Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jul 21, 2015 at 8:20 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Overseas Trading

Stocks in Asia rallied on the heels of encouraging U.S. earnings -- and despite ongoing weakness in commodities. China's Shanghai Composite added 0.6% despite data showing foreign direct investments grew 8.3% during the first half, marking a slower pace of annual growth. Japan's Nikkei popped 0.9% on a weaker yen, with airlines catching a lift from lower fuel prices. Elsewhere, Hong Kong's Hang Seng and South Korea's Kospi each tacked on 0.5%.

European bourses are mixed as traders keep an eye trained on the latest round of quarterly results, as well as a potential bailout deal between Greece and its creditors. At last check, France's CAC 40 is up close to 0.1% and London's FTSE 100 has inched 0.04% higher, while the German DAX is down 0.05%.

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Published on Jul 21, 2015 at 9:25 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Upgrades

Analysts are weighing in on social network giant Facebook Inc (NASDAQ:FB), home security specialist AlarmCom Hldg Inc (NASDAQ:ALRM), and drugmaker Anacor Pharmaceuticals Inc (NASDAQ:ANAC). Here's a quick roundup of today's bullish brokerage notes on FB, ALRM, and ANAC.

  • It looks as if FB just can't be stopped. After closing at its loftiest perch to date yesterday following some upbeat analyst attention, the stock is poised to hit a fresh intraday peak out of today's gate, thanks to a pair of bullish brokerage notes. Specifically, BofA-Merrill Lynch added the security to its U.S. 1 Focus List, while Nomura boosted its price target to $115 from $96. Should Facebook Inc continue to add to its impressive 41% year-over-year advance, another round of price-target hikes could be on the horizon. Currently, the consensus 12-month price target for FB of $98.53 is within a chip shot of last night's settlement at $97.91.

  • Wall Street newcomer ALRM received a bevy of bullish brokerage attention this morning. Chiming in on the stock was William Blair, Stifel, Raymond James, and BofAMerrill-Lynch, which all initiated coverage with the equivalent of a "buy" rating. What's more, the latter three set their price targets in the $21-$22 range, a premium to Monday's close at $18.78. Since going public on June 26, shares of AlarmCom Hldg Inc have added 17%, but appear ready to pare a portion of these gains in today's trading -- down 1.2% at last check.

  • It's been a tremendous year for ANAC, which has surged nearly fivefold to trade at $148.13. In fact, the equity is on pace to notch a fresh record high today -- after tagging an all-time high of $150.41 on Monday -- after Goldman Sachs upped its outlook to "buy" from "neutral" and its price target to $195 from $60. The brokerage firm specifically cited confidence in the company's atopic dermatitis medication, and said it sees "ANAC as an even more attractive acquisition target with Crisaborole de-risked." Should Anacor Pharmaceuticals Inc continue its trek into uncharted territory, shorts may be forced to abandon their losing bets. Short interest accounts for 11.2% of the stock's available float, and it would take almost a week to cover these bearish bets, at ANAC's average daily pace of trading.
Published on Jul 20, 2015 at 8:15 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Overseas Trading
Stocks in Asia settled mixed amid an ongoing retreat in commodity prices. China's Shanghai Composite outperformed its peers, adding 0.9% after the People's Bank of China posted new guidelines for qualified lenders to enter the Internet finance arena. Meanwhile, Hong Kong's Hang Seng finished 0.04% lower and South Korea's Kospi gave back 0.2%. The Japanese Nikkei was shuttered for holiday.

European bourses have kicked off the week on a positive footing, as Greek banks have re-opened -- and reports are indicating Athens spent its bridge loan to meet existing debt obligations. At midday, the German DAX is up 1%, the French CAC 40 has added 0.8%, and London's FTSE 100 is 0.2% higher.

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Published on Jul 20, 2015 at 12:24 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Commodities

By Clara Denina

LONDON (Reuters) - Gold prices plunged as much as 4 percent to their lowest in more than five years on Monday as sellers in top consumer China offloaded the metal.

Investors have been finding less and less reason to hold gold as an insurance against risk, with the dollar strengthening ahead of what is expected to be the first increase in U.S. interest rates for nearly a decade.

Spot gold <XAU=> fell $45.55 to its weakest since March 2010 at $1,088.05 an ounce shortly after the Shanghai Gold Exchange opened, with volumes soaring to a record.

It regained some ground, trading above the key $1,100 support level, but was still down 2.2 percent at $1,108.18 an ounce by 1355 GMT.

gold

A woman holds a one-kilogram gold bar at the headquarters of the Australian Bullion Company (ABC) in Sydney April 19, 2013. REUTERS/Daniel Munoz

Spot platinum <XPT=> fell for the fifth straight session, down 5 percent to a fresh 6-1/2-year low of $942.49 an ounce, due to oversupply, sluggish demand and weaker gold prices, which encouraged speculative selling.

"Illiquidity was important in the Asian overnight move, with Japan and other countries on holiday ... it was just a bit of a bear raid and there was nobody on the other side to mop up the selling," Societe Generale analyst Robin Bhar said.

"We have breached significant support levels, we know U.S. rate hikes are coming, there is no inflation and there is no catalyst to hold gold when other markets are doing better."

Gold fell more than 1 percent on Friday, pressured by increased bets on a Federal Reserve rate rise this year, which would increase the opportunity cost of holding the metal.

More than 3 million lots traded on a key contract <XAU9999=SGEX> on the Shanghai Gold Exchange, compared with fewer than 27,000 lots on Friday, Reuters data showed. Before Monday, the volume for July had averaged fewer than 30,000 lots.

Traders said it appeared that sellers had taken advantage of a low-liquidity environment, with Japanese markets shut for a public holiday, fuelling speculative selling.

"The break of the critical $1,130 support level now makes the technical picture look very weak," ANZ said. "Short-term supports sit at $1,085 and $1,050, while topside resistance at $1,130 looks pretty solid."

In wider markets, the dollar hit a three-month high against a basket of currencies, making dollar-priced gold more expensive for holders of other currencies. [MKTS/GLOB]

China said on Friday its gold reserves were up 57 percent at 1,658 tonnes at the end of June from the last time it adjusted its reserve figures more than six years ago.

"This implies stockpiling of around 100 tonnes per year, which is dramatically lower than market expectations," Citigroup said in a note.

Palladium <XPD=> dropped as much as 3.4 percent to its lowest since October 2012 at $593 an ounce, before cutting some losses to trade down 1.4 percent at $605.25.

Spot silver <XAG=>, the least hit among precious metals in Monday's slide, was off 0.5 percent at $14.78 an ounce.

 

(Additional reporting by Manolo Serapio Jr in Manila; Editing by Dale Hudson and Mark Potter)

Published on Jul 20, 2015 at 12:31 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move
Gold prices are continuing to tumble today, amid speculation a large fund in China sold its holdings in the precious metal. Additionally, for the first time since 2009, the mainland released an update on its gold reserves -- saying they were 1,658 tonnes, or up 57% from six years ago.

Against this backdrop, the SPDR Gold Trust ETF (NYSEARCA:GLD) is off 2.1% at $106.40 -- and fresh off a five-year low of $105.62 -- while the Direxion Daily Gold Miners Index Bear 3X Shares (NYSEARCA:DUST) is up 24% at $33.17, and on track for its highest daily close since Dec. 16. Drilling down on specific gold-related stocks that are seeing significant moves to the downside -- and are on the short-sale restricted list -- are Barrick Gold Corporation (USA) (NYSE:ABX), Yamana Gold Inc. (USA) (NYSE:AUY), and Newmont Mining Corp (NYSE:NEM).

ABX, for example, tumbled to a 25-year low of $7.76 earlier, but was last seen down 11.4% at $7.78. Today's negative price action only highlights the equity's longer-term technical troubles, with ABX off 59% year-over-year.

Option traders, meanwhile, have been quick to initiate long calls over puts in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Barrick Gold Corporation's 50-day call/put volume ratio of 6.92 ranks in the 94th percentile of its annual range. In other words, calls have been bought to open over puts with more rapidity just 6% of the time within the past year.

AUY, meanwhile, hit $2.15 earlier -- its lowest point since September 2004. More recently, the stock was off 7.7% at $2.20, widening its year-to-date deficit to 45%.

Put players have been increasing their presence in AUY's options pits of late. At the ISE, CBOE, and PHLX, Yamana Gold Inc.'s 10-day put/call volume ratio has jumped to 0.42 from 0.16 over the past two weeks, and now sits higher than 81% of all similar readings taken in the last 12 months.

To the delight of short sellers, NEM is off 11.1% this afternoon at $18.38. Unlike ABX and AUY, the security was in the green for 2015 heading into today's session. Thanks to today's bear gap, though, the stock is now down 3% on the year.

In the stock's options pits, put buying has been popular, per NEM's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.90, which rests in the 71st annual percentile. Echoing this put-skewed bias among short-term traders is Newmont Mining Corp's Schaeffer's put/call open interest ratio (SOIR) of 0.93, which sits above 65% of comparable readings taken in the past year.
Published on Jul 20, 2015 at 2:19 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Analysts are weighing in today on pharmaceutical firms Cempra Inc (NASDAQ:CEMP) and Clovis Oncology Inc (NASDAQ:CLVS), as well as alternative energy provider SolarCity Corp (NASDAQ:SCTY). Here's a quick roundup of today's brokerage notes on CEMP, CLVS, and SCTY.

  • CEMP is busting out today, touching a record high of $46.14 earlier, and last seen up 8.1% at $45.47. The sharp move follows a price-target hike to $56 from $42 at Roth Capital, which waxed optimistic on the company's antibiotic, solithromycin. On a year-over-year basis, the stock has almost quintupled in value. Not surprisingly, 100% of analysts consider Cempra Inc a "strong buy" -- though there's room for future price-target hikes, as the consensus price target of $41.90 stands at a discount to current trading levels. Looking ahead, CEMP is tentatively scheduled to report second-quarter earnings next week.

  • CLVS jumped north of $91 out of the gate, but is now sitting fractionally lower at $87.02, despite Goldman Sachs adding the security to its "America's Conviction Buy List." At the same time, the brokerage trimmed its price target to $110 from $116 -- still a 26.4% premium to the stock's current perch, and in record-high territory. Options traders aren't buying the hype. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Clovis Oncology Inc has amassed a put/call volume ratio of 2.32 -- in the 93rd annual percentile. Likewise, almost 22% of the equity's float is sold short, representing two weeks of pent-up buying demand, at CLVS' average trading volumes.

  • SCTY has soared 7.6% to trade at $56.10 -- and is now back in the black on a year-to-date basis -- thanks to a bullish note from Raymond James. Specifically, the brokerage firm said that "the theoretical value of SCTY stock would be close to $100/share," based on the cost of Sunedison' Inc's (NYSE:SUNE) Vivint Solar Inc (NYSE:VSLR) buyout agreement. SolarCity Corp short sellers may be on edge. Over 46% of the stock's float is dedicated to short interest, representing about 12 sessions' worth of trading activity, at SCTY's typical daily clip.

For other stocks in analysts' crosshairs, read Analyst Upgrades: Amazon.com, Inc., Facebook Inc, and Paypal Holdings Inc and Analyst Downgrades: Zillow Group Inc, Yelp Inc, and General Motors Company.

Published on Jul 20, 2015 at 2:46 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move

U.S. stocks are modestly higher this afternoon, as traders take in -- and await -- big-cap earnings reports and a commodities implosion. Among the equities experiencing notable price swings today are e-commerce concerns eBay Inc (NASDAQ:EBAY) and Etsy Inc (NASDAQ:ETSY).

EBAY is enjoying a halo lift from officially independent Paypal Holdings Inc (NASDAQ:PYPL). The shares are shrugging off ratings downgrades from Moody's and Fitch, and were last seen 3.2% higher at $28.79, and just off a post-split best of $29.35 (the stock closed Friday at $66.29). In addition, shareholders are seemingly applauding eBay Inc's reported acquisition of second-hand clothing startup Twice.

Heading into today, EBAY's 14-day Relative Strength Index (RSI) stood at 74 -- in overbought territory. What's more, the stock's short-term options crowd is way more call-heavy than usual, as the security's Schaeffer's put/call open interest ratio (SOIR) sits at an annual low of 0.33.  In other words, near-term calls roughly triple their put counterparts.  

On the flip side, ETSY is falling from grace in a big way. The stock skyrocketed to a two-month high on Friday, thanks to an unexpected nod from Google Inc (NASDAQ:GOOGL), but was last seen 7.7% lower at $20.29. In fact, ETSY touched an intraday low of $18.92, landing on the short-sale restricted list. 

As such, it looks like bears -- and there are quite a few, as short interest represents six days' of pent-up buying demand, at ETSY's average pace of trading -- are turning to the options pits. Intraday put volume is accelerated relative to the norm, and has doubled call volume thus far. It looks like speculators are buying to open the August 20 put, expecting the shares to extend their retreat south of $20 through the close on Friday, Aug. 21, when the newly front-month options expire. 

Today's deflation may have been in the cards, though. In light of last week's GOOGL pop, Etsy Inc's 14-day RSI surged to 77. 

Published on Jul 20, 2015 at 3:32 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Earnings Preview

It's a busy week on the earnings front, and tomorrow, Wall Street will get the latest results from telecommunications titan Verizon Communications Inc. (NYSE:VZ), burrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG), and search engine specialist Yahoo! Inc. (NASDAQ:YHOO). Below, we'll take the pre-earnings temperature of VZ, CMG, and YHOO.

  • VZ will unveil its second-quarter results ahead of the open, and according to the stock's near-term at-the-money (ATM) straddle, the options market is expecting a 1.8% post-earnings move. This is slightly more than the 1.4% swing the security has averaged over the past eight quarters in the session subsequent to reporting. Option traders have been buying to open puts over calls at a rapid-fire rate in recent months, per the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.01 -- in the 99th percentile of its annual range. Meanwhile, VZ's short-term options are pricing in relatively tame volatility expectations, considering its 30-day ATM implied volatility (IV) of 12.7% rests lower than 76% of all similar readings taken in the past year. Technically speaking, Verizon Communications Inc. (NYSE:VZ) has spent the past couple of years bouncing between $46 and $52, and was last seen lingering near $47.88.

  • CMG will step up to the plate after tomorrow's close, and ahead of the second-quarter earnings release, the stock is up 2.6% at $678.92 -- and making a run for its year-to-date breakeven mark. The equity could be poised to see some volatility in the wake of earnings, considering it's averaged a single-session post-earnings move of 9.4% in the last eight quarters -- the most recent three of which were to the downside. This time around, the options market is forecasting a slimmer 8.3% swing, based on CMG's near-term ATM straddle. In Chipotle Mexican Grill, Inc.'s options pits, speculators have taken the glass-half-full approach of late. At the ISE, CBOE, and PHLX, the equity's 50-day call/put volume ratio of 0.97 rests in the 84th annual percentile. Those currently purchasing CMG's short-term options are paying up for elevated volatility expectations, based on the stock's 30-day ATM IV of 40%, which ranks 3 percentage points from a 52-week peak.

  • YHOO will also unveil its second-quarter results after the close, and the options market is projecting a 4.7% post-earnings move (based on the stock's near-term ATM straddle). This is roughly in line with the 5% move Yahoo! Inc. has averaged over the past eight quarters in the session after announcing. On the charts, the equity has struggled in 2015, down 21.5% at $39.62, and sentiment has been skewed toward the skeptical side. In fact, the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.54 rests in the 92nd percentile of its annual range, meaning puts have been bought to open over calls at a faster clip just 8% of the time within the past year. Currently, YHOO's short-term options are priced at a relative bargain, as evidenced by its Schaeffer's Volatility Index (SVI) of 13%, which ranks lower than 78% of all comparable readings taken in the last 12 months.
Published on Jul 20, 2015 at 9:03 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Monday Morning Outlook

"In looking ahead to July standard expiration, which is now only 10 trading days away, put open interest [at the 205 strike] currently exceeds 300,000 contracts. This is unusually large … If the SPY can hold 205, we might see short covering into expiration that pushes the SPY back to its recent highs."

-- Monday Morning Outlook, July 6, 2015 

July expiration week saw the S&P 500 Index (SPX - 2,126.64) rally 2.4%, as perceived progress with respect to Greece and its European creditors was made. But there is still work to be done, as negotiations for a third bailout have yet to take place. Moreover, China's Shanghai Composite continued to trade above its July 8 lows, as some listings re-opened for trading. 

The SPX "V-bottomed" and rallied to new highs -- a potential scenario that we presented two weeks ago, per the excerpt above. The magnitude of the rally may have been helped along by short covering related to the massive put open interest on the SPDR S&P 500 ETF Trust (SPY - 212.48) that expired on Friday. 

Market technicians may have been caught flat-footed, or worse yet, caught short just ahead of the rally. For example, the rally from the July 8 bottom began after a move below the index's 200-day moving average -- a sell signal for some investors. Moreover, the bearish head-and-shoulders (H&S) pattern that targeted a move down to the SPX's 2,000-2010 area didn't come close to its target objective, and within the blink of an eye, the SPX was back above the "neckline" of this pattern, in the 2,070-2,075 area. We can't say for certain if those keying in on these technical patterns are back in the market or covered their short positions, but a breakout above the May and June highs would likely invite fresh long positions and induce more short covering. 

Regardless, the area around the SPX's 2014 close continues to act as support on pullbacks, which we have observed multiple times. An interesting scenario would be the SPX pulling back to the 2,070-2,075 area during the next couple of weeks.  If this occurs, it would be a 61.8% Fibonacci retracement of the early July low and last week's high.  If this area was to mark a trough, it would also set the stage for a bullish "inverse" H&S pattern. Given that caution has reigned supreme, we have noticed that bearish H&S patterns have been more recognizable and acted upon than the bullish inverse H&S patterns.

150717MMO_SPX

"[D]espite the fact that major indexes in the U.S. recently logged all-time highs, sentiment is negative, which means if 'this too shall pass,' there is serious sideline money and short-covering potential that could drive a major rally by year end."

-- Monday Morning Outlook, July 6, 2015

"The Chicago Board Options Exchange Volatility Index slid 8.5 percent Thursday to 12.11, extending its five-day decline to 39.4 percent … 'The VIX flared up and fell quickly because the world got scared, but this too shall pass,' said Sean Heron, who helps oversee $30 billion for Glenmede Trust Co. 'People are very quick to sell out of decaying volatility. The sellers feel more brazen and the buyers feel more reluctant.'"

-- Bloomberg, July 17, 2015

Short covering directly related to standard July options expiration is over. So, from a short-term perspective, this particular source of demand disappears -- something for bulls to keep in mind as the SPX and SPY attempt to move above their range highs.  In fact, the rally from last week's lows began to fizzle by Thursday afternoon, when these highs were well within reach.  

Also, bear in mind that options on CBOE Volatility Index (VIX - 11.95) July futures expire this Wednesday morning.  With total VIX call open interest approaching 2015 highs and roughly half of VIX call open interest in the July series, those looking to replace expired VIX calls could be active, with August VIX  futures dropping by almost 20% since the July peak. 

The situation with Greece and its creditors could continue to spark volatility spikes -- and one should not be surprised if volatility at least creeps higher in the coming days, with the VIX in the vicinity of its 2015 lows and investors who use equity index and exchange-traded fund (ETF) put options looking to replace expired portfolio insurance.

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The good news is that even the short position on VIX futures is not nearly as big now as it was last month, when the Greece drama began unfolding. This positioning reduces the risk of a volatility pop like we saw earlier this month.  Moreover, VIX call buying that is used as a hedge to a short VIX futures position may slow relative to what we have seen recently. 

Weekly Commitment of Traders report -- VIX futures players added to short positions after short covering occurred, but net short position not nearly as big as last month  

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 Amid a couple of obvious risks (a VIX pop from low levels and SPX trading at chart resistance), the sentiment backdrop continues to be supportive of a breakout to new highs. One sentiment indicator familiar to loyal readers of our Monday Morning Outlook is a measure of put buying on equities (downside bets) relative to call buying (upside bets).  As you can see on the graph below, the ratio of put buying to call buying is in the early stages of rolling over from an extremely high level, which is consistent with a bullish environment for stocks.

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But what about the low VIX? Our buy-to-open data on equity options goes back to 2008 and, unfortunately, there has been only one other instance when the VIX was within 10% of its 52-week low simultaneous with the 10-day, buy-to-open put/call volume ratio within 10% of its 52-week high.  This unusual circumstance occurred last Thursday for the first time since early May 2014. Per the table below, the SPX rallied impressively during the next two months after the first such signal -- but admittedly, this one data point is far from a healthy sample size.

150717MMO_Excel

Over the short term, we could see some congestion around current levels or a pullback to SPX support in the 2,070-2,075 area. Continue to view pullbacks as buying opportunities, as this is the trade that has continued to work -- even though we continue to see fear spike as if the "Big One" is coming.

Read more:

Indicator of the Week: The SPX's Quarterly Win Streak Is Over -- Now What?

The Week Ahead: Apple Inc. Headlines a Full Earnings Roster; PayPal Goes Public
Published on Jul 20, 2015 at 9:20 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Upgrades

Analysts are weighing in on e-commerce concern Amazon.com, Inc. (NASDAQ:AMZN), social network giant Facebook Inc (NASDAQ:FB), and payment processor Paypal Holdings Inc (NASDAQ:PYPL). Here's a quick roundup of today's bullish brokerage notes on AMZN, FB, and PYPL.

  • AMZN received a bevy of upbeat analyst attention ahead of its upcoming earnings report. Cowen and Company raised its outlook to "outperform" from "market perform" and boosted its price target to $565 from $435 -- in never-before-seen territory. Specifically -- and despite confusion surrounding last week's Prime Day -- the brokerage firm said it sees strong growth in Amazon.com, Inc.'s retail and cloud divisions, with the former expected to lead the market. Likewise, Wedbush upgraded AMZN to "outperform" from "neutral" and lifted its price target to $575. On the charts, the equity has been a standout, up almost 56% year-to-date to trade at $483.01. In fact, AMZN -- along with the broader Nasdaq Composite (COMP) -- hit a record high of $485.42 on Friday, and looks poised to take out this notable milestone today. Short-term speculators are more put-skewed than usual, though, per the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.31, which ranks in the 82nd annual percentile. Separately, the company said it plans to invest $5 billion in India to make the nation its biggest market outside of the U.S.

  • FB also had a record-setting day on Friday -- topping out at an all-time peak of $95.39, before settling the session at $94.97. BTIG thinks there's more upside to come, and boosted its price target for the stock to $117. As such, the shares are pointed modestly higher ahead of the bell, and seemingly on track to notch a new record high. Longer term, FB has added an impressive 21.7% in 2015, catching the eye of call buyers. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Facebook Inc's 10-day call/put volume ratio of 2.84 ranks higher than 83% of all comparable readings taken in the past year. Simply stated, calls have been bought to open over puts at a faster-than-usual clip.

  • PYPL -- an eBay Inc (NASDAQ:EBAY) spinoff -- will begin publicly trading its shares today. Ahead of this morning's opening bell, J.P. Morgan Securities initiated coverage with an "overweight" rating and a $48 price target, saying it's "bullish on PayPal in the short term, recognizing many long-term secular threats to monitor." The stock also received "outperform" and "buy" ratings from BMO, Baird, and SunTrust Robinson, with the brokerage firms setting their price targets in the $45-to-$46 range. Evercore, meanwhile, bucked the bullish trend, rating Paypal Holdings Inc a "sell." The stock is up 4.5% in pre-market action, after closing Friday at $38.39 (the stock traded last week under a "when-issued" status).
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Published on Jul 20, 2015 at 9:45 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

U.S. stocks are in the black this morning, while gold is in retreat mode. In company news, today's stocks to watch include Dow component United Technologies Corporation (NYSE:UTX), solar specialist Sunedison Inc (NYSE:SUNE), and drugmaker Horizon Pharma PLC (NASDAQ:HZNP)

  • UTX is selling its Sikorsky Aircraft unit to Lockheed Martin Corporation (NYSE:LMT) for roughly $9 billion, confirming earlier speculation. However, while United Technologies Corporation shares were higher ahead of the bell, they're down 0.7% at $110. Tomorrow could be a big day for the tech stock, as well, as the company will report earnings before the open. One group wagering against UTX of late is options traders. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has racked up a put/call volume ratio of 3.16 -- with long puts more than tripling calls. This ratio also ranks in the bearishly skewed 98th annual percentile.

  • SUNE is purchasing sector peer Vivint Solar Inc (NYSE:VSLR) for approximately $2.2 billion, in the hopes of expanding into the commercial and residential solar market. The buyout has shares of the former up 4.6% at $33.04 -- and just off a six-year peak of $33.31 -- and those of the latter almost 45% higher. All in all, it's been a great year for Sunedison Inc, which has soared 69.5% year-to-date. There's plenty of sideline cash available to fuel additional gains, too. Over 31% of SUNE's float is sold short, representing more than seven sessions' worth of pent-up buying demand, at typical volumes.

  • Finally, HZNP has jumped 5.7% to trade at $39.19 -- and peaked at $39.49, in record-high territory -- after the company raised its full-year sales forecast. Longer term, the stock has more than tripled in value this year, atop support from its 10- and 40-day moving averages. In doing so, Horizon Pharma PLC has vindicated the confidence of the brokerage bunch -- with 100% sporting "buy" or better recommendations. However, price-target hikes are a possibility, as HZNP is on the doorstep of its consensus 12-month price target of $39.88.

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Published on Jul 20, 2015 at 9:57 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Downgrades

Analysts are weighing in on real estate issue Zillow Group Inc (NASDAQ:Z), online review portal Yelp Inc (NYSE:YELP), and car concern General Motors Company (NYSE:GM). Here's a quick roundup of today's bearish brokerage notes on Z, YELP, and GM.

  • Just a few weeks ahead of a big executive shift -- and a tentatively scheduled earnings report -- Z saw its rating cut to "underweight" from "equal weight" at Barclays, which also slashed its price target on the shares to $70 from $90. Not only does this represent a 10% discount to the stock's current perch at $77.71, but it sits in territory not charted since July 2013. Longer term, the shares have struggled since topping out at an all-time high of $164.90 last July, shedding more than half their value -- and hitting a new annual low of $76.82 this morning. Short sellers, meanwhile, have been rolling the dice on additional losses. In fact, short interest on Zillow Group Inc rose 3.3% in the latest reporting period to 17.4 million shorted shares -- a record high.

  • Barclays also weighed in on YELP, lowering its outlook to "equal weight" from "overweight," and cutting its price target to $36 from $50. As such, the stock tumbled to a two-year low of $33.35 out of the gate, and was last seen off 3.7% at $33.67. Today's negative price action only echoes the equity's withstanding trajectory, with YELP down 38.5% year-to-date. While analysts have been downwardly revising their ratings in recent weeks, there's still plenty of room for more bearish brokerage notes -- which could translate into additional headwinds for Yelp Inc. Currently, 50% of covering analysts still maintain a "buy" or "strong buy" rating, while the average 12-month price target of $52.41 stands at a 56% premium to YELP's present perch.

  • J.P. Morgan Securities reduced its price target on GM to $44 from $46, sending the shares 0.3% lower at the open to $30.56. It's already been a rough ride for General Motors Company, which has shed 22% since hitting an annual high of $38.99 in mid-March. While analysts have begun re-evaluating their bullish ratings, short-term speculators have shown a distinct preference for calls over puts. In fact, GM's Schaeffer's put/call open interest ratio (SOIR) of 0.56 sits lower than 88% of all similar readings taken in the past 12 months. An unwinding of the hedges related to these call positions could pressure the shares in the near term. Looking ahead, GM will tell all in the earnings confessional later this week.

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