Earnings Preview: Autodesk, Inc. and Splunk Inc

Autodesk, Inc. (ADSK) and Splunk Inc (SPLK) will report quarterly earnings after the close tonight

Nov 29, 2016 at 11:08 AM
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The earnings calendar is relatively quiet this week, with a smattering of retailers among the bigger names due to report. But software firms Autodesk, Inc. (NASDAQ:ADSK) and Splunk Inc (NASDAQ:SPLK) are on the docket to reveal their quarterly results after the close tonight, and options traders are busy placing last-minute bets. Below we'll take the pre-earnings temperatures of ADSK and SPLK, and see what traders are expecting for the stocks.

ADSK has been a strong performer this year, adding nearly 24% in 2016. In fact, the shares hit a record peak of $78.58 earlier this month. Up 0.3% at $75.40 today, the stock remains with striking distance of higher highs. ADSK has a fairly solid history of post-earnings gains, too. Over the last eight quarters, the shares have moved to the upside five times in the session subsequent to reporting, including an 8.1% pop last quarter. Options are currently pricing in a move of 9.7% for Wednesday -- notably wider than the average single-session post-earnings swing of 4.2%.

Overall, it looks like options traders have been betting on another upward move for ADSK. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 2.92 shows long calls nearly tripling long puts. Moreover, this ratio sits higher than two-thirds of the past year's readings. Today, ADSK puts are leading, trading at threetimes the average intraday pace, but there are still plenty of bulls getting in on the action. Specifically, it appears speculators may be buying to open the December 82.50 call, betting on ADSK shares rallying into record-high territory within the next few weeks.

This optimism is generally echoed outside of the options arena, as well. Two-thirds of the analysts following Autodesk, Inc. (NASDAQ:ADSK) rate the stock a "strong buy." Plus, short interest levels are relatively low, representing just over 4% of the equity's available float.

Turning our attention to SPLK, the shares are 0.2% lower at $57.28 today, and sitting nearly 3% below their year-to-date breakeven mark. Still, the stock has nearly doubled from its February lows, and has been consolidating atop support at the 160-day moving average in recent months. SPLK shares have moved higher in the post-earnings session just three times out of the past eight quarters, with an average one-day move of 4.7% in either direction. Options traders are eyeing a heftier swing this time, however, pricing in a move of 11.9% for tomorrow.

Analysts have largely remained in SPLK's bullish corner, with 23 out of 28 brokerage firms rating the stock a "buy" or better, and not a single "sell" opinion in sight. But that also means the door could be open to future downgrades, should tonight's results disappoint. Meanwhile, short interest accounts for nearly 10% of SPLK's total float, or more than seven sessions' worth of trading, at the security's average daily trading pace.

Options traders have also been exceedingly skeptical of SPLK in recent months. At the ISE, CBOE, and PHLX, the stock's 50-day put/call volume ratio of 2.51 sits just 1 percentage point shy of an annual bearish high. So far today, puts have a wide lead, trading at eight times the pace typically seen at this point in the session, and outnumbering calls by a 3-to-1 margin. Interestingly, however, this doesn't seem to represent more downbeat expectations, as the vast majority of this put volume is coming from a block of 2,200 weekly 12/2 55.50-strike puts, which looks like it may have been sold to open. Assuming this is the case, the put seller is betting the underfoot $55.50 level will serve as a floor for Splunk Inc (NASDAQ:SPLK) through Friday's close, when the weekly series expires.

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