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

Apr 18, 2016 at 2:41 PM
facebook twitter linkedin


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.
 

Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!