Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jan 17, 2023 at 11:11 AM
Updated on Jan 17, 2023 at 11:16 AM
  • Intraday Option Activity
  • Buzz Stocks
 
Published on Jan 17, 2023 at 11:12 AM
  • Analyst Update

Church & Dwight & Co., Inc. (NYSE:CHD) stock is up 4.1% at $85.23 at last check, after Morgan Stanley upgraded the stock to "overweight" from "equal weight," with a price-target hike to $91 from $82. Plus, Credit Suisse upped its rating to "outperform" from "neutral," and raised its price target by $10 to $95. Both analysts see an attractive entry point after a rough year for CHD. 

This could be the start of an optimistic shift amongst the brokerage bunch. Of the 23 analysts in coverage, 15 still carry a "hold" or worse rating on CHD. Plus, the 12-month consensus price target is in line with current levels, leaving room for price-target hikes. 

Down 18.2% year-over-year, today's pop has Church & Dwight stock breaking above the $84 level, which had kept a lid on the shares since early December. The stock's 40-day moving average has also moved in as support. 

Options look like a good way to go when betting on CHD, too, per the stock's Schaeffer's Volatility Scorecard (SVS), which sits at 87 out of 100. This this means the security has exceeded option traders' volatility expectations during the past year.

Published on Jan 17, 2023 at 9:28 AM
  • Analyst Update

The brokerage bunch is busy this morning, with Pfizer Inc. (NYSE:PFE), Wendy's Co (NASDAQ:WEN), and Snap Inc (NYSE:SNAP) all receiving downgrades before today's open. 

Pfizer in Need of "Covid Reset"

Wells Fargo downgraded Pfizer stock to "equal weight" from "overweight," saying the biotech company "needs a Covid reset" before the shares can stage a comeback. The brokerage also said it expects lower adjusted profit between 2023 and 2025, specifically due to lower sales of Covid-related products.

At last check, PFE is saddled with a 2% premarket loss, last seen trading at $46.91. The equity is poised to add to its 13.9% year-over-year deficit, and, should these losses hold, pacing for its second close below its 100-day moving average since November.

Look Anywhere but Wendy's for Upside, Says Analyst

While no less than seven analysts hiking their price targets on Wendy's stock, Deutsche Bank cut its rating to "hold" from "buy." The Wall Street broker's bear note cited the stock's valuation, advising investors to look elsewhere in the restaurant sector for better upside potential. 

In response, WEN was last seen trading 1.1% lower at $22.82 before the open, pulling back dangerously close to its year-to-date breakeven mark. Coming into today, eight of 18 covering brokerages still rate the equity a "strong buy" -- both of which indicate more analyst action to the downside could soon come in -- though its average 12-month target price is a slight premium to Friday's close.

Watch Out Snap, Here Comes the Competition 

Competition is ramping up for Snap, according to JMP Securities. The analyst downgraded Snap stock to "market perform" from "market outperform," as Instagram Reels and YouTube shorts move in on the camera and social media company's specialty. In addition, declining time spent on Snap was cited in the bear note.

Just before Wall Street's open, SNAP is down 1.1% to trade at $9.69. The shares' 80-day moving average has kept a firm lid on any positive price action over the last month, while Snap stock contends with a hefty 75.5% year-over-year deficit.

Published on Jan 17, 2023 at 9:10 AM
Updated on Jan 17, 2023 at 9:11 AM
  • Opening View

The market is eyeing a rocky start to the holiday-shortened week, following two-straight weeks of considerable gains. Dow Jones Industrial Average (DJIA) futures are down more than 100 points before the bell this morning, while futures on the Nasdaq-100 Index (NDX) and S&P 500 Index (SPX) sit modestly in the red as well. Meanwhile, the empire state manufacturing index came in at negative 32.9 in January, compared to analyst expectations of negative 7 -- its lowest level since pandemic-era 2020. 

Continue reading for more on today's market, including:

Futures Jan17

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.7 million call contracts and over 1.2 million put contracts traded on Friday. The single-session equity put/call ratio fell to 0.69 and the 21-day moving average rose to 0.81.
  2. Pfizer Inc (NYSE:PFE) is down 1.9% premarket, after Wells Fargo downgraded the stock to "equal weight" from "overweight," stating the shares need a reset after Covid. On the charts, the equity is fresh off its third-straight weekly loss, down 13.8% year-over-year. 
  3. China-based tech stock Alibaba Group Holding Inc (NYSE:BABA) is in the spotlight before the bell, after news that activist investor Ryan Cohen built a stake in the company. Up 0.2% at last glance, BABA is already sporting a 32.8% year-to-date gain. 
  4. Morgan Stanley (NYSE:MS) is up 2.1% in electronic trading, after the company posted better-than-expected fourth-quarter results. Year-over-year, the equity is down 10.6%. 
  5. There is no more economic data of note today. 

buzzjan17

Investors Unpack China's GDP Data 

Economic data weighed on Asian markets today, though Japan’s Nikkei was able to add 1.2% as the Bank of Japan’s (BoJ) two-day monetary policy meeting gets underway. In China, December retail sales fell 1.8% while fourth-quarter gross domestic product (GDP) expanded by 2.9%, both of which beat analyst estimates. However, the country’s “exit wave” during its reopening process has created problems, with GDP growing by just 3% in 2022 – its slowest annualized growth since 1976. In response, China’s Shanghai Composite lost 0.8%, and Hong Kong’s Hang Seng dipped 0.1%. South Korea’s Kospi snapped a nine-session win streak, with a 0.9% haircut.

Stocks in Europe are slightly lower, as inflation, interest rates, and economic growth take center stage at the World Economic Forum in Davos, Switzerland. At the forum, UBS CEO Ralph Hamers said 2023 will be “the year of inflection” for the global economy, while Swiss Re CEO Christian Mumenthaler said inflation won’t fall back to low levels for at least a decade. At last glance, London’s FTSE, Germany’s DAX, and France’s CAC 40 are down 0.2%, 0.1%, and 0.07%, respectively.

Published on Jan 17, 2023 at 8:35 AM
  • Monday Morning Outlook
 
Published on Jan 13, 2023 at 4:32 PM
Updated on Jan 13, 2023 at 4:35 PM
  • Market Recap

Despite JPMorgan Chase's (JPM) recession warning, stocks managed to swing back into positive territory to close out the strong week. The Dow and S&P 500 logged four-straight daily gains, while the Nasdaq extended its win streak to six consecutive sessions -- its longest since November 2021. All three marked weekly wins, as well as their best weekly performances since mid-November. 

In addition to bank earnings, Wall Street also unpacked the University of Michigan's  consumer sentiment survey, which showed the one-year inflation outlook hitting its lowest level since April 2021. Looking ahead, U.S. markets will be closed on Monday in observance of Martin Luther King Jr. Day.

Continue reading for more on today's market, including:

  • 2 energy stocks collecting bull notes.
  • Why options traders piled on bank stocks.  
  • Plus, another 2023 top stock pick; what boosted Virgin Galactic shares; and Carvana stock takes a breather.

Closing Index Summary January 132023

NYSE and Nasdaq Stats January 132023

5 Things to Know Today 

  1. Former U.S. President Donald Trump’s business empire, The Trump Organization, was fined $1.6 million today for tax fraud and other crimes to evade taxation. (CNBC)
  2. Delta Air Lines (DAL) reported a quarterly earnings beat that is fueling hopes that 2023 could be a “Goldilocks year” for players within that industry. (MarketWatch
  3. Why Waste Management shares have plenty of room to run.
  4. Commercial launch update lifted this Richard Branson stock.
  5. Car e-tailer pulled back from a trading frenzy.

Earnings January 132023

Unusual Options Activity January 132023

Oil, Gold Wrap Up Stellar Week with More Gains

Oil prices extended their win streak to seven on Friday, settling at their highest level in more than two weeks and with a more than 8% weekly gain. Traders remained optimistic regarding demand out of China as the country eases Covid-19 measures. February-dated crude added $1.47, or 1.9%, to settle at $79.86 per barrel on the day.

Gold prices settled higher once again on Friday, forming a “golden cross” while nabbing a fresh eight-month high. Easing inflation and a weaker U.S. dollar continued to draw investors to the yellow metal. February-dated gold rose $22.90, or 1.2%, to settle at $1,921.70 per ounce. For the week, gold prices added 2.8%.

Published on Jan 13, 2023 at 12:10 PM
  • 5-Minute Market Rundown

While things got off to a good start on Monday, with the major indexes building on Friday's rally, the Dow Jones Industrial Average (DJI) and S&P 500 Index (SPX) pivoted lower at the tail end of the session. By the next day, Wall Street managed a win, even after Federal Reserve Chairman Jerome Powell dodged the topic of economic policy in his latest address. Things really picked up for the Nasdaq Composite (IXIC), which logged its first four-day win streak since September, as bond yields cooled.

An encouraging consumer price index (CPI) reading rolled in on Thursday, and the Nasdaq went on to score its fifth-straight win for the first time since July. Against the improving backdrop, Wall Street's "fear gauge," the Cboe Volatility Index (VIX), was all over the place. Today, the VIX is heading for its worst week since October, while the major benchmarks pace for solid weekly wins despite a dire warning from JPMorgan Chase (JPM). 

Schaeffer's Top Picks for 2023

Last week, we mentioned that our top picks for the year are rolling out, and we kicked things off by highlighting drugmaker AbbVie (ABBV). Well, we've got even more stocks for you to watch.

Retail name Macy's (M) sports a low price/earnings ratio and attractive dividend yield, and has largely brushed off recession headwinds, making it a prospective buy-and-hold for 2023. Cloud stock MongoDB (MDB) has plenty of support in place, as it trades at more than six times its initial public offering (IPO) level. Elsewhere, it looks like semiconductor company ASML Holding (ASML) might have a monopoly on EUV lithography, while Aehr Test Systems' (AEHR) 2023 rally is showing no signs of slowing down.

Biggest Analyst Calls of the Week

Logitech (LOGI) shared its preliminary third-quarter results, and J.P. Morgan Securities downgraded the stock after the numbers missed expectations. Meanwhile, Jefferies downgraded these two streaming stocks, while KeyBanc Capital Markets upgraded Bumble (BMBL) on a host of resilient data. Elsewhere, Piper Sandler issued a bull note for Uber Technologies (UBER), after noting the positive impact higher car prices could have on the rideshare stock.

Holiday-Shortened Week Features Fed Updates, Earnings

Next week will be short, as markets are closed on Monday in observance of Martin Luther King Jr. Day, but there's no shortage of Fed updates and earnings reports on the docket. Plus, here's a look at how the third year of a Presidential cycle typically plays out for the stock market.

Published on Jan 13, 2023 at 12:00 PM
  • Quantitative Analysis
  • Editor's Pick

Subscribers to Chart of the Week received this commentary on Sunday, January 8.

In the last quarter of 2022, Waste Management Inc (NYSE:WM) stock broke a technical downtrend and retested that level before advancing. WM is now back above its 100-day moving average, just off all-time levels, and has been a steady uptrend over essentially any timeframe you select. For example, the shares are above their year-to-date breakeven while the SPDR S&P 500 ETF Trust (SPY) is off 16% in 2022, while their year-over-year breakeven remains positive compared to the SPY’s 13% 12-month haircut. Going back even further, WM’s three-year tally checks in at 54%, compared to the SPY’s 32% gain. 

CotW Repost WM Jan13

Despite this outperformance, put traders won’t give up. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.50 sits higher than 71% of readings from the past year. Echoing this, WM’s Schaeffer's put/call open interest ratio (SOIR) of 1.09 ranks higher than 67% of annual readings, meaning short-term traders remain quite put-biased. Digging deeper, five of the top open interest positions are puts.

WM is approaching its 12-month consensus price target of $174, and could see revisions or upgrades higher, especially considering seven of the 11 brokerages maintain tepid “hold” stances. And among short sellers, bearish bets have increased by 32% in the last four months, all while WM has rallied, hinting at the technical strength of the stock.

Even further supporting our case, Friday afternoon WM was seen trading up 2.9% at $158.24, after several brokerages moved in with fresh bull notes. Raymond James approached with an “outperform” rating, Jefferies upgraded to a “buy” from “hold,” and both Citigroup and Citibank set “buy” recommendations, with the latter citing WM as an underappreciated natural gas opportunity. In other words: jump on board the Waste Management train, as there remains ample buying opportunity for bulls in the weeks ahead!

Published on Jan 13, 2023 at 11:58 AM
  • Editor's Pick
  • Buzz Stocks
  • Intraday Option Activity

Earnings season is officially underway, with several big bank names stepping into the confessional this morning. How did JPMorgan Chase & Co. (NYSE:JPM)Wells Fargo & Co (NYSE:WFC), and Bank of America Corp (NYSE:BAC) fare? While the results look good on paper, the stocks' subsequent performance has left a lot to be desired. 

Blue-Chip Banker Slowed by Recession Fears

Heavy hitter JPMorgan Chase's adjusted fourth-quarter earnings of $3.56 topped analyst estimates of $3.07, while revenue of $35.57 billion was higher than the estimated $34.34 billion. JPMorgan Chase stock was last seen 0.4% lower to trade at $139.04 though, after the company disclosed it had set aside $1.4 billion to prepare for a mild recession. The shares have taken a 18% haircut year-over-year, but have added 37% off their Oct. 12 bottom of $101.28.

At last check, over 48,000 options have changed hands, volume that's triple the average intraday amount. The January 140 call that expires next Friday is seeing notable buy-to-open activity today.

Options Bulls Unfazed by Wells Fargo Whiff

Wells Fargo's adjusted fourth-quarter earnings came in at 61 cents, lower than the 66 cent estimate from analysts. Revenue also fell short of expectations, sending WFC lower by 2.2% to trade at $41.88. The shares are off by 25% in the last 12 months, but a short-term floor is forming at $40.

Wells Fargo options are flying off the shelves. Over 100,000 contracts have changed hands in the first hour of trading, volume that's quadruple the average intraday amount. The January 40 put is getting a lot of attention, which will be interesting to watch in the next week.

Net Interest Income Bites Bank of America

Bank of America's adjusted fourth-quarter earnings and revenue both topped Wall Street's forecasts. However, the stock was last seen off by 1.5% to trade at $33.92, weighed down by net interest income that fell below expectations. Sticking with the theme--BAC is down 30% year-over-year, with several short-term trendlines keeping a lid on recent gains. Also of note: Bank of America stock is trading right at its post-earnings bull gap levels from October

Over 230,000 BAC contracts have been traded this morning, volume that's also four times the average intraday amount. The January 35 call is one to watch, given the stock's current perch.

Published on Jan 13, 2023 at 11:38 AM
  • Midday Market Check
 
Published on Jan 13, 2023 at 11:18 AM
  • Analyst Update

Energy stocks Chesapeake Energy Corporation (NASDAQ:CHK) and Diamondback Energy Inc (NASDAQ:FANG) are in the spotlight today, after Gerdes Energy Research initiated coverage on both with a "buy" rating. This is the second bull note for the pair this week, as Mizuho assumed coverage on both with a "buy" on Monday as well. Both stocks are inching lower despite the praise, with CHK down 0.8% at last check, while FANG is 0.2% lower. 

The shares of Chesapeake Energy are outperforming with a 28.6% year-over-year gain, and bounced off the $84 level and 320-day moving average earlier this month. There is plenty of short-covering potential, too, as short interest makes up 7.8% of the stock's available float, or over five days' worth of pent-up buying power. 

Diamondback Energy stock is sporting a 21.1% year-over-year gain -- up 6% since the start of 2023. The stock is looking to snap a six-day win streak, should today's minor losses hold, though a slew of moving averages linger below as potential support.

It's also worth noting that options bears have been targeting FANG despite its relative strength on the charts, per the security's 10-day put/call volume ratio of 10.90 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than all other readings from the past year. 

Published on Jan 13, 2023 at 10:08 AM
  • Buzz Stocks
Options traders are chiming in this morning, with the 30,000 calls and 7,054 puts exchanged so far accounting for 12 times the average intraday volume. The most popular position is the the weekly 1/13 5.50-strike call, where positions are being opened, indicating these traders expect to see more upside before today's close.

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