Earnings Preview: Goldman Sachs Group Inc, Johnson & Johnson, and UnitedHealth Group Inc

Goldman Sachs Group Inc (NYSE:GS), Johnson & Johnson (NYSE:JNJ), and UnitedHealth Group Inc (NYSE:UNH) will report earnings tomorrow morning

by Karee Venema

Published on Apr 18, 2016 at 2:41 PM
Updated on Jun 24, 2020 at 10:16 AM

Earnings season picks up this week, with no fewer than 14 Dow components reporting -- including Big Blue, which will unveil its results after tonight's close. Looking ahead to tomorrow morning's action, big bank Goldman Sachs Group Inc (NYSE:GS) will follow its sector peers into the limelight, while consumer products specialist Johnson & Johnson (NYSE:JNJ) and healthcare concern UnitedHealth Group Inc (NYSE:UNH) are also slated to report first-quarter earnings. Here's a closer look at the stocks ahead of the scheduled events.

  • Short-term options traders are more call-heavy now toward GS than at any other point over the past year, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.53 -- an annual low. Now is the time for option buyers to strike on GS' near-term options, too, considering its Schaeffer's Volatility Index (SVI) of 24% sits in the 25th percentile of its 52-week range. In other words, the stock's short-term options are pricing in relatively low volatility expectations at the moment.

    Looking back over the past eight quarters, GS has averaged a single-session post-earnings move of 1.4%. This time around, though, the options market is expecting a bigger swing of 4.8%. Technically, Goldman Sachs Group Inc has popped 14.5% since hitting a year-to-date low of $139.05 in mid-February, last seen at $159.24.

  • JNJ saw its price target lifted to $123 at Cowen and Company and $115 at Raymond James this morning -- sending the shares up 0.7% to $110.98, and fresh off a record high of $111.10. This only echoes JNJ's longer-term trajectory, with the stock rallying 17.7% off its Jan. 21 year-to-date low of $94.28.

    Options traders have been initiating long calls over puts at a rapid-fire rate in the lead-up to the firm's earnings report. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Johnson & Johnson's 10-day call/put volume ratio of 1.45 ranks higher than 79% of all comparable readings taken in the past year. Those scooping up near-term options are getting quite a deal, too, from a volatility perspective. JNJ's SVI of 13% and its 30-day at-the-money (ATM) implied volatility (IV) of 12.3% rank in the low 12th percentile of their annual ranges.

  • UNH options traders, meanwhile, have been bracing for the worst. At the ISE, CBOE, and PHLX, for instance, the equity's 10-day put/call volume ratio of 4.04 rests just 3 percentage points from a 52-week peak. Similar to its fellow Dow components, UNH's near-term options are attractively priced -- historically speaking -- even with the growing uncertainty surrounding earnings. Specifically, UNH's SVI of 21% ranks in the 13th annual percentile, while its 30-day ATM IV of 20.9% sits below 77% of all comparable readings taken in past year.

    On the charts, UnitedHealth Group Inc has been moving steadily higher since bottoming at a 2016 low of $107.51 in mid-January, up 18.8%. Guiding the equity north has been its 30-day moving average -- a trendline that caught an early morning dip for the shares of UnitedHealth Group Inc. At last check, though, UNH had swung higher with the broader Dow, up 0.3% at $127.73.

A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!


  
 
 

Partnercenter