Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Apr 19, 2018 at 9:40 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Chip concern Advanced Micro Devices, Inc. (NASDAQ:AMD) has dropped in early trading after receiving a price-target cut from Barclays to $9 from $10. AMD is far from the only tech issue trading lower this morning, however, as a weak outlook from Taiwan Semiconductor Manufacturing (TSM) is weighing on a number of high-profile names, including Apple (AAPL). This comes just a day after a quarterly update from Lam Research (LRCX) pulled down semiconductor stocks.

AMD was down 2% at $10.15 at last glance, bringing its year-over-year loss to more than 20%. While the stock has bounced back some since its annual low of $9.04 back on April 4 and is set for a third straight weekly win, it topped out yesterday near familiar resistance at the 32-day moving average, right near a trendline connecting lower highs since the January peak. 

The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.08 ranks in the 84th percentile of its annual range. This lofty ranking suggests that near-term traders have rarely been more put-biased in the past year, so options traders are seemingly well positioned for a pullback.

Plus, short interest on the security rose 14% during the past two reporting periods, and now represents 22% of the stock's total available float. In fact, the nearly 182 million AMD shares sold short are the most since at least 2002, and equate to more than three times the stock's average daily trading volume.

Published on Apr 19, 2018 at 9:52 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update
  • Buzz Stocks

American Express (NYSE:AXP) stock is up 6.6% to trade at $101.44, the top Dow stock out of the gate, after the blue chip reported first-quarter earnings and revenue that surpassed analyst expectations. The company attributed the upbeat numbers to a record high investment in credit-card rewards and a healthy economy that spurred higher customer spending. In response, five brokerage firms chimed in with price-target hikes for AXP shares, including Barclays to $113. 

American Express stock is now trading back above its year-to-date breakeven, and within striking distance of its record high of $102.38, tagged on Jan. 16. The security is currently on track for its best week since October 2016, and has added 33% in the last 12 months. 

Despite the equity's solid uptrend and the analyst attention today, there is still room for more upgrades that could push the stock higher. Of the 20 brokerages covering AXP, 60% rate it a tepid "hold." 

In the options pits, calls were all the rage ahead of AXP earnings. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 1.68. Not only does this show that bought AXP calls have nearly doubled puts, but the reading ranks 3 percentage points from a 52-week high. 

Digging deeper, the May 95 call saw the largest increase in open interest during this time frame. The majority of the activity at this strike was of the buy-to-open variety, indicating options traders have been banking on a continued uptrend from the Dow stock in the coming weeks. Those buyers likely aren't disappointed today, with the calls now comfortably in the money.

Published on Apr 19, 2018 at 10:15 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Despite its two-year run from around $24 to its current perch of $41.59, eBay Inc (NASDAQ:EBAY) stock has long been surrounded by bearish sentiment. So far in April, however, it's been a different story, with a number of analysts weighing in bullishly on EBAY shares. A week ago, KeyBanc initiated coverage on the e-commerce issue with an "overweight" rating and $50 price, calling for continued growth in gross merchandise volume (GMV) going forward.

Morgan Stanley issued a similar note yesterday, upgrading EBAY to "overweight" from "underweight," and lifting its price target to $58 from $36. The analyst in coverage believes eBay's payments business will help drive GMV growth in the coming years, naming the security a top large-cap pick in the process. Turning to this morning, Citigroup weighed in with a price-target hike to $58 from $50.

The shares would need to rally another 39.5% to hit the $58 level, but the momentum is certainly in the bulls' favor. EBAY is up almost 11% so far in 2018, and the most recent pullback was neatly contained by the $39 level, site of the highs from September and October, as well as the 160-day moving average.

There's certainly room for more bullish analyst attention, too. In fact, almost half the brokerage firms tracking eBay say it's a "hold" or "strong sell," so the recent flurry of bull notes could be just the beginning -- especially with the company set to report earnings after the close next Wednesday, April 25. Last quarter, EBAY shares jumped 13.8% the day after earnings, and ultimately touched a record high of $46.99.
Published on Apr 19, 2018 at 10:25 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Analyst Update

The U.S. stock market is trading in negative territory this morning, with the Nasdaq suffering the worst of its peers so far. Weighing on the tech-heavy index are sharp drops from iPhone maker Apple Inc. (NASDAQ:AAPL) and graphics card developer NVIDIA Corporation (NASDAQ:NVDA), after Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) warned of weak demand for smartphones and cryptocurrency-mining chips in its soft current-quarter and full-year revenue target.

Mizuho Doesn't See Much Upside for Apple Stock

Apple stock was last seen down 1.8% to trade at $174.56, with a bearish note from Mizuho Securities only adding pressure to the blue chip. The brokerage firm said it doesn't see much upside to 2018 iPhone unit shipment estimates, which could negatively impact fiscal third-quarter guidance, and thinks any upward revisions to Apple's share buyback program is already priced in. Mizuho reiterated its "neutral" rating and $175 price target.

Options traders have been growing increasingly skeptical of AAPL stock, too, which is currently trading 3.2% above its year-to-date breakeven level. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.75 ranks in the 99th annual percentile, meaning puts have been bought to open relative to calls at a faster-than-usual clip.

Anyone buying short-term put options in today's session are contending with inflated premiums. Apple's 30-day implied volatility skew of 14.8% ranks in the 95th annual percentile, indicating puts are pricing in much higher volatility than their call counterparts.

Nvidia Stock Tests Key Trendline

Nvidia stock is down 2.2% to trade at $231.20, testing a foothold atop its 80-day moving average. This trendline served as support in December and February, but kept a lid on the shares earlier this month. Just below here is NVDA's 120-day moving average -- located at $221.70 -- which contained the stock's pullback from its March 13 record high of $254.50.

Speculative players have been purchasing puts relative to calls at an accelerated pace recently, per NVDA's 10-day put/call volume ratio of 0.82 at the ISE, CBOE, and PHLX -- in the 92nd percentile of its 12-month range. Considering the equity is still up 131% year-over-year, it's likely some of this put buying could be shareholders protecting paper profits against any downside risk.

Regardless, Nvidia has consistently rewarded premium buyers over the past year. Its Schaeffer's Volatility Scorecard (SVS) reading comes in at a lofty 88 (out of a possible 100), indicating the shares have tended to make outsized moves in the last 12 months, relative to what the options market has priced in.

Published on Apr 19, 2018 at 11:39 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Earnings Preview
  • Analyst Update

First Solar, Inc. (NASDAQ:FSLR) topped out at a six-year high of $77.25 earlier, after Baird raised its price target on the solar stock to $85 from $82. And while FSLR shares have since turned lower amid broad-market headwinds -- down 3% to trade at $75.52 -- they are holding above the $74-$75 region, which has been a stiff ceiling for the shares since 2014.

Today's strong start just echoes FSLR stock's longer-term uptrend, with the shares boasting a 187% year-over-year lead. In fact, the shares had their best day since Jan. 11 yesterday -- tacking on 6.7%, on a fresh "buy" rating from BofA-Merrill Lynch and tailwinds from SunPower's (SPWR) well-received buyout of SolarWorld's U.S. division. This had the equity's 14-day Relative Strength Index (RSI) closing near overbought territory last night, which may explain some of today's downside.

Nevertheless, there's certainly room for more analysts to upwardly revise their outlooks on First Solar stock. Despite the stock's impressive advance over the last 12 months, seven brokerages still maintain a lackluster "hold" rating, while the average 12-month price target of $73.14 stands at a discount to current levels.

Options traders appear to be betting on additional upside, too. Amid relatively low absolute volume, the stock's May 80 call has seen the biggest rise in open interest over the past 10 days, and data from Trade-Alert points to buy-to-open activity here. If this is the case, call buyers expect FSLR to topple the round $80 mark by the close on Friday, May 18, when the back-month options expire.

This time frame includes First Solar's earnings report, due after the close next Thursday, April 26. The stock has finished higher the day after earnings in three of the past four quarters, averaging a gain of 13.73%. Over the past eight quarters, FSLR stock has swung 11.3% the next day, regardless of direction.

Published on Apr 19, 2018 at 12:56 PM
Updated on Mar 19, 2021 at 7:15 AM
  • The Week Ahead

Earnings season hits high gear next week, with big names from virtually every sector set to step up to the plate. Boeing (BA), Caterpillar (CAT), Coca Cola (KO), and Verizon Communications (VZ) are among the blue chips due up. FAANG names Alphabet (GOOGL), Amazon.com (AMZN), and Facebook (FB) will also report, and we'll also hear from airliners and auto names. In addition to the jam-packed earnings slate, the first read on first-quarter gross domestic product (GDP) will be featured at the end of the week. 

Below is a brief list of some key market events scheduled for the upcoming week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

On Monday, April 23, Markit's flash composite purchasing managers index (PMI) and existing home sales will kick off the week. Alphabet (GOOGL), Alaska Air (ALK), FirstEnergy (FE), Halliburton (HAL), Hasbro (HAS), Kimberly-Clark (KMB), Wynn Resorts (WYNN), and Xerox (XRX) will report earnings.

The S&P CoreLogic Case-Shiller home price index, new home sales, and data on consumer confidence will be released on Tuesday, April 24. 3M (MMM), Caterpillar (CAT), Coca Cola (KO), Travelers (TRV), United Technologies (UTX), Verizon Communications (VZ), Barrick Gold (ABX), Biogen (BIIB), Centene (CNC), Cree (CREE), Eli Lilly (LLY), Equifax (EFX), Fifth Third Bancorp (FITB), Freeport McMoRan (FCX), Harley Davidson (HOG), iRobot Corporation (IRBT) JetBlue Airways (JBLU), Lockheed Martin (LMT), Teck Resources (TECK), and Texas Instruments (TXN) will step into the earnings confessional.

Wednesday, April 25, brings the MBA mortgage index and weekly crude inventories. Boeing (BA), Visa (V), Facebook (FB), Advanced Micro Devices (AMD), Chipotle Mexican Grill (CMG), Ford Motor (F), Twitter (TWTR), Qualcomm (QCOM), Allegiant Travel (ALGT), Anthem (ANTM), AT&T (T), Dr Pepper Snapple (DPS) eBay (EBAY), Evercore (EVR), F5 Networks (FFIV), General Dynamics (GD), Goodyear Tire (GT), Innoviva (INVA), O'Reilly Auto Parts (ORLY), PayPal (PYPL), Rockwell Automation (ROK), Sarepta Therapeutics (SRPT), and Trivago (TRVG) will unveil earnings.

Weekly jobless claims, durable goods orders, the Fed's balance sheet, and international trade data are due out on Thursday, April 26. Intel (INTC), Microsoft (MSFT), Amazon.com (AMZN), AbbVie (ABBV), Alexion Pharma (ALXN), American Airlines (AAL), Domino's Pizza (DPZ), D.R. Horton (DHI), Dunkin Brands (DNKN), Expedia (EXPE), Fiat Chrysler (FCAU), First Solar (FSLR), General Motors (GM), Hershey Foods (HSY), Mattel (MAT), MGM Resorts (MGM), PepsiCo (PEP), Royal Caribbean Cruises (RCL), Southwest Airlines (LUV), Spirit Airlines (SAVE), Starbucks (SBUX), Time Warner (TWX), United Parcel Service (UPS), U.S. Steel (X), and Western Digital (WDC) will all report earnings.

On Friday, April 27, the week will close out with the advance reading of first-quarter GDP, as well as consumer sentiment stats, the employment cost index, and the Chicago PMI. Earnings from Chevron (CVX), Exxon Mobil (XOM), Cabot Oil & Gas (COG), Dominion Energy (D), and Phillips 66 (PSX) will finish out the busy week of reports.

Published on Apr 19, 2018 at 3:09 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move
  • Stock Market News

The U.S. stock market is selling off today, as the 10-year Treasury yield trades near 2.93% -- its highest level since late February. Among individual stocks making big moves lower are pharmaceutical ingredients distributor Aceto Corporation (NASDAQ:ACET), semiconductor firm Qualcomm, Inc. (NASDAQ:QCOM), and tobacco titan Philip Morris International Inc. (NYSE:PM). Here's a quick look at what's pressuring shares of ACET, QCOM, and PM.

Aceto Shares Sink to New Low on Strategic Review

Aceto said it was undergoing a strategic review to address "persistent adverse conditions in the generics market," which includes cutting its dividend and potential credit waivers with lenders. The company also announced the resignation of Chief Financial Officer Edward Borkowski, projected $230 million-$260 million in impairment charges, and pulled its 2018 guidance.

In reaction, Canaccord Genuity double-downgraded the stock to "sell" from "buy," and slashed its price target by 80% to $2, saying the shares "could see significant pressure before it gets better." Craig-Hallum followed suit, lowering its rating to "sell" from "hold." Against this backdrop, ACET stock plunged to a 15-year low of $2.60 earlier, and was last seen trading down 63.5% at $2.70.

With the stock short-sale restricted, put volume is running at 86 times the average intraday pace -- with the 1,072 puts traded so far a new annual high -- as traders look for alternate ways to bet bearishly on ACET. Buy-to-open activity has been detected at the April 2.50 put, pointing to expectations for additional losses through front-month options expiration at tomorrow's close.

China Woes Exacerbate Qualcomm Stock's Slide

Chip stocks are getting whacked by Taiwan Semiconductor's (TSM) soft forecast, with Qualcomm shares last seen down 4.2% at $52.93. Pouring salt on the proverbial wound is news China may require the company to take additional steps to ease competition concerns before approving its takeover of NXP Semiconductors (NXPI), as well as a price-target cut to $79 from $86 at Canaccord Genuity.

QCOM is now trading at levels not seen since early November, and has given back 22% since its late-February highs near $67.60. A continued round of bearish brokerage notes could create even bigger headwinds for Qualcomm stock, too, especially if next Wednesday's earnings disappoint. There are still nine analysts that maintain a "buy" or better rating on the shares, while the average 12-month price target sits all the way up at $66.59.

Philip Morris Stock Plunges to New Low on Revenue Miss

Philip Morris is the worst stock on the S&P 500 Index (SPX) today, down 15.4% at $85.77, and earlier touching a two-year low of $83.52. Pressuring the shares is the tobacco firm's worse-than-expected first-quarter revenue of $6.9 billion -- impacted by a sharper-than-forecast decline in cigarette shipments.

The stock has brought its year-to-date deficit to 18.4%, and a round of bearish backlash seems likely. All but one of the 12 covering analysts maintain a "buy" rating, and the consensus 12-month price target is docked at $119.56 -- a 38% premium to current trading levels. Downgrades and/or price-target cuts could exacerbate Philip Morris stock's technical troubles.

Published on Apr 20, 2018 at 9:15 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Technical Analysis
  • Unusual Trading Activity
  • Analyst Update

The broad tech sell-off that hit Wall Street earlier this year sent Amazon.com, Inc. (NASDAQ:AMZN) stock spiraling below its 50-day moving average, with the shares finally bouncing near the 80-day moving average and $1,350 level. In fact, a win today would mark a fifth straight for AMZN, and the security was last seen trading slightly higher before the open after a price-target hike to $1,800 from $1,750 at Credit Suisse.

amzn stock today

Options traders have seemingly been betting on more upside from the FAANG stock. The 10-day call/put volume ratio from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 1.32 for Amazon, which ranks in the high 95th annual percentile. In other words, call buying has been unusually popular in recent weeks, relative to put buying.

Meanwhile, peak open interest resides at the soon-to-expire April 1,600 call. The removal of this overhead call wall could be seen as a bullish development for the shares, especially with the May 1,400 put coming in as the next most populous contract. For what it's worth, the stock was last quoted at $1,556.91, so it would need to add 2.8% today for those April calls to move into the money.

Either way, AMZN has been a name that's regularly made bigger moves on the charts over the past year compared to what the options market was expecting. That's according to its Schaeffer's Volatility Scorecard (SVS) of 91. The e-commerce company is scheduled to report earnings after the close next Thursday, April 26.
Published on Apr 20, 2018 at 9:55 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Analyst Update

Skechers USA Inc (NYSE:SKX) reported better-than-expected first-quarter profit of 75 cents per share on in-line revenue of $1.25 billion. However, the shoemaker gave a weak forecast for the current quarter, sending SKX stock down 26.1% to trade at $31.09 -- its lowest point since November.

A round of bearish brokerage notes is only adding to the pressure. Included in the bunch was a downgrade to "neutral" from "outperform" at Wedbush, with the brokerage firm also slashing its price target by $12 to $34. Cowen, meanwhile, cut its price target to $41 from $46, but said weather and distributor weakness were to blame for the soft outlook, versus the actual product.

Today's swing is nothing new for SKX stock, which has a history of making big post-earnings moves. And a number of options traders in recent weeks had been bracing for a negative earnings reaction. In addition to accelerated put buying at the major options exchanges, the stock's April 47.50 call saw the biggest increase in open interest over the last 10 days -- most of which was sold to open last Friday, according to Trade-Alert.

While this would suggest that those writing the calls expected SKX to stay below $47.50 through front-month expiration at tonight's close, another possible motive may have been to profit off a post-earnings volatility crush. At last Friday's close, implied volatility at this strike closed up 13.5 percentage points at 98.1%, with the calls trading at a volume-weighted average price (VWAP) of $0.50. Today, the ask price for the deep in-the-money calls was $0.05, though the traders will likely just let the options expire worthless at the end of the day.

Published on Apr 20, 2018 at 9:57 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Downgrades

Procter & Gamble Co (NYSE:PG) stock is down 1% to trade at $74.21, and just touched a two-year low of $74.16, as analysts continue to react to the company's subpar earnings report yesterday. Deutsche Bank and BofA-Merrill Lynch both downgraded the blue-chip stock to "hold" from "buy," while issuing price-target cuts to $80 and $82, respectively. The analyst in coverage at BofA noted they "do not see a near-term catalyst to drive multiple expansion." Three other brokerage firms chimed in with cuts of their own, including Berenberg to $72. 

Procter & Gamble Stock stock is now on track for a four-day losing streak, and yesterday suffered its steepest one-day percentage drop in nearly five years. The equity has now shed 18% in 2018, and additional downgrades could be in store. Of the 14 brokerages covering the stock, 50% still rate it a "buy" or "strong buy."

Despite the security's struggles, short sellers have been hesitant to jump aboard. Short interest fell by 3% during the last reporting period, and the 34.43 million shares sold short only represents 1.4% of PG's total available float.

In the options pits, though, put buyers are coming out of the woodwork. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows PG with a 10-day put/call volume ratio of 1.28, a reading that ranks in the elevated 70th percentile of its annual range. This indicates puts have been bought to open over calls at a faster-than-usual clip during the past two weeks.

Now appears to be a more attractive time to buy premium on puts, rather than calls. The fund's 30-day implied volatility (IV) skew of 2.9% ranks in the 1st annual percentile, meaning short-term puts have rarely been cheaper compared to their call counterparts.

Published on Apr 20, 2018 at 10:10 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Shares of Twitter Inc (NYSE:TWTR) are higher in today's trading, after MKM Partners upgraded the stock to "buy" from "neutral," and initiated a $40 price target -- a roughly 27% premium to last night's close, and territory not charted since April 2015. Analyst Rob Sanderson said it thinks the company is removed from Facebook's (FB) data scandal, and that it "increasingly appears that Twitter is here to stay."

The social media giant also saw positive attention from Citigroup, which raised TWTR's ranking to eight from 15 among its list of U.S. internet stocks. In response, the equity is trading up 4.7% at $33.01 at last check, extending its recent bounce higher above the supportive 80-day moving average. Twitter stock is up 155% year-over-year, and touched a two-year high of $36.80 on March 14.

The stock also sports a Schaeffer's put/call open interest ratio (SOIR) of 0.69, which ranks in the 83rd percentile of its annual range. Though the ratio indicates that short-term calls still outnumber puts on an absolute basis, the elevated percentile indicates that near-term traders have rarely shown a greater preference for puts over calls in the last year.

Looking further, the stock's Schaeffer's Volatility Scorecard (SVS) of 96 (out of 100) indicates Twitter shares have easily exceeded options traders' volatility expectations in the past year. This could come in handy for premium buyers, with the company's first-quarter earnings report set for release ahead of the open this coming Wednesday.

 

Published on Apr 20, 2018 at 10:57 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Investor Sentiment
  • Buzz Stocks

After falling nearly 3% on Thursday, Apple Inc. (NASDAQ:AAPL) stock is down another 3.1% today to trade at $167.40. The latest pullback was sparked by a round of bearish analyst attention, with one firm calling for the end of the iPhone X. Morgan Stanley, meanwhile, trimmed its price target to $200 from $203, saying it expects iPhone shipments in the March quarter to fall short of expectations -- though it'd be a buyer of any post-earnings dip because of Apple's services business.

But AAPL remains above the key $165 level. This price point contained the stock's most recent pullback, representing a 10% discount to the equity's March 13 record high of $183.50. It's also home to the closely watched 200-day moving average. The security is back below the year-to-date breakeven level of $169.23, however.

appl stock price

Today's negative news cycle has options volume surging, with the 441,899 contracts that have already traded pacing for the 99th annual percentile. New positions are being opened at the about-to-expire April 167.50 put, while other traders are taking a slightly longer view, based on new positions opening at the weekly 4/27 170-strike call.

Coming into today, evidence suggests a number of traders have been betting on or bracing for an extended pullback in Apple stock, as the company prepares to report earnings on Tuesday, May 1. Specifically, the far out-of-the-money May 140 put saw the largest increase in open interest over the past 10 days, and the June 150 put is home to elevated open interest, as well.

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