Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jun 29, 2015 at 9:28 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Upgrades

Analysts are weighing in today on e-commerce giant eBay Inc (NASDAQ:EBAY), drugmaker Organovo Holdings Inc (NYSEMKT:ONVO), and commodity concern Chesapeake Energy Corporation (NYSE:CHK). Here's a quick roundup of today's bullish brokerage notes on EBAY, ONVO, and CHK.

  • EBAY saw its price target lifted at both J.P. Morgan Securities and Evercore ISI, after the company announced the spin-off date for its PayPal division. The former brokerage firm set its mark at $64 -- all-time high territory -- while the latter moved its expected price up to $55, although that marks a discount to Friday's close at $61.03. The shares have been strong this year, adding 8.8% -- and touching a June 5 record high of $63.30 along the way -- and option traders expect more upside. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) eBay Inc's 10-day call/put volume ratio comes in at 4.44, which is only 9 percentage points from an annual high. Analysts haven't been as impressed, as 58% say EBAY is a "hold" or worse. The shares could get a lift, if additional bullish notes come down the pike.

  • Even though the stock has dropped nearly 46% in 2015 to trade at $3.93, Jefferies started ONVO with a "buy" recommendation and a $5 price target. Elsewhere, Organovo Holdings Inc has been a favorite among short sellers. Almost 28% of the security's float is sold short, which would take bears almost four whole weeks to repurchase, at the sock's normal daily volumes. Echoing this pessimistic outlook is ONVO's Schaeffer's put/call open interest ratio (SOIR), which at 1.14 lands in the 86th percentile of its annual range. 

  • CHK has been a long-term laggard on the charts, dropping 61% in the past 12 months to finish Friday at $11.16, after matching Thursday's six-year low of $11. The stock is trading higher in electronic trading, though, as Sterne Agee CRT raised its outlook to "buy" and increased its price target to $13 from $9, saying CHK has plenty of liquidity to stabilize its balance sheet in the years to come. Most analysts don't feel the same way. Of the 20 brokerage firms covering Chesapeake Energy Corporation, 17 rate it a "hold" or worse. 



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Published on Jun 29, 2015 at 9:28 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

U.S. markets are sharply lower in electronic trading, after Greece failed to reach a debt resolution with its creditors over the weekend. Among specific equities in focus are Athens exchange-traded fund (ETF) Global X FTSE Greece 20 ETF (NYSEARCA:GREK), financial firm National Bank of Greece (ADR) (NYSE:NBG), and nutritional supplement specialist Herbalife Ltd. (NYSE:HLF).

  • GREK is bracing for a 15.3% plunge out of the gate -- and on pace to surrender support atop the $10 mark -- after banks in Greece were shuttered and capital controls were implemented. Over the weekend, Greek Prime Minister Alexis Tsipras called for a referendum on a proposed bailout package for the country, sending rumors spiking over a possible "Grexit." The ETF has been in a downward spiral for some time, shedding nearly half its value year-over-year to churn near $11.78. In the options pits, long calls have been preferred over puts, per Global X FTSE Greece 20 ETF's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.68. Premium on the ETF's front-month options are currently pricing in lofty volatility expectations, too. GREK's Schaeffer's Volatility Index (SVI) of 95% ranks in the 80th annual percentile.

  • After closing at $1.28 on Friday, NBG is reeling ahead of the bell, down 25% -- and on its way toward record-low territory. Banks in Greece will remain closed through the week, with ATMs -- which will reopen tomorrow -- allowing a 60 euro limit on cash withdrawals. On the charts, the National Bank of Greece has been in a steady decline over the past 12 months, shedding roughly 65%. Option traders, meanwhile, have been buying to open puts over calls at a rapid-fire rate in recent weeks. At the ISE, CBOE, and PHLX, NBG's 10-day put/call volume ratio of 0.33 sits in the 86th percentile of its annual range. Echoing this is the security's Schaeffer's put/call open interest ratio (SOIR) of 0.89, which rests higher than 79% of all similar readings taken in the past year. Simply stated, short-term speculators are more put-heavy than usual.

  • Bill Ackman is at it again. This time, the activist investor is demanding HLF CEO Michael Johnson release a 2005 video in which he supposedly called the company a "lottery ticket." At last check, the shares were off 1.2% in electronic trading, after settling last week at $53.75. Longer term, HLF has performed well in 2015, up more than 42% -- and true to form, is set to end June on a high note. Short sellers, however, are unconvinced Herbalife Ltd. (NYSE:HLF) can sustain this momentum. More than 29% of the stock's float is sold short, representing 18.8 times HLF's average daily trading volume.

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Published on Jun 29, 2015 at 9:33 AM
Updated on Mar 19, 2021 at 7:15 AM
  • VIX and Volatility
Market predictions are generally kind of pointless. Actually making money in the trading biz generally requires excellent timing, and predictions are almost always vague on that front. But with that in mind, I'm going to make a prediction that has 100% chance of success.

Here it is: This Greek debt situation never gets resolved. I feel safe in saying that my grandkids are going to see stories about the ongoing debt negotiations via hologram while traveling to school in their hovercrafts.

But anyway, that's not stopping some bullish bets! This, via Bloomberg:

"Even as Greece inches closer to default, U.S. traders are more worried about missing out on a rally in the nation's stocks.

"Bullish options bets on an exchange-traded fund tracking Greek shares have risen to a record. There were more than twice as many calls than puts -- a higher ratio than on funds tracking equities of Germany, Spain and Italy.

"Investors are willing to take a gamble on a market that's been four times more volatile than the U.S. this year amid a change in government and five month of unproductive bailout talks. They've added money to the Global X FTSE Greece 20 ETF every single week since January, with inflows of almost $34 million in the past four days."

Now, normally, I'd say that’s pretty bearish. I mean, Greece is getting clocked, yet all traders want to do is play for a turnaround. That's usually a contra tell. Everyone loves calling turns, but trends themselves love continuing.

But alas, that's not a great description. I just kind of assumed from the TeeVee that before today, Greek stocks were down huge this year. Thing is, they haven't done all that terribly.

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Going into Monday, the Global X FTSE Greece 20 ETF (GREK) was down about 12% in 2015, but it's flat over the past 3.5 months -- meaning it moves about 0% for every 10,000 stories. The big hit took place in 2014, as GREK has lost half its value in a calendar year.

The implied volatility here is positively ginormous. It resembles a one-product biotech awaiting FDA approval for something. The GREK "VIX" sits at 95, and that's actually down a bit from a peak of around 113 earlier this year. On the other hand, GREK options traded at about a 40 vol this time last year.

Realized vol has taken a similar trajectory. Ten-day realized volatility (RV) sat at about 26 this time last year, rumbled all the way up to 137 this February, and now looks downright peaceful in the mid 60s.

I'm not sure traders were really "predicting" a GREK rally so much as some sort of resolution in the the near term. That’s a real sizable overbid to already high realized vol.  

That convinces me more that my "bold" prediction will prove prescient. We will never stop hearing about this story. Traders are going to keep rolling this options paper the same way they roll CBOE Volatility Index (VIX) calls every month.

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.
Published on Jun 29, 2015 at 9:39 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Downgrades

Analysts are weighing in today on aluminum giant Alcoa Inc (NYSE:AA), as well as financial firms Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM). Here's a quick roundup of today's bearish brokerage notes on AA, BAC, and JPM.

  • AA received a pair of bearish brokerage notes, with Morgan Stanley and Stifel cutting their respective price targets to $16 and $18. As such, the stock is down 2.1% at $11.44 -- after touching an annual low $11.37 -- meaning it's lost almost 20% since hitting its most recent high of $14.28 in early May. However, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been buying to open Alcoa Inc calls over puts at a rapid-fire rate of late. Specifically, the equity's 10-day call/put volume ratio of 12.13 ranks in the 98th percentile of its annual range.

  • The Greek debt crisis is hitting a number of financial stocks, including BAC. Also weighing on the shares -- down 1.4% at $17.17 -- is a $1 price-target cut to $20 at Oppenheimer. Bank of America Corp is now on track to close below its supportive 20-day moving average for the first time in a month. Meanwhile, at the ISE, CBOE, and PHLX, traders have been scooping up long puts over calls at an accelerated clip, per the stock's 50-day put/call volume ratio of 0.26 -- higher than 82% of comparable readings from the past year. Echoing this is BAC's Schaeffer's put/call open interest ratio (SOIR), which sits at an annual high of 0.89.

  • JPM also got slapped by Oppenheimer, which downgraded the equity to "perform" from "outperform." The bearish note is leading the shares lower this morning, off 1,4% at $67.97 at last check. Taking a step back, JPMorgan Chase & Co. hit a record high of $69.82 last week, and is still up a market-beating 8.6% year-to-date. Not surprisingly, brokerage firms remain overwhelmingly optimistic toward the security, with 14 maintaining "buy" or better assessments, compared to five "holds" and not a single "sell" recommendation.

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Published on Jun 29, 2015 at 10:41 AM
Updated on Mar 19, 2021 at 7:15 AM
  • By the Numbers
Canadian Solar Inc. (NASDAQ:CSIQ) is hovering near breakeven amid the broad-market sell-off, down 0.3% this morning at $29.65. This marks quite the turnaround, though, as CSIQ plunged 7.2% out of the gate due to concerns surrounding China, where the company houses most of its operations. Based on recent options activity, this bounceback is an unwelcome sight.

During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 2.63 CSIQ puts for every call. This ratio ranks a mere 4 percentage points from a 12-month high, suggesting speculators are largely bearish toward the solar stock.

Further reflecting that negativity is CSIQ's Schaeffer's put/call open interest ratio (SOIR) of 1.41, as put open interest outweighs call open interest among options with a shelf-life of three months or less. If that's not enough, this SOIR stands above 94% of comparable readings from the past year, meaning short-term traders are more put-skewed than usual.

However, not everyone is in Canadian Solar Inc.'s (NASDAQ:CSIQ) bearish camp. All of the analysts currently tracking the security rate it a "strong buy." What's more, the stock's consensus 12-month price target of $46.84 represents a nearly 58% premium to its current perch -- and in territory not explored for seven years.
Published on Jun 29, 2015 at 11:36 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Analysts are weighing in today on tech giant Intel Corporation (NASDAQ:INTC), insurance issue Assured Guaranty Ltd. (NYSE:AGO), and retailer Macy's, Inc. (NYSE:M). Here's a quick look at today's brokerage notes on INTC, AGO, and M.

  • INTC is 0.5% lower today at $30.88, after Pacific Crest lowered its price target to $35 from $37. The shares have been battling back since hitting an annual low of $29.31 in late March, but option traders have been betting on downside. Intel Corporation's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio stands at 1.09 -- higher than 69% of all other readings from the past year. This bearish outlook has spilled outside the option pits, as well. Over the two most recent reporting periods, short interest on INTC increased 16.2%. Should the stock bounce back, an unwinding of this negativity could result in tailwinds.

  • AGO is down 12.8% today at $23.92, after Puerto Rico's governor said the territory's debt was "unpayable." With the drop, the stock has now given back all of its year-over-year gains, something option traders are likely happy to see. Assured Guaranty Ltd.'s 10-day ISE/CBOE/PHLX put/call volume ratio of 9.63 ranks in the 82nd percentile of its annual range. Brokerage firm BTIG is similarly bearish. The firm lowered its outlook on AGO to "neutral" from "buy" this morning, and also removed its price target.

  • Deutsche Bank weighed in on M this morning, cutting the stock's rating to "sell" from "buy," and lowering its price target by $8 to $63. The brokerage firm cited concerns with the company's same-store sales, and increasing cost pressure in health care, shipping, and retirement. The shares are now 2.4% lower at $68.15, though they've outperformed the S&P 500 Index (SPX) by almost 8 percentage points in the past 40 sessions. Most analysts are on the skeptical side. Of the 16 brokerage firms with coverage on Macy's, Inc., nine rate it a "hold" or worse. Plus, the equity's average 12-month price target of $68.53 is in line with its current perch.
Published on Jun 29, 2015 at 8:15 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Overseas Trading

Stocks in Asia sold off sharply today, as Greece's inability to reach an agreement with its international creditors -- just ahead of the country's Tuesday deadline to repay an International Monetary Fund (IMF) loan -- overshadowed a bigger-than-expected interest rate cut from the People's Bank of China. Specifically, the Shanghai Composite fell 3.3%, putting it in bear-market territory. Meanwhile, Japan's Nikkei plunged 2.9% on a round of mixed data -- including a wider-than-anticipated fall in industrial production  -- and a stronger yen. Meanwhile, Hong Kong's Hang Seng and South Korea's Kospi gave back 2.6% and 1.4%, respectively.

European equities are getting hit by the aforementioned Greek crisis, amid news that the country's banks will not open this week -- which is weighing on financial stocks throughout the eurozone. Meanwhile, trading in Athens will remain shuttered until July 6, one day after a scheduled referendum on Greece's bailout deal. At last check, London's FTSE 100 is off 1.8%, France's CAC 40 is down 3.6%, and the German DAX has given back 3.1%.

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Published on Jun 25, 2015 at 5:04 PM
Updated on Mar 19, 2021 at 7:15 AM
  • The Week Ahead

We are still more than a week away from Alcoa Inc's (NYSE:AA) unofficial kick-off to earnings season, and notable earnings reports remain light. The news cycle continues to spin, though, with speculators eyeing Greece's June 30 debt-repayment deadline. Also on June 30, Apple Inc. (NASDAQ:AAPL) will launch its highly anticipated Apple Music service. As the market will be closed on July 3 to allow U.S. investors to go fireworks shopping, the highly anticipated nonfarm payrolls report will hit the Street a day early.

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.

Monday, June 29

The pending home sales index for May will be released Monday morning, as will the Dallas Fed's manufacturing survey. Earnings announcement after the closing bell sounds include Apollo Education Group, Inc. (APOL) and CHC Group (HELI).

Tuesday, June 30

Should Greece and its creditors not reach a bailout agreement by Tuesday -- the country's deadline to repay the International Monetary Fund (IMF) $1.7 billion -- talk of a default and "Grexit" will likely dominate headlines. On the home front, St. Louis Fed President James Bullard will speak, and the Street will digest the S&P Case-Shiller home price index for April, the Chicago purchasing managers index (PMI), and June's consumer confidence data. Before the bell, ConAgra Foods Inc (CAG) and Schnitzer Steel Industries (SCHN) will step into the earnings confessional.

Wednesday, July 1

The ADP employment report will get the jobs data rolling. The Markit PMI, Institute for Supply Management (ISM) manufacturing index, construction spending, and the regularly scheduled crude inventories report will also be released Wednesday morning. General Mills Inc. (GIS), Constellation Brands, Inc. (STZ), Paychex, Inc. (PAYX), and Acuity Brands, Inc. (AYI) all report earnings before the bell, while Global Power Equipment Group Inc (GLPW) and Progress Software Corporation (PRGS) come in to focus after the bell.  

Thursday, July 2

The holiday-shortened week comes to a close with quite a bang, with weekly jobless claims and the highly anticipated nonfarm payrolls report on tap, along with May factory orders. There are no earnings reports of note.

Friday, July 3

U.S. markets will be closed for the July 4 holiday.

Published on Jun 26, 2015 at 8:08 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Overseas Trading
Most Asian markets finished lower today, as anxiety over Greece's fiscal status continued to weigh on investor sentiment. China's Shanghai Composite once again logged the worst losses, plunging 7.4% -- its biggest one-day drop since Jan. 19 -- on deleveraging and liquidity concerns. The index is now on the cusp of entering bear-market territory. Hong Kong's Hang Seng also felt the heat of China's sell-off, shedding 1.8%, while Japan's Nikkei fell 0.3% despite stronger-than-forecast household spending data. South Korea's Kospi managed to outperform its regional peers, tacking on 0.3%.

European benchmarks are mixed at midday, after yesterday's Eurogroup summit failed to produce a resolution to Greece's debt crisis. Greece's creditors are calling for a deal to be reached this weekend, with German Chancellor Angela Merkel explaining eurozone leaders have "agreed that everything must be done to find a solution on Saturday." Against this backdrop, the French CAC 40 is up 0.4%, while London's FTSE 100 is down 0.5%, and the German DAX is slightly lower.

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Published on Jun 26, 2015 at 1:48 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Analysts are weighing in today on microprocessing savant ARM Holdings plc (ADR) (NASDAQ:ARMH), hospital operator Community Health Systems (NYSE:CYH), and industrial issue Chart Industries, Inc. (NASDAQ:GTLS). Here's a quick roundup of today's brokerage notes on ARMH, CYH, and GTLS.

  • ARMH is taking it on the chin today, after receiving a downgrade to "underperform" from "market perform," and a price-target cut to 800p from 1,000p, at Bernstein. Specifically, the brokerage firm said, "We see a genuine risk of the smartphone slowdown observed in 1Q 2015 being the first of a series, more than an inventory correction." At last check, the shares were off 5.4% at $50.99. In recent months, ARM Holdings plc has been churning in the $51-$54 range, following a sharp rally off its annual low of $37.75 in late October. Options traders, meanwhile, have been counting on a break out. ARMH's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio sits at 18.66 -- above all but 10% of readings from the past year.

  • CYH is fresh off a record high of $64.82, as healthcare stocks continue to surge in the wake of the Supreme Court's Obamacare ruling. Also helping the shares climb is a rush of bullish brokerage attention. For instance, Wells Fargo and Mizuho -- which also weighed in on Tenet Healthcare Corp (NYSE:THC) -- both upgraded Community Health Systems to the equivalent of a "buy" opinion, while the latter bumped its price target to $83.90, as well. Jefferies, which upped its price target to $79, said, "we believe hospital stocks still have room to run up as multiples continue to gradually creep higher to more appropriate levels." On the other hand, Raymond James downgraded CYH to "market perform." Taking a step back, the brokerage crowd has been bullish toward the shares for some time, as 70% rate them a "buy" or better, with not a single "sell" to be found. At last check, CYH is up 3% at $64.31.

  • GTLS is benefiting from an upgrade to "buy" at Northcoast, adding 5.4% to flirt with $37.22. Longer term, the shares have now advanced 8.8% year-to-date, and are on track to close above their 80-day moving average -- which rejected a rally earlier this month -- for the first time since May 21. Elsewhere, short-term options traders have been call-skewed toward Chart Industries, Inc. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.59 sits below more than four-fifths of comparable readings from the past year.
Published on Jun 26, 2015 at 2:07 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stock Market News

This morning, the Supreme Court of the United States (SCOTUS) issued a ruling that same-sex partners have a constitutional right to marry -- doing away with state bans against the practice. Not only did SCOTUS' decision cause a flurry of news across the various major news outlets, but it is also causing a bit of a bump for XO Group Inc (NASDAQ: XOXO). The parent company for The Knot, The Bump, and The Nest advanced nearly 4% in the immediate wake of the announcement, with some firms estimating the ruling will translate into a "gay-marriage stimulus package."   

The shares have backed off a bit, but are still about 1.1% higher on the day, at $16.23.
XOXO's site director told MarketWatch, "As we celebrate the Supreme Court's decision to legalize marriage equality for the entire country, our study shows that LGBTQ couples are hosting intimate weddings, with a focus on the guest experience and lots of personalized details."  

Technically, if you want the definition of a stock caught in a sideways trend, you should look to XOXO. The stock has spent most of 2015 bumping into resistance at $18, only to find support in the $15.50-$16 region. What may be encouraging is the stock's 10-month moving average is moving into the $15.50 area, and could help the shares break out. 

On the sentiment side, however, Wall Street isn't optimistic. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.05 stands higher than 92% of all other readings from the past year, suggesting short-term option traders are more put-heavy than usual. Likewise, short interest on XO Group Inc (NYSE:XOXO) surged 34.2% during the past two reporting periods.

Meanwhile, other stocks that saw post-SCOTUS jumps include jewelry retailers Blue Nile Inc (NASDAQ:NILE) and Signet Jewelers Ltd. (NYSE:SIG), as well as luxury goods titan Tiffany & Co. (NYSE:TIF). 
Published on Jun 26, 2015 at 2:12 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stock Market News
  • Intraday Option Activity
It's been a tremendous few weeks for IPOs, and that trend is continuing today. AlarmCom Hldg Inc (NASDAQ:ALRM) is breaking out in its Wall Street debut, surging 14.8% from its IPO price of $14 (subscription required) to trade at $16.07, while Xactly Corp (NYSE:XTLY) has tacked on an even more impressive 16% at $9.28.

Meanwhile, Wall Street rookie Fitbit Inc (NYSE:FIT) is pulling back, down 4.1% at $35.10, even as the fitness stock's options began trading today -- the earliest listing date possible, according to Options Clearing Corporation (OCC) rules. So far, 1,700 puts are on the tape, versus roughly 1,440 calls. Most active is the weekly 7/2 34.50-strike put, which option bears are buying to open in hopes of a continued decline through next Thursday's close, when the series expires.

In related news, options trading began earlier this week on Wingstop Inc (NASDAQ:WING) -- which publicly debuted just four sessions prior to FIT. However, volume has been extremely light, with just 30 contracts crossing per day, on average. Things are even slower this afternoon, with just one WING put and not a single call changing hands.

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