Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Mar 8, 2024 at 4:26 PM
  • Market Recap
Published on Mar 8, 2024 at 3:16 PM
  • Options Recommendations

Subscribers to Schaeffer's Weekend Trader options recommendation service received this ABNB 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.

Shares of Airbnb Inc (NASDAQ:ABNB) staged a breakout above their October and February highs, while also clearing the $156.20 level, which coincides with the round $100 billion market cap. The company’s new buyback program announced in mid-February also equates to 6% of that market cap.
ABNB March8


Despite the stock trading at its highest level since April, analysts are still hesitant, leaving the door wide open for a round of upgrades and/or price-target hikes. Of the 33 firms in coverage, 23 rate ABNB a tepid "hold" or worse, while the 12-month consensus target price of $143.77 is a more than 10% discount to current levels.
Short sellers have been in covering mode since short interest peaked in September to levels not seen since Airbnb’s initial public offering (IPO). It would still take more than one week for these traders to cover their bearish bets, though, at the security’s average pace of trading.
It’s also worth noting that implied volatility (IV) is bringing options prices lower and is below 63-day historical volatility (HV). Our call option has a leverage ratio of 9.2, and will double in a 11% move higher in the underlying shares.

Published on Mar 8, 2024 at 11:28 AM
Updated on Mar 8, 2024 at 1:27 PM
  • 5-Minute Market Rundown

The S&P 500 Index (SPX) continued to reach new heights this week, setting both intraday peaks and a record close, but not without its challenges. A lackluster Institute for Supply Management (ISM) services index put a damper on Wall Street, while Apple's (AAPL) antitrust woes in Europe weighed on the tech sector. Federal Reserve Chairman Jerome Powell's Congress testimony injected some positivity back into the markets, however, after he noted interest rate cuts could happen later this year.

A cooler-than-expected ADP jobs report also paved the way for the Nasdaq Composite's (IXIC) intraday records, which combined with the European Central Bank's (ECB) lower annual inflation and growth outlook helped the Dow Jones Industrial Average (DJI) bounce. The latter remains on track for a weekly loss following hotter-than-expected nonfarm payrolls, alongside the SPX and IXIC.

Record Highs Galore

Several stocks notched record highs this week. Chip giant Nvidia (NVDA) was popular among call traders after it toppled the $2 trillion mark, while Deckers Outdoor (DECK) and Super Micro Computer (SMCI) both surged on news that they will join the SPX. A strong forecast and quarterly report also propelled CrowdStrike (CRWD) to all-time highs, and a new weight loss drug pushed Novo Nordisk (NVO) to a fresh peak.

Retail Sector Highlights

There was no shortage of retail sector headlines for investors to unpack. Macy's (M) skyrocketed after Arkhouse Management revised its buyout offer, and Target (TGT) announced a membership program and quarterly win. Foot Locker (FL) and Dollar Tree (DLTR) geared up for their respective earnings reports, while American Eagle Outfitters (AEO) and Gap (GPS) saw increased options activity after trips to the earnings confessional.

Coming Up: Key Inflation Data

The consumer price index (CPI) and producer price index (PPI) readings for February are due out next week, in addition to retail sales and jobs data. While earnings season is slowing down, reports will still come from Adobe (ADBE)Dick's Sporting Goods (DKS)Kohl's (KSS)Lennar (LEN), and Oracle (ORCL). Before this economic data deluge is here, dive into why stocks continue to brush off cautious sentiment, and whether or not this SPX uptrend is remarkable.
Published on Mar 8, 2024 at 12:12 PM
  • Midday Market Check


Published on Mar 8, 2024 at 9:22 AM
Updated on Mar 8, 2024 at 11:07 AM
  • Analyst Update
Published on Mar 8, 2024 at 10:31 AM
  • Buzz Stocks

Eli Lilly and Co (NYSE:LLY) stock is slipping today, after the U.S. Food & Drug Administration (FDA) delayed approving the drugmaker's Alzheimer’s drug, donanemab, which was expected to be approved this month, and called for an advisory panel. At last glance, LLY was down 1.7% at $766.79. 

LLY has consistently seen record highs in 2024, most recently hitting a Mar. 4 all-time peak of $800.78. The stock's 20-day moving average has guided the shares higher since the start of the year, and is capturing today's minor pullback. The equity is up 31.2% so far in 2024.

On the analyst front, there is little room for any more optimism, as 19 of the 21 in coverage already consider LLY a "buy" or better, while just two say "hold." Price-target hikes could arise, however, as the 12-month consensus price target of $790.83 is a slim premium to current levels. 

Published on Mar 8, 2024 at 9:56 AM
  • Buzz Stocks

Retail giant Gap Inc (NYSE:GPS) yesterday announced better-than-expected fourth-quarter profits of 49 cents per share on $4.3 billion. The company attributed the results to lower markdowns and strong demand for its Old Navy products during the holiday season. At last check, GPS is up 4.4% at $20.17.

In response, six analysts raised their price target, including Barclays to $28 from $26. More tailwinds could stem from a round of upgrades, as 10 of 15 brokerage firms in coverage call GPS a "hold" or worse. The shares are also primed for a short squeeze, as 13.1% of their available float is sold short. 

So far today, 11,000 calls and 7,971 calls have already crossed the tape, which is 11 times the intraday average volume. Most popular is the weekly 3/8 19-strike put, which expires at the close, followed by the April 22 call.

The security has been testing a floor at the $19 region since late February, but overhead pressure remains at the 60-day moving average. Shares are not too far off from their Dec. 11, two-year high of $22.07, and have added more than 101% over the past nine months.

Published on Mar 8, 2024 at 9:05 AM
Updated on Mar 8, 2024 at 9:18 AM
  • Opening View

This morning's highly anticipated jobs data is front and center on Wall Street. While nonfarm payrolls increased to 275,000 in February -- above the 198,000 figure estimated -- the unemployment rate climbed to 3.9%. Stock futures are volatile after the report, with futures on the Dow Jones Industrial Average (DJIA) down 23 points at last glance, while Nasdaq-100 Index (NDX) and S&P 500 Index (SPX) futures inch higher. 

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

  • Behind two post-earnings stock surges yesterday. 
  • Dollar Tree stock red-hot ahead of earnings next week. 
  • Plus, CVNA upgraded; DOCU jumps after earnings; and LLY slips on FDA update. 

Futures March8

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.6 million call contracts and 909,384 put contracts exchanged Thursday. The single-session equity put/call ratio fell to 0.56, while the 21-day moving average stayed at 0.71.
  2. Carvana Co (NYSE:CVNA) stock is up 5.2% premarket, after an upgrade from RBC to "sector perform" from "underperform," with a lofty price-target hike to $90 from $45. The firm cited the car retailer's valuation, as well as a favorable setup for "unit acceleration." Since the start of the year, Carvana stock is already up 50.1%. 
  3. Shares of DocuSign Inc (NASDAQ:DOCU) are up 8.6% before the bell, after the tech company's upbeat fourth-quarter report and strong first-quarter guidance. No fewer than five analysts lifted their price targets after the event. DOCU is on track to recover a large portion of its 9.9% year-to-date deficit, should these gains hold. 
  4. Eli Lilly & Co (NYSE:LLY) stock is down 1.1% in electronic trading, after the U.S. Food & Drug Administration (FDA) delayed approving the drugmaker's Alzheimer’s drug, donanemab, which was expected to be approved this month, and called for an advisory panel. Looking to slip further from its March 4 record high of $800.78, LLY is up 33.8% since the start of 2024. 
  5. More economic data scheduled next week


Asia Markets Climb Amid Economic Data

Markets in Asia enjoyed gains across the board, after Fed comments stateside suggested interest rate hikes might be coming in the not-too-distant future. In Japan, household spending saw a wider-than-expected year-over-year drop of 6.3% in January, helping the Nikkei add 0.2% as the yen strengthens against the U.S. dollar. In China, the Shanghai Composite closed up 0.6%, as auto sales climb 16.8% month-over-month and Li Auto (LI) shared plans to build over 2,000 charging stations. Elsewhere, Hong Kong’s Hang Seng added 0.8% and South Korea’s Kospi tacked on 1.2%.

Stocks in Europe are all over the place, as investors digest German industrial output that rose 1% for January. A handful of earnings and revised euro zone data is also in focus. At last check, London’s FTSE 100 is off 0.5%, Germany’s DAX is down 0.2%, and France’s CAC 40 is flat.


Published on Mar 7, 2024 at 4:27 PM
  • Market Recap
Published on Mar 7, 2024 at 2:23 PM
  • Trade Postmortem

Schaeffer's Weekend Trader subscribers doubled their money with our American Express Company (NYSE:AXP) April 200 call recommendation in just over a month. Now that they've pocketed their profits, it seems like a good idea to review what went into this winning pick.

At the time of our recommendation on Feb. 4, AXP had just completed a 7.1% gap higher following the credit card company's Jan. 26 earnings report. That post-earnings jump helped the equity clear and hold above its previous all-time high of $199.55.

We also noted massive upgrade potential and a chance for short covering. In addition, we highlighted the negative put/call volume ratio that could have unwound given the stock's technical outperformance.

Premiums were affordable, too, in a post-earnings volatility crush. AXP’s implied volatility (IV) was in line with its 63-day historical volatility (HV). So, not only did traders double their money, they did so for a bargain.

American Express stock turned in just eight losing sessions since our recommendation. What's more, AXP scored seven-straight record highs beginning on Feb. 22, and earlier today hit another peak of $224.69 following yesterday's news that the company raised dividends by 17% to 70 cents per share. We recommended exiting the position today, allowing our subscribers to collect a 100% profit.

AXP Chart March 72024

Published on Mar 7, 2024 at 1:58 PM
  • Buzz Stocks

Earnings season is about to start winding down, though a handful of retailers are still slated to report next week. Dollar Tree Inc (NASDAQ:DLTR) will announce its fourth-quarter results before the open Wednesday, Mar. 13. 

Dollar Tree stock closed half of its last eight post-earnings sessions higher, including a 4.4% pop this past November. The security has averaged an 8.9% swing, regardless of direction, over these past two years. This time around, the options pits are pricing in a next-day swing of 10.6%. 

DLTR has been climbing on the charts since its mid-January bounce off the $130 level, now sporting a 4.6% year-to-date lead. Close support from its 10-day moving average has helped guide the stock higher since its rebound as well. 

DLTR March7

Over the past 10 weeks, calls have been much more popular than usual in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 2.12 ranks higher than 93% of readings from the past year. 

Published on Mar 7, 2024 at 1:01 PM
  • The Week Ahead

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