Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Mar 18, 2024 at 10:50 AM
  • Buzz Stocks

The shares of HashiCorp Inc (NASDAQ:HCP) are surging today, after Bloomberg reported that the company is exploring options such as a potential sale. At last glance, HCP was up 8% at $28.63, earlier as high as $25.59. 

This gap higher has HCP breaking above the $27 level, which had provided a ceiling since late February, and trading at its highest levels since August. Since the start of the year, the equity is up 22%. 

In response, calls are being picked up at double the intraday average volume in the options pits. The April 27 call is the most popular, followed by the April 26 call. These options are reasonably priced at the moment, too, per HCP's Schaeffer's Volatility Index (SVI) of 48%, which ranks in the low 12th percentile of its annual range. 

It's also worth noting that short interest represents 6.5% of the stock's available float. It would take shorts nearly three days to cover their bets, at HashiCorp stock's average pace of trading. 

Published on Mar 18, 2024 at 10:18 AM
  • Buzz Stocks

Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is considering building advanced packaging capacity in Japan, which could boost the country's semiconductor industry. The security is up 2.7% at $140.28 at last check, climbing back towards its March 8, all-time high of $158.40, with support from the 20-day moving average. TSM is already up more than 34% in 2024.

The brokerage bunch leans bullish, with eight of nine analysts in coverage calling Taiwan Semiconductor stock a "buy" or better. Bull notes could still be on the horizon, though, as the equity's 12-month consensus price target of $133.14 is still a 5.5% discount to current trading levels.

That optimism is echoed in the options pits, where TSM's 50-day call/put volume ratio of 3.28 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than all readings from the last 12 months. This means calls have been much more popular than usual.

Published on Mar 18, 2024 at 9:10 AM
  • Analyst Update

PepsiCo Inc (NASDAQ:PEPSI) is inching higher before the open, after landing a bull note from Morgan Stanley. The Wall Street analyst upgraded the food and beverage giant to "overweight" from "equal weight," calling the stock undervalued and citing the potential for rebounding fundamentals. Ahead of the bell, PEP is up 1.5% at $167.11.

Coming into today, PEP was down 3% and 6.7% year-to-date and year-over-year, respectively. The stock is trading well below its May 2023 all-time highs, but holding above its October multi-year lows. As such, analysts are lukewarm on Pepsi stock, with seven of 17 covering brokerages rating it a tepid "hold." This leaves room for more analysts to change their tune. 

Options are an affordable way to speculate at the moment. PEP's Schaeffer's Volatility Index (SVI) of 14% ranks higher than just 15% of annual readings -- a sign that premium traders are pricing in relatively low volatility expectations. 

Published on Mar 18, 2024 at 9:01 AM
  • Opening View

Futures are on the Nasdaq-100 Index (NDX) are up 218 points this morning, as several tech stocks rise, with investors eyeing Nvidia's (NVDA) GTC conference today. Also in focus is the Fed's two-day policy meeting that kicks off tomorrow. Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) futures are comfortably higher as well, while oil prices move sharply higher as drone attacks by Ukraine affect Russian output. 

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

  • These retail stocks had a wild week.
  • 4 ways to protect your portfolio with options
  • Plus, GOOGL in talks with Apple; HCP considers sale; and PEP upgraded. 

Futures March 18

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.9 million call contracts and over 1.1 million put contracts exchanged Friday. The single-session equity put/call ratio fell to 0.61, while the 21-day moving average remained at 0.71.
  2. Alphabet Inc (NASDAQ:GOOGL) stock is up 5.5% premarket, after Bloomberg reported the tech giant is in talks with Apple (AAPL) to build Gemini artificial intelligence (AI) into future iPhones. Since last March, GOOGL is up 40.7%. 
  3. A Bloomberg report is sending HashiCorp Inc (NASDAQ:HCP) higher as well, as the software company is reportedly exploring a sale. Up 11.4% in electronic trading, HCP is sporting a 12.1% year-to-date lead headed into today. 
  4. The shares of PepsiCo Inc (NASDAQ:PEP) are up 1.5% before the bell, after an upgrade from Morgan Stanley to "overweight" from "equal weight." The beverage stock is sporting a minor loss in 2024, and is down 6.7% year over year. 
  5. This week will bring a handful of economic data, as well as the Federal Reserve's latest interest rate decision

Buzzmar18

Stocks Confidently Higher Overseas

Stocks in Asia moved higher to start the week, with all eyes on the Bank of Japan’s (BoJ) interest rate announcement tomorrow, where its negative rate is expected to be pivoted from -0.1% to a 0% benchmark. Retail sales in China rose by a stronger-than-expected 5.5% for January and February, while industrial added production added 7%. Japan’s Nikkei added 2.7%, after Honda and Nissan signed an electric vehicle (EV) memorandum, while China’s Shanghai Composite climbed 1%. Hong Kong’s Hang Send tacked on 0.1% and South Korea’s Kospi rose 0.7%.

Markets are moving higher as well in Europe, with investors gearing up for this week’s Fed meeting in the U.S. The European Central Bank (ECB) is also expected to cut rates in 2024, a sign of "major progress" in the economy. At last glance, both London’s FTSE 100 and Germany’s DAX are up 0.3%, while France’s CAC 40 has risen 0.2%, the latter boosted by a 6.4% pop from French rail operator Alstom, after a new passenger train service in the U.K. was unveiled.

Published on Mar 15, 2024 at 4:23 PM
Updated on Mar 15, 2024 at 4:23 PM
  • Market Recap
 
Published on Mar 15, 2024 at 2:30 PM
  • Options Recommendations

Subscribers to Schaeffer's Weekend Trader options recommendation service received this TAP commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Molson Coors Beverage Co (NYSE:TAP) stock is breaking out from an ascending triangle, which is coincident with a level of high options volume and coincides with both its 50- and 200-day moving averages. Longer term, the shares have been moving higher since the brewing company’s better-than-expected earnings in mid-February.

 

TAP WT

Since December, short interest has risen 31%, now representing 6% of the stock’s available float. It would take six days for shorts to cover, at TAP’s average pace of trading. And with the shares at fresh six-month highs, bears may feel pressured to start buying back their bets.

An unwinding of pessimism amongst analysts could provide tailwinds as well. Of the 16 firms in coverage, only three carry a “strong buy” rating, with 12 a tepid “hold,” and one “strong sell.
Options are affordably priced at the moment, too. The stock's Schaeffer's Volatility Index (SVI) of 19% ranks in the 11th percentile of its annual range, meaning options traders are pricing in low volatility expectations. Our recommended call option has a leverage ratio of 13.7, and will double in a 7% rise in the underlying shares.

Published on Mar 15, 2024 at 12:21 PM
Updated on Mar 15, 2024 at 12:35 PM
  • 5-Minute Market Rundown

After a quiet start to the week, a satisfactory consumer price index (CPI) reading for February pushed the S&P 500 Index (SPX) to a fresh record close. Both the Dow Jones Industrial Average (DJI) and Nasdaq Composite (IXIC) also rallied, as investors rotated back into the tech sector.

However, hesitancy returned before Thursday's producer price index (PPI) reading, which ended up doubling analysts' expectations, sending Treasury yields sharply higher and shutting down interest cut hopes, despite strong retail and jobs data. The DJI was looking to close the week near breakeven on "triple witching" Friday, while the IXIC and SPX were headed for weekly losses.

Tech Overview

There was renewed interest in tech stocks this week. J.P. Morgan Securities initiated coverage of Duolingo (DUOL) with an "overweight" rating, while chip concern Nvidia (NVDA) remained popular in the options pits. Oracle (ORCL) stock surged on a revenue beat, and Intel (INTC) pivoted lower after the Pentagon reportedly pulled plans to spend $2.5 billion on a chip grant. Elsewhere, fintech names Square (SQ) and Paypal (PYPL) saw increased options activity.

Retail Highlights

Retail earnings were still trickling in, with footwear name On Holding (ONON) missing fourth-quarter estimates and issuing a disappointing net sales forecast. Kohl's (KSS) also shared disappointing quarterly and a dismal 2024 outlook, while Petco (WOOF) beat top-line estimates. Rising consumer prices bolstered China e-tailer Pinduoduo (PDD), while a C-suite shakeup dinged Under Armour (UAA). Lastly, Dick's Sporting Goods (DKS) hit a record high after earnings.

Interest Rate Decision Ahead

Next week brings the Federal Open Market Committee (FOMC) meeting and interest rate decision, as well as some manufacturing data. The earnings docket is getting quiet, but quarterly reports are coming from Chewy (CHWY)FedEx (FDX), General Mils (GIS)Micron Technology (MU), and Nike (NKE). Before then, check out what these four big profit turnarounds have in common, and consider this SPX macro factor.
Published on Mar 15, 2024 at 11:50 AM
  • Midday Market Check

         

Published on Mar 15, 2024 at 11:04 AM
  • Buzz Stocks

Madrigal Pharmaceuticals Inc (NASDAQ:MDGL) stock is taking off today, after the U.S. Food & Drug Administration (FDA) approved the biotech company's drug for the treatment of non-alcoholic steatohepatitis (NASH), a fatty liver disease. The oral drug, Rezdiffra, is the first treatment to get approval for the condition. 

At last glance, Madrigal Pharmaceuticals stock was up 15.5% at $281.23, and earlier was high as $299.98 -- its highest levels since May 2023. Looking to close its fifth-straight week of gains, the equity is up 23.8% since the start of the year. 

Options traders are targeting the stock's surge. So far, 4,951 calls and 3,534 puts have been exchanged, which is already seven times the average daily options volume. The January 2025 210-strike call is the most popular, followed by the March 260 call. 

A bout of short covering could also be providing tailwinds, as short interest represents 19.7% of the security's available float. It would take shorts over seven days to buy back their bearish bets, at MDGL's average pace of trading. 

 

Published on Mar 15, 2024 at 9:18 AM
  • Opening View

Stock futures are mixed to finish off a busy week of inflation data, as investors brace for volatility that may come from "Triple Witching" Friday. This means that stock options, market index options and market index futures all expire today, as they do once every quarter. 

In the meantime, the New York Fed’s Empire State manufacturing gauge fell 18.5 points to negative 20.9 in March, its third-straight negative reading. Elsewhere, import prices rose for the second month, adding 0.3% in February and contributing to inflation. 

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

  • Back to basics: applying money management principles to options trading. 
  • Retail stock hit record highs after earnings. 
  • Plus, analyst sees upside for RIVN; and two stocks plummeting after earnings. 

Futures March 15

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.4 million call contracts and 926,923 put contracts exchanged Thursday. The single-session equity put/call ratio rose to 0.63, while the 21-day moving average remained at 0.71.
  2. Rivian Automotive Inc (NASDAQ:RIVN) stock is up 3.7% premarket, after an upgrade from Piper Sandler to "overweight" from "neutral," with a price-target hike to $21 from $15. Heading into today, the embattled electric vehicle (EV) stock is down 54.4% since the start of the year. 
  3. Jabil Inc (NYSE:JBL) stock is down 11.2% before the bell, after the electronics company's annual forecast came in below expectations, despite fiscal second-quarter earnings narrowly beating estimates. Dropping further from last week's record highs, the equity is up 83.6% since last March. 
  4. The shares of Adobe Inc (NASDAQ:ADBE) are off 11.3% in electronic trading, despite upbeat fiscal first-quarter results, after the software company's disappointing current-quarter guidance. A flood of analysts slashed their price targets after the earnings event. Year over year, ADBE is up 71%, but is slightly lower year-to-date. 
  5. Next week will bring a handful of economic data, as well as the Federal Reserve's latest interest rate decision

buzzmar15

Stocks Drop in Asia Despite Wage Growth in Japan

Markets in Asia were mostly lower today, as investors unpacked yesterday’s hotter-than-expected U.S. inflation data. China’s Shanghai Composite was the region’s only winner, adding 0.5% following a drop in housing prices and a People’s Bank decision to keep its one-year lending facility rate at 2.5%. Japan’s Nikkei slid 0.3%, even after Rengo, the country’s biggest trade union, said employees are expecting the largest surge in compensation in over 30 years. Elsewhere, Hong Kong’s Hang Seng pulled back 1.4% as healthcare stocks weighed, while South Korea’s Kospi led losses with a 1.9% drop.

Across the pond, investors are in better shape, with all three indexes higher at midday. At last check, London’s FTSE 100 is up 0.2%, Germany’s DAX has added 0.4% thanks to a 10% post-earnings pop from HelloFresh, and France’s CAC 40 is up 0.5%.

Published on Mar 15, 2024 at 9:08 AM
Updated on Mar 15, 2024 at 9:17 AM
  • Buzz Stocks

McDonald's Corp (NYSE:MCD) stores in the U.K., Australia, New Zealand, and Japan suffered a technology outage that reportedly left customers able to pay only in cash, while employees took orders on paper, and some locations suspended operations. The fast food giant said it was working to address the issue, and that it was not related to a cyberattack.

MCD is down 0.4% at $280.50 ahead of the open, pacing for a third-straight daily drop after slipping below support from the 100-day moving average. Shares are trading at their lowest level since late November, distancing themselves from a Jan. 22, all-time high of $302.39, while sporting a roughly 5% year-to-date deficit.

Analysts remain optimistic, with 20 of the 29 in question calling McDonald's stock a "buy" or better. Plus, the 12-month consensus target price of $326.81 a roughly 16% premium to current levels.

Published on Mar 15, 2024 at 9:14 AM
  • Analyst Update

Piper Sandler upgraded the shares of electric vehicle (EV) giant Rivian Automotive Inc (NASDAQ:RIVN) to "overweight" from "neutral," and hiked its price target to $21 from $15. The analyst cited the stock's valuation, as well as the company's cash, and its new vehicle platform -- the R2 SUV that will start at around $45,000. In response, RIVN is up 3.5% to trade at $11.10 in premarket trading.

When we last covered Rivian stock, J.P. Morgan Securities initiated bullish coverage. We also noted that there was room for pessimism to unwind amongst the brokerage bunch, and that shift seems to be taking place. Meanwhile, the 122.38 million shares sold short account for 17.8% of the security's total available float.

Since gapping lower on the charts after earnings in latter part of February, RIVN has struggled, and its most recent rally lost steam just above the $13.50 area. The equity yesterday fell nearly 9%, following news that sector peer Fisker (FSR) was preparing to file for bankruptcy. Rivian stock sports a 54.4% year-to-date deficit.

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