Like OvaScience Inc, BMY is trading above its average 12-month price target, suggesting it could be poised for additional price-target increases. Elsewhere, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.05 is only 2 percentage points from an annual extreme, meaning short-term speculators have rarely been as put-focused in the past year. The stock could be pushed higher by an unwinding among option bears.

  • BofA-Merrill Lynch raised its price target on CPHD to $60 from $56, while increasing its rating to "buy" from "neutral" based on higher growth potential and gains in market share. The stock has benefited from the positive note by adding 7.8% today to its current price of $53.70. Cepheid's success on the charts may not be finished, considering six out of the 17 analysts covering it rate it a "hold." What's more, nearly 11% of the security's float is sold short, and would take almost 18 sessions to buy back, at its average daily pace of trading. CPHD could see a boost from analyst upgrades and/or a short-squeeze situation.

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2 Ways to Play Puts on NQ Mobile Inc (ADR) (NQ) Ahead of Earnings

NQ Mobile Inc (ADR) will unveil three quarters' worth of earnings reports after tonight's close

by 12/18/2014 10:37 AM
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NQ Mobile Inc (ADR) (NYSE:NQ) is scheduled to take its turn in the earnings confessional after tonight's close, and will unveil quarterly results from its fiscal first, second, and third quarters. Ahead of the highly anticipated event, put players from both the long and the short sides have been lining up their bets.

At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 10-day put/call volume ratio has jumped to 0.48 from 0.02 since the start of the month. What's more, the current ratio ranks in the 72nd percentile of its annual range, meaning puts have been bought to open over calls at an accelerated clip in recent weeks.

As noted, though, put writers have been active on NQ, as well. In fact, over the course of the past 20 sessions, speculators at the ISE, CBOE, and PHLX have sold to open 2.42 puts for each one they've purchased.

On the charts, NQ has had a volatile run this year, with most of the action resolving to the downside. In fact, since their Dec. 31, 2013 close at $14.70, the shares have shed 63% of their value. Today, however, NQ Mobile Inc (ADR) (NYSE:NQ) is up 11.1% to trade at $5.40, as traders pile on ahead of tonight's quarterly earnings results.


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Analyst Upgrades: LinkedIn Corp, Tetraphase Pharmaceuticals Inc, and Visa Inc

Analysts upwardly revised their ratings on LNKD, TTPH, and V

by 12/18/2014 9:29 AM
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Analysts are weighing in today on professional networking site LinkedIn Corp (NYSE:LNKD), drugmaker Tetraphase Pharmaceuticals Inc (NASDAQ:TTPH), and credit card giant Visa Inc (NYSE:V). Here's a quick roundup of today's bullish brokerage notes on LNKD, TTPH, and V.

  • Wells Fargo initiated coverage on LNKD with an "outperform" rating. On the charts, the shares have outperformed the broader S&P 500 Index (SPX) over the past couple months, and -- at $219.78 -- are currently resting atop support at their 50-day moving average. However, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more puts than calls over the last two weeks. Specifically, LinkedIn Corp's 10-day put/call volume ratio of 1.12 across this trio of exchanges sits 9 percentage points from an annual high. If the stock continues to outpace the broader market, a capitulation among these option skeptics could result in tailwinds. Just ahead of the bell, LNKD is up 2%.

  • TTPH has tacked on more than 145% this year to trade at $33.19 -- just 3 cents shy of yesterday's all-time peak of $33.22 -- and is poised to open 15% higher following a successful late-stage trial of its antibiotic, eravacycline. The brokerage bunch is cheering the news, too, as the stock has received no fewer than 10 upwardly revised price targets -- including JMP Securities' hike to $58 from $32, which represents the most ambitious outlook. Taking a step back, all of the analysts covering Tetraphase Pharmaceuticals Inc have handed out a "buy" or better rating. However, the equity's consensus 12-month price target of $27.80 represents a discount to current trading levels, paving the way for this morning's rush of positive analyst notes.

  • Finally, V saw its price target raised by $40 to $300 at Credit Suisse, which also reiterated its "outperform" assessment. On the charts, the stock has added 16.3% in 2014 to sit at $259.08 -- not far from its record high of $265.63, touched one week ago. Additionally, Visa Inc has outperformed the SPX by 20 percentage points during the last three months. As such, the brokerage bunch is overwhelmingly in the bulls' corner. In fact, 20 out of 24 covering analysts rate V a "buy" or better, versus four "holds" and not a single "sell."

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Analyst Downgrades: The Coca-Cola Co, SanDisk Corporation, and Schlumberger

Analysts downwardly revised their ratings on KO, SNDK, and SLB

by 12/18/2014 9:22 AM
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Analysts are weighing in today on blue-chip beverage giant The Coca-Cola Co (NYSE:KO), data storage solutions specialist SanDisk Corporation (NASDAQ:SNDK), and oil-and-gas issue Schlumberger (NYSE:SLB). Here's a quick roundup of today's bearish brokerage notes on KO, SNDK, and SLB.

  • SocGen followed in the recent footsteps of its fellow brokerage firms, reducing its price target on KO to $38, and underscoring its "sell" rating. It's been a tough month for the shares, which have shed 7.3% since their Nov. 28 record close at $44.83 to trade at $41.55. Against this backdrop, option traders have been growing increasingly pessimistic. The stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.03 ranks in the 84th percentile of its annual range. Simply stated, puts have been bought to open over calls on The Coca-Cola Co at a faster-than-usual clip in recent weeks.

  • Stifel cut its price target on SNDK to $109 from $112 -- and reiterated its "buy" rating -- although this still represents expected upside of 10.4% to last night's closing price of $98.74, and rests in territory yet to be charted by the shares. Overall, analysts have been upbeat toward a stock that's rallied nearly 40% year-to-date. Of the 22 brokerage firms covering SanDisk Corporation, 19 maintain a "buy" or better rating, with not a single "sell" to be found. Plus, the consensus 12-month price target of $110.69 sits at a 12.1% premium to current trading levels.

  • SLB is poised to pop 1.3% out of the gate, as a rebound in the energy sector overshadows a price-target reduction to $89 and an uninspiring "hold" recommendation at Jefferies. Longer term, the shares have surrendered 30% since topping out at a record peak of $118.76 in early July, and closed last night at $82.88, just shy of their 10-day moving average. Not surprisingly, option traders have taken the bearish route. At the ISE, CBOE, and PHLX, for example, SLB's 10-day put/call volume ratio of 2.19 ranks 3 percentage points from an annual bearish peak. Additionally, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.17 ranks higher than 64% of similar readings taken in the past year. In other words, short-term speculators are more put-heavy than usual toward Schlumberger Limited.

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Buzz Stocks: AK Steel Holding Corporation, Oracle Corporation, and The Pantry Inc

Today's stocks to watch in the news include AKS, ORCL, and PTRY

by 12/18/2014 9:04 AM
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The major market indexes appear ready to rally, adding to yesterday's Fed-induced surge. In company news, today's stocks to watch include metal manufacturer AK Steel Holding Corporation (NYSE:AKS), enterprise software giant Oracle Corporation (NYSE:ORCL), and convenience store chain The Pantry Inc (NASDAQ:PTRY).

  • AKS anticipates current-quarter shipments will soar to 2 million tons -- a 37% increase over the prior three-month period -- sending the shares more than 8% higher ahead of the bell. The firm also expects to benefit from falling metal and energy prices. Yesterday, AK Steel Holding Corporation rallied 6.1% to close at $5.56, but remains 32.2% lower on a year-to-date basis. Option traders have responded by buying to open puts over calls at a faster-than-usual pace, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, AKS' 10-day put/call volume ratio across these three exchanges is 0.29, near the top quartile of its annual range.

  • ORCL reported slightly better-than-expected per-share earnings for the fiscal second quarter. Sales increased 3% year-over-year, as well, powered by $7.3 billion in software and cloud revenue. Elsewhere, the brokerage crowd reacted positively to the results, as no fewer than 10 firms raised their price targets on Oracle Corporation, with D.A. Davidson, Canaccord Genuity, and Barclays all eyeing a move up to $50 -- in uncharted territory, representing the boldest forecast of the bunch. These price-target hikes are well-deserved, considering the shares have advanced 19% in the last year to perch at $41.16, just a chip-shot away from their consensus 12-month price target of $43.68. On a related note, a slight majority of analysts are bullish toward ORCL, with 14 firms handing out "buy" or better ratings, versus 11 "hold" or worse opinions. Returning to the charts, the stock is pointed 5.8% higher in electronic trading.

  • Finally, PTRY is being purchased for just over $860 million by Canadian convenience store chain Alimentation Couche-Tard Inc, owner of Circle K. The deal works out to roughly $36.75 per share, or a 3.5% premium to The Pantry's Wednesday close at $35.52. Longer term, the stock has been a beast, more than doubling in value this year, and touching a seven-year high of $36.71 yesterday on then-unconfirmed buyout whispers. What's more, the equity is sitting another 2.2% above breakeven this morning. Accordingly, options traders have been upping the bullish ante, based on PTRY's 50-day ISE/CBOE/PHLX call/put volume ratio of 4.95 -- in the 74th annual percentile.

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