Earnings Preview: NIKE, Micron Technology, Barnes & Noble

Analyzing pre-earnings option trends on Nike Inc (NYSE:NKE), Micron Technology, Inc. (NASDAQ:MU), and Barnes & Noble, Inc. (NYSE:BKS)

Jun 24, 2015 at 11:37 AM
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Among the companies about to step up to the earnings plate tomorrow are blue chip Nike Inc (NYSE:NKE), semiconductor stock Micron Technology, Inc. (NASDAQ:MU), and book peddler Barnes & Noble, Inc. (NYSE:BKS). Below, we'll take the pre-earnings temperature of NKE, MU, and BKS.

  • NKE, which received a price-target hike to $121 from $118 at Goldman Sachs today, will report fiscal fourth-quarter earnings tomorrow night. Historically speaking, the shares have averaged a single-session post-earnings move of 4.1% over the past eight quarters, while the options market is currently pricing in a swing of 3.7%, based on short-term at-the-money (ATM) straddle data. Technically speaking, it's been a strong 12 months for Nike Inc, which has jumped 40% atop its supportive 10-week moving average to trade at $107.07-, and hit an all-time high of $107.45 on Monday. Regardless, option buyers have been focused on long puts over calls in recent months, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). NKE's 50-day put/call volume ratio of 0.79 sits just 12 percentage points from an annual peak.

  • MU has been far less successful on the charts, shedding nearly 31% of its value this year to hover around $24.27. In fact, on June 15, the stock hit an annual low of $23.70. As such, Micron Technology, Inc. has been getting hit with bearish brokerage notes lately, including a trio of price-target cuts today from the likes of Needham (to $40), Bernstein (to $45), and BofA-Merrill Lynch (to $40). Considering 21 of 26 analysts still consider the stock a "buy" or better, and its consensus 12-month price target of $35.67 stands in territory not charted since late December, additional negative attention may be on the way -- especially if the company disappoints in the confessional tomorrow night. Speaking of which, on average, MU has posted a one-day move of 5.3% in the session adjacent to its last eight quarterly reports. Based on the equity's near-term ATM straddle, a 6.6% shift is expected this time around.

  • BKS will take the earnings stage bright and early tomorrow, and the options market is pricing in a 7.8% post-event move -- roughly in line with historical numbers. On the charts, the stock has been impressive, muscling almost 15% higher in 2015 to trade at $26.66, and hitting a six-year high of $27.10 yesterday. This upward momentum could have short sellers feeling the heat. A lofty 16.3% of Barnes & Noble, Inc.'s float is sold short, which would take more than three weeks to buy back, at typical daily trading levels.

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