Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Nov 1, 2019 at 9:53 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Analyst Update

Although the social media name reported third-quarter earnings that were above analyst estimates, a lower-than-expected quarterly revenue and a narrower-than-anticipated revised full-year sales forecast has Pinterest Inc (NYSE:PINS) deep in the red this morning. Last seen down 21.7% at $19.69, PINS opened at a fresh record low of $18.81 this morning, and is eyeing its worst daily loss ever. 

So far, no fewer than nine price-target cuts and one downgrade have been handed out by covering analysts. The steepest comes from Zephirin Group, which slashed its price target all the way down to $14 -- a more than 44% downside to last night's close of $25.14. And while Pivotal Research downgraded to "hold" from "buy," D.A. Davidson went against the grain, upgrading to "buy" from "neutral." Coming into today, eight of 15 brokerage firms carried a tepid "hold" recommendation.

Short sellers -- and there are plenty of them -- are likely cheering today's freefall. Short interest increased by 24% in the past two reporting periods to a record high 19.12 million shares. This accounts for a healthy 22% of the stock's total available float, and three times PINS' average daily trading volume.

From a more technical viewpoint, PINS has suffered on the charts since its mid-April public trading debut. Pressure from both the 20-day and 30-day moving averages have sent the stock into a steep deficit since its Aug. 22 all-time peak of $36.83. In fact, the equity has shed around 33% over the past six months.

Published on Nov 1, 2019 at 10:23 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

Pharma stock Novo Nordisk (NYSE:NVO) is trading higher after the firm lifted its full-year sales outlook, and announced its Ozempic diabetes drug reached blockbuster status in the U.S. during its first nine months on the market, generating $1.03 billion in sales -- beating analysts' expectations. Some of these gains, however, have been tamped by the Eli Lilly (LLY) competitor's third-quarter operating profit, which missed analysts' estimates.

At last check, NVO is up 3.8% at $57.28, earlier hitting a new annual high of $57.29. Since a brief pullback to familiar support at its 200-day moving average in late September, the stock has been climbing up the charts, notching a 6.8% gain for October, and a nearly 24% gain for the year.

Consensus among the brokerage bunch is split, with three analysts giving NVO stock a "strong buy" rating, and three saying it's a "hold" or worse. What's more, the 12-month average target price of $57.90 is just a slim 1.1% premium to current levels. 

The options pits, on the other hand, are overwhelmingly bullish. Over 180 calls have been bought to open for every put on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Novo Nordisk's 10-day put/call volume ratio of 186.32 sits higher than all but 3% of similar readings from the past year, indicating that this rate of call buying relative to put buying is highly unusual. 

Published on Nov 1, 2019 at 12:06 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Sarepta Therapeutics Inc (NASDAQ:SRPT) stock is up 4.3% today to trade at $86.63, after Guggenheim initiated coverage with a "buy" rating and a $183 price target -- a 120% premium to last night's close. This bull note comes ahead of the Duchenne muscular dystrophy (DMD) specialist's turn in the earnings confessional, slated for after the market closes next Thursday, Nov. 7.

Most analysts are already upbeat toward SRPT stock. Prior to today, 14 brokerages maintained a "buy" or better rating on the equity, compared to one "hold," and not a single "sell." Plus, the average 12-month price target of $187.86 represents expected upside of 116.9% to current trading levels.

Skepticism has been ramping up in other corners of the Street, though. Short interest on SRPT surged 7.6% in the most recent reporting period to 15.59 million shares -- the most since July 2016. These bearish bets represent 22% of Sarepta Therapeutics stock's available float, or 9.2 times the average daily pace of trading.

Historically speaking, SRPT stock tends to do well after earnings, having closed higher the day after five of the drugmaker's past eight quarterly events. SRPT has averaged a next-day move of 6.6% over the last two years, regardless of direction, with the options market pricing in a slimmer 6.2% swing for Friday's trading.

Looking at the charts, Sarepta Therapeutics stock has struggled in the second half of 2019, down nearly 46% from its July 15 annual high of $158.80 -- due in part to a late-August bear gap sparked by the Food and Drug Administration's (FDA) failure to approve the company's DMD injection treatment. More recently, the equity has recovered from its Sept. 26 52-week low at $72.05, but is struggling to break out above its 50-day moving average.

srpt stock daily price chart on nov 1

 

Published on Nov 1, 2019 at 2:19 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move

The U.S. stock market is soaring -- with the S&P 500 Index (SPX) fresh off a record high -- following this morning's jobs report. Among specific stocks making notable moves are oil-and-gas expert California Resources Corp (NYSE:CRC) and tobacco name Turning Point Brands Inc (NYSE:TPB). Here's a quick look at what's moving the shares of CRC and TPB.

California Energy Stock Soars on Surprise Profit

California Resources stock is at the top of the New York Stock Exchange (NYSE) today, up 39.2% at $7.78. This comes after the company reported an adjusted third-quarter profit of 35 cents per share, compared to the consensus estimate for a per-share loss of 32 cents. Total costs for the three-month period also fell by $110 million year-over-year to $533 million.

Longer term, though, CRC stock is still down 54.2% on a year-to-date basis, and hit a three-year low of $4.68 just yesterday. Several options traders are betting on the $5 level to continue to serve as a floor for the shares, at least over the next two weeks. Amid heavy trading today, the November 5 put is most active, and it looks like speculators may be selling to open the options.

Turning Point Lights Up on Vaping News

Turning Point stock has surged 20.4% to trade at $25.12, after the company announced a strategic review of its vaping distribution business, saying recent headlines have "dramatically disrupted" its third-party vaping distribution. TPB also reported third-quarter revenue of $96.8 million, well above the $80.6 million expected by analysts.

TPB stock had been selling off since hitting an all-time peak above $57 in early July, and bottomed at an 18-month low of $20.11 on Wednesday. Today's pop has the shares paring their year-to-date deficit to 8.9%, and at least some options traders are eyeing an even bigger bounce.

While volume is light on an absolute basis, options are crossing 11 times the expected intraday rate. Buy-to-open activity is detected at the November 30 call, meaning traders expect Turning Point shares to climb back above the $30 mark by expiration at the close on Friday, Nov. 15.

Published on Nov 1, 2019 at 2:36 PM
Updated on Mar 19, 2021 at 7:15 AM
  • 5-Minute Market Rundown

The S&P 500 Index (SPX) started the week with a fresh record high after a slew of sunny earnings reports and amid optimism around U.S.-China trade. While that optimism subsequently waned amid reports China is worried about President Donald Trump's "impulsive nature," and after a key economic summit was cancelled, the index ultimately extended its quest for new highs.

Specifically, traders cheered as the Fed lowered its benchmark funds rate by 25 basis points, and Fed Chair Jerome Powell downplayed the odds for more rate cuts in the near term. Meanwhile, the Nasdaq Composite (IXIC) joined the S&P in record-high territory on Friday, guided higher by a strong jobs report and another upbeat round of corporate earnings. As of this writing, the Dow Jones Industrial Average (DJI), S&P, and Nasdaq were all pacing toward healthy weekly wins.

Halloween Week's Notable Earnings Winners and Losers

Earnings season continued at full force to wrap up October. Spotify (SPOT) kicked off the week with a killer surprise earnings beat, while Apple's (AAPL) outstanding quarterly report sent the Dow name within a chip-shot of a fresh record high. The tech giant's suppliers Universal Display (OLED) and Cirrus Logic (CRUS) also surged on blowout earnings.

On the flip side, Pinterest (PINS) suffered a massive sell-off to record lows after sharing third-quarter revenue and a full-year outlook that came in below estimates. Small shop platform Etsy (ESTY) was also slammed after earnings, with analysts quick to serve up price-target cuts.

FAANG Stocks Steal the Spotlight

While we mentioned Apple's big earnings win, it was far from the only FAANG name to draw attention this past week. Facebook (FB) also managed a post-earnings win, much to the delight of FB options traders, while Alphabet (GOOGL) wasn't so lucky, pulling back from new-high territory after earnings. The Google parent also offered to buy Fitbit (FIT) to jump into the wearables market.

And while the stock itself saw little change, Amazon's (AMZN) subscription service, Amazon Prime, announced it will provide free grocery delivery to its U.S. members. This sent the likes of grocery stocks Kroger (KR), BJ's Wholesale Club (BJ), and Natural Grocers by Vitamin Cottage (NGVC) sliding on Tuesday. 

Stocks to Buy and Avoid in November

Looking ahead, the S&P may not be done hitting new highs, with data suggesting the index is moving into the most bullish six months of the year. Narrowing in, we also took a look at the stocks you should buy and avoid in November, historically.

Despite an upcoming report out of Walt Disney (DIS), the earnings slate next week will feature fewer blue chips, though a mix of tech, retail, and food stocks could move after earnings. To name a few, Shake Shack (SHAK), Square (SQ), and Dropbox (DBX) are among those on the docket, while Activision Blizzard (ATVI) and Sarepta Therapeutics (SRPT) are also poised to draw eyes on Wall Street.

Published on Nov 4, 2019 at 9:16 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

CAR-T therapy has been the big thing in oncology in recent years, and one name at the forefront of the immuno-oncology movement is Allogene Therapeutics Inc (NASDAQ:ALLO). In fact, Canaccord Genuity came out with a note this morning praising the company, saying its allogeneic CAR-Ts could be a market leader in the allogeneic therapy space, and clinical data should remain strong. Canaccord began coverage on ALLO shares with a "buy" rating and $36 price target.

Looking more broadly, this bull note matches the general sentiment among other brokerage firms in coverage on Allogene Therapeutics. There are already 11 analysts in coverage, and seven of them have "buy" or "strong buy" recommendations. What's more, the average 12-month price target is right where Canaccord is targeting, standing at $37.33.

The stock was last seen trading at $28.94, after going public just over a year ago, when it opened for trading at $22. The shares have bounced around since then in a range of roughly $25 to $33, and right now are trading just atop the newly formed 200-day moving average.

Despite the optimism from analysts, the biotech remains heavily shorted. Short interest accounts for almost 27% of the total float, and represents almost 33 times the average daily trading volume.

The San Francisco-based company should remain in focus, too, since its due to report earnings before the open tomorrow, Nov. 5. Interestingly, the three previous earnings releases have resulted in negative next-day reactions for the stock.

Published on Nov 4, 2019 at 9:17 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

Under Armour Inc (NYSE:UAA) stock is sinking in electronic trading -- down 13.4%, at last check -- on news the athletic apparel retailer is being investigated by U.S. federal regulators over possible accounting fraud. The Wall Street Journal initially reported on the probe, which is being conducted by the Justice Department and the Securities and Exchange Commission (SEC), and will look into whether or not UAA shifted quarterly sales to boost its financial results.

The WSJ report comes in the wake of a major C-suite shake-up at Under Armour, and hit just ahead of this morning's third-quarter earnings report, which showed profit and revenue beats of 23 cents per share and $1.4 billion, respectively, for the three-month period. However, the Nike (NKE) rival lowered its full-year revenue forecast for the second straight quarter, citing a challenging retail environment.

Should today's pre-market price action pan out, UAA stock will be headed toward its biggest one-day percentage drop since October 2017. The shares had been recovering since their Aug. 28 low at $17.64, but were more recently stuck between support at a trendline connecting higher lows since August, and resistance at their 80-day trendline. On Friday, Under Armour settled at $21.14.

Options traders had been taking the bullish route on UAA stock in recent weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 1.80 registers in the 70th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

However, some of this call buying may have been at the hands of short sellers guarding against any upside risk. Short interest on Under Armour stock rose 7.2% in the most recent reporting period to 38.97 million shares. This accounts for 20.8% of the equity's available float, or 8.5 times the average daily pace of trading.

Published on Nov 4, 2019 at 10:12 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Natural gas specialist ONEOK, Inc. (NYSE:OKE) is moving higher in today's trading, last seen up 1.1% at $71.05. The equity is enjoying an upgrade to "buy" from "neutral" and an $81 price target at Goldman Sachs. Coming on the heels of a respectable third-quarter report last week, analyst Michael Lapides said his outlook for 2020 through 2022 represents a 5% upside to overall analyst outlook, and "robust returns on new NGL pipeline projects" to drive cash flow. .

This morning's bull note is brushing aside a price-target cut out of UBS to $78 from $80. Most analysts are already bullish, as more than half sport a "buy" or "strong buy" recommendation. What's more, the stock's average 12-month price target $76.10 comes in 7.2% above current levels.

Meanwhile, data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), shows a preference for calls over puts during the past two weeks of trading. This is per the stock's 10-day call/put volume ratio of 1.95, which ranks in the 76th percentile of its annual range.

Also of note, those looking to bet on ONEOK stock may want to consider options. The equity's Schaeffer's Volatility Index (SVI) is currently at 18%, which registers in the 15th percentile of its annual range -- indicating short-term options are attractively priced at the moment, from a volatility perspective.

On the charts, OKE has had a volatile year. While the equity is still 8% below its Sept. 16 all-time high of $77.21, recent support has emerged at the 200-day moving average. Year-to-date, ONEOK stock has added 31%.
Published on Nov 4, 2019 at 10:51 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Earnings Preview
  • Analyst Update

Jefferies downgraded Papa John's International, Inc. (NASDAQ:PZZA) to "hold" from "buy," but left its $58 price target intact. The brokerage firm said "material upside" to sales seem unlikely given increased competition in the pizza delivery space, and believes that while same-store sales will improve in coming quarters, this is already priced into the shares. In reaction, PZZA stock is down 3.5% at $55.93.

History suggests Papa John's stock could bounce back later this week, with the pizza maker slated to report third-quarter earnings before the market opens on Wednesday. The equity has closed higher the day after the company reports earnings in each of the past four quarters, averaging a gain of 3%. The options market, meanwhile, is pricing in a massive 11.3% next-day move this time around, regardless of direction.

Despite the security's upbeat earnings history, skepticism has been ramping up in other corners of Wall Street, too. For starters, short interest surged 17.5% in the most recent reporting period to 9.46 million shares. This represents 36.1% of PZZA stock's available float, or 9.4 times the average daily pace of trading.

Meanwhile, at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Papa John's 10-day put/call volume ratio of 1.06 ranks in the 62nd annual percentile. What this means is that puts have been bought to open at a quicker-than-usual clip in recent weeks, albeit amid relatively low absolute volume.

Looking at the charts, PZZA shares have been making a beeline higher since skimming the $41.50 region in late August. The stock came within striking distance of its Nov. 15 annual high of $60.56 last Friday, when it topped out at an intraday peak of $59.71. And although the security is notably lower today, its 20-day moving average is once again emerging as support, just as it did in late September and early October.

pzza stock daily price chart on nov 4

Published on Nov 4, 2019 at 2:42 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move

The U.S. stock market is soaring once more, with all three benchmarks nabbing new record highs. Among specific stocks making notable moves higher are gene therapy specialist bluebird bio Inc (NASDAQ:BLUE), tech issue BlackBerry Ltd (NYSE:BB), and biotech BioNTech SE (NASDAQ:BNTX). Here's a quick look at what's moving the shares of BLUE, BB, and BNTX.

Wells Fargo Thinks Zynteglo Concerns Overblown on bluebird bio

Bluebird bio stock is up 0.4% at $83.29 at last check, after earlier trading as high as $86.54, after Wedbush upgraded it to "outperform" from "neutral." Although the brokerage firm also trimmed its price target to $124 from $131, the analyst believes concerns about the launch of Zynteglo  -- a gene therapy for a blood disorder -- are overblown. Jefferies also lowered its BLUE price target, to $155 from $195.

Short sellers remain in control, despite short interest decreasing in the most recent reporting period. The 8.91 million shares sold short account for 16.3% of BLUE's total available float, and 13.4 times the average daily trading volume.

BlackBerry Breaks Out After Upgrade

Another stock up on analyst attention is BlackBerry, last seen trading 1.8% higher at $5.59. BofA Merrill-Lynch raised its rating on the tech stock to "neutral" from "underperform," and hiked its price target to $7 from $6, while waxing optimistic about the company's car cybersecurity software, Cyclane. Today's gains have BB breaking out of congestion in the $5.30 neighborhood, which coincides with its 32-day moving average.

In the options pits, calls hold a distinct advantage. In the last 10 days, 10,118 calls were bought to open at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 624 puts. Plus, the resultant call/put volume ratio of 16.21 ranks in the 69th percentile of its annual range, indicating calls have been bought to open over puts at a quicker-than-usual clip in the last two weeks.

Analysts Line Up Buy Ratings On BNTX

BioNTech stock is up 16.2% to trade at $19.20, after the company's research quiet period ended, and analysts piled on with bull notes. J. P. Morgan Securities burst down the door with an "overweight" rating and $23 price target for December 2020, noting it "isn't your typical biotech IPO." Berenberg, UBS, and Canaccord Genuity also chipped in with "buy" ratings of their own, the highest price target of $25 coming from the former. BNTX priced its initial public offering (IPO) at $15 per American depositary share (ADS) back on Oct. 10, before opening at $16.50. The shares traded as high as $21.99 on Oct. 23. 

Published on Nov 5, 2019 at 9:17 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Facebook, Inc. (NASDAQ:FB) shares are trading modestly higher ahead of the bell, after Daiwa Securities upgraded the FAANG stock to "outperform" from "buy." What's more, the brokerage firm's $250 FB price target represents expected upside of 28% to last night's close at $194.72.

Most analysts are already bullish on FB stock, with 29 of 33 in coverage maintaining a "buy" or better rating, and not a single "sell" on the books. Plus, the average 12-month price target of $238.45 is a nearly 22% premium to current levels.

This bullish bias is seen in the options pits, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FB's 50-day call/put volume ratio of 2.31 ranks in the 84th percentile of its annual range, meaning calls have been bought to open over puts at an accelerated clip.

Drilling down to the past two weeks' worth of action, the weekly 11/8 195-strike and 210-strike calls saw notable increases in open interest. Data points to buy-to-open activity at the weekly options, indicating options traders are targeting even bigger gains by expiration at the close this Friday, Nov. 8.

Looking at the charts, Facebook stock bounced sharply off its 200-day moving average in early October, and has since gained 12.5%. The shares are now up 48.5% year-to-date, and within striking distance of their July 25 annual high of $208.66.

Published on Nov 5, 2019 at 9:28 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

Investors are monitoring earnings releases from Shake Shack Inc (NYSE:SHAK) and Tapestry Inc (NYSE:TPR), and both stocks are sliding in pre-market action. This would be bad news for a number of options traders, since data for both SHAK and TPR shows interest in calls.

For SHAK, the shares are set to open down 17.2%, which would put them below the 200-day moving average for the first time since March. The company said that its GrubHub (GRUB) partnership disrupted its business during the quarter, and it lowered its full-year same-store sales forecast. The equity had already been under pressure in recent months, falling from a September peak around $105 to yesterday's close of $84.21, and a number of price-target cuts this morning are adding extra pressure. A few of these bears are expecting more downside, setting a $60 price target.

Meanwhile, the burger joint's 10-day call/put volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 1.79, and ranks in the 70th annual percentile, showing strong demand for call buying in recent weeks. Peak open interest for SHAK was at the November 90 call.

For TPR, the stock has been volatile before the open, and was last seen down more than 2%. Despite better-than-expected quarterly results, the company's comments about "constrained" business environment in China would be scaring investors, adding that margins at Kate Spade were pressured by tariffs. Tapestry stock was already down 21.4% in 2019, settling at $26.52 yesterday.

Still, the Schaeffer's put/call open interest ratio (SOIR) for TPR comes in at 0.64, and ranks in the 29th annual percentile, showing a notable call-skew among near-term traders. Most notably, there's peak open interest at the November 30, where heavy buy-to-open activity can be confirmed, as bulls were betting on a breakout above $30.

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