Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Nov 15, 2019 at 9:54 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Analyst Upgrades

Chip name Applied Materials, Inc. (NASDAQ:AMAT) is up 8% to trade at $61.53 -- and nabbed a fresh annual high of $61.90 this morning -- the equity swimming in bull notes after the company's fiscal fourth-quarter results last night. Applied Materials shared a quarterly beat and forecast its fiscal first-quarter revenue at $4.1 billion, above analyst estimates. The firm touted a rise in China sales, while sharing expectations for post-5G rollout equipment upgrades next quarter, with CEO Gary Dickerson adding that the company is "optimistic about 2020."

Analysts have flocked to the chip stock tenfold, with no fewer than 12 price-target hikes and one on the books so far. Instinet upgraded AMAT to "buy" from "neutral" and hiked its price target to $68 from $40, while J.P. Morgan Securities established a December 2020 price target of $72, saying the company will benefit from higher semiconductor revenue this quarter. From a broader perspective, 11 of 18 firms sport a "buy" or "strong buy" rating coming into today, with not a single "sell" in sight.

Meanwhile, data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a preference for AMAT calls in recent weeks. This is per the stock's 50-day call/put volume ratio of 1.53, which ranks in the elevated 71st percentile of its annual range.

AMAT has now tacked on 86% in 2019, continuing its steady climb higher on the charts. A double layer of support has come from both the 50- and 70-day moving averages within the last few months. Plus, with today's bull gap taking no prisoners, the shares are already trading at an annual high out of the gate while simultaneously testing March 2018 record high territory.

Published on Nov 15, 2019 at 10:04 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

The shares of Home Depot Inc (NYSE:HD) are up 0.3% to trade at $237.27 today, after Jefferies raised its price target to $268 from $246. The brokerage firm predicted Home Depot will outperform Lowe's (LOW) in their upcoming earnings reports, due to impressive same-store sales growth and website traffic. Home Depot is scheduled to report third-quarter earnings before the open this Tuesday, Nov. 19, while Lowe's earnings are expected the morning of Wednesday, Nov. 20. 

The new price target sits deep in record-high territory for Home Depot stock. In fact, HD is currently nestled just below its Oct. 21 record high of $238.98, and is cruising toward its fourth straight win. There have been pullbacks during this steady climb higher in recent months, but they have found support at the shares' 40-day moving average. 

For a stock that's up 38% year-to-date, there's plenty of pessimists around. For starters, nine of the 20 brokerages in coverage still rate HD a tepid "hold," and the average 12-month price target of $236.39 is a discount to current levels. In other words, more bull notes could keep the wind at the equity's back.

Plus, Home Depot's Schaeffer's put/call open interest ratio (SOIR) of 1.54 ranks in the 89th annual percentile, meaning short-term traders are more put-heavy than usual toward the stock. This heavy accumulation of puts could help buoy the shares in the near term, as the hedges related to these bets unwind.

Looking at the stock's earnings history, HD has closed higher the day after the company reports in the last two quarters, including a 4.4% jump in August. During the past eight quarters, the stock has averaged a modest post-earnings swing of 1.2%, regardless of direction. This time around, the options market is pricing in a larger-than-average 4.7% move for Tuesday's trading.

Published on Nov 15, 2019 at 10:04 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

Pharmaceutical name resTORbio Inc (NASDAQ:TORC) has slid to the very bottom of the Nasdaq today after the company announced it stopped testing on its lead drug RTB101 for respiratory illness, following a failed late-stage trial. The biopharma firm added that they will continue testing on the drug in other conditions, such as Parkinson's disease. The news has placed TORC firmly in penny stock territory, down 82.2% at $1.41, and already hitting an all-time low of $1.35. 

Prior to today, TORC had staged a bounce off its late-October lows near the $6.50 region, climbing straight up with help from a well-received third-quarter earnings report last week. However, the shares' one-month high of $9.88 -- touched earlier this week -- was swiftly rejected by pressure at its 320-day moving average, sending the shares back below recent support at the 10-day moving average. 

While analysts haven't chimed in yet, the door is wide open for bear notes, especially considering all five in coverage consider TORC a "strong buy." Plus, its 12-month consensus price target sits all the way up at $24.33 -- a level the equity has yet to reach. 

This dramatic plummet could have shorts cheering today, even though TORC has landed itself on the short-sale restricted (SSR) list. In the last two reporting periods, short interest has risen 19.7% to 3.77 million shares. These pessimistic positions make up a healthy 18.2% of the stock's available float, too, or roughly 25 days at the stock's average pace of trading. 

Published on Nov 15, 2019 at 1:49 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move

Stocks are scoring new highs to end the week, thanks to upbeat retail sales and chip sector earnings. Among two names making notable moves higher today are luxury retail concern Farfetch Ltd (NYSE:FTCH) and biopharmaceutical name Amarin Corporation (NASDAQ:AMRN). Here's a quick look at what's moving the shares of FTCH and AMRN.   

FTCH Call Traders Don't Envision a Post-Earnings Breather 

Farfetch stock is up 29.4% to trade at $9.68, on track for its best day ever and one of the better stocks on the New York Stock Exchange today. This comes after the retailer reported a third quarter loss that was slimmer than expected. Revenue topped expectations too, although five brokerages issued price-target cuts, the lowest coming out of Deutsche Bank to $14 from $31. FTCH is set to snap a five-day losing streak, but the rally has run out of steam at the shares' 80-day moving average. 

Options bulls appear undeterred. At last check, over 30,000 call options have changed hands, 10 times the expected intraday amount and 13 times the number of puts traded. Leading the charge is the November 10 call, which expires at the close today, but there are also new positions being opened at the December 9 call. 

Amarin Eyes Best Week Ever After More FDA News

Amarin stock is finishing its big week with a bang, last seen up 6.1% to trade at $22.80. A panel of experts to the Food and Drug Administration (FDA) unanimously voted to expand Vascepa, the company's heart disease drug, as additional therapy for patients with high risks of stroke and heart disease. On Monday, AMRN gapped higher after the FDA made encouraging comments about Vascepa. The shares are cruising toward a 33% weekly gain, its best ever, and are pennies away from its July 5 13-year high of $23.91.

Options traders were in overdrive on Monday, and are back at it again today. With just over three hours left in today's trading, 103,000 calls have changed hands, four times the average intraday amount and volume pacing for the 99th percentile of its annual range.

Published on Nov 15, 2019 at 3:26 PM
Updated on Mar 19, 2021 at 7:15 AM
  • 5-Minute Market Rundown

It was a wild trading week for stocks, as Wall Street closely monitored developments on the trade agreement between the U.S. and China. U.S. President Donald Trump, in particular, was quite vocal about the state of the trade deal, with comments on Tuesday over how China has "cheated" the U.S. in the past spooking traders early in the week. Despite this, a huge win from Boeing (BA) on Monday and news of Disney's (DIS) successful new streaming service helped all three major indexes clock fresh highs throughout the week. In fact, by the end of the week, the Dow, Nasdaq and S&P had all notched yet another all-time peak. 

Also on investor's radars were several speeches from Fed Chair Jerome Powell, in which the central bank leader hinted at holding monetary policy steady for the time being, and spoke positively about the U.S. economy. Earnings are still on the forefront of traders' minds too, and this week blue chips Walmart (WMT) and Cisco Systems (CSCO) were both in the spotlight -- the former giving the retail sector a boost on a well-received report -- and the latter spiraling on a negative earnings reaction. 

Stocks Swinging on Disney+ Debut 

Walt Disney's (DIS) highly anticipated streaming service Disney+ made its debut on Tuesday this week, but not without some hiccups. Several users took to Twitter (TWTR) to complain about glitches plaguing the new platform on its opening day. The blue chip was able to brush off most of these complaints though, and gave the Dow a boost through Wednesday after a strong numbers report

The release had several other stocks making big moves. Roku (ROKU) in particular saw a surge in shares, with options bulls piling on at the beginning of the week, while CBS (CBS) fell in the other direction over increased competition concerns. Entertainment name AMC (AMC) struggled ahead of the Disney+ release, too, with technical trouble nipping at its heels on Monday.  

Retail Stocks in the Spotlight as Earnings Season Chugs Along

There were several huge retail names on the docket this week. Perhaps most prominently in view was Walmart (WMT), which posted a well-received earnings and revenue beat -- giving several other sector peers, including Macy's (M), a halo lift. 

Earlier in the week, apparel company Canada Goose (GOOS) stepped into the earnings confessional, with a little less luck, sinking over 10% on Wednesday after trimming its third-quarter forecast. Dillard's (DDS) on the other hand, followed up with a big earnings beat, and what its CEO called a "substantial improvement over the second quarter." 

Retail Earnings, Fed Activity Remain on Wall Street's Radar

The final full week of trading in November is coming up next, and retail earnings will continue to take the spotlight as Wall Street prepares for a busy holiday season. Home Depot (HD) will headline the retail roll, with quarterly report from Macy's (M) and Target (TGT) also in the spotlight.

The Fed will also remain in focus, with the latest Federal Open Market Committee (FOMC) meeting minutes due out next Wednesday, along with several Fed speeches which will trickle in throughout the week. 

Published on Nov 18, 2019 at 9:33 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Earnings Preview
  • Analyst Update

Retail giant L Brands Inc (NYSE:LB) was slammed with a set of price-target cuts this morning, adding to its already grim run on the charts. RBC dropped its target price to $21 from $22, while Wedbush slashed its LB price target to $16 from $20. This double dose of bear notes comes just ahead of the company's quarterly report, which is scheduled for after the close this Wednesday, Nov. 20. At last check, LB is trading down 0.5% at $17.98.

LB has struggled on the charts of late. Now down nearly 30% year-to-date, the equity is seeing overhead pressure at its descending 50-day moving average. In fact, as recently as Sept. 3, the Victoria's Secret parent touched an almost decade low of $15.82.

In the options pits, it looks like traders have been optimistic despite the stock's underperformance on the charts. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 2.54 calls for every put during the past 10 sessions. The 10-day call/put volume ratio registers in the 80th percentile of its annual range, pointing to a healthier-than-usual appetite for long calls over puts.

Meanwhile, short interest has rolled back 11.6% during the past two reporting periods. These bearish bets still account for a healthy 8.3% of the stock's available float, so it's possible some of the recent call buying could be a result of shorts hedging against any earnings-related upside risk.

Looking at the stock's earnings history, LB has closed lower the day after the retailer reported in six of the past eight reports, including a 17.7% plunge this time last year. The equity has averaged a post-earnings swing of 8.5% in the last two years, regardless of direction, but this time around, the options market is pricing in a larger-than-usual 13.2% move for L Brands sotck.

Published on Nov 18, 2019 at 10:08 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Intraday Option Activity
  • Buzz Stocks

Just a week after SunPower Corporation (NASDAQ:SPWR) was shining amid news of a strategic spin-off, the stock is now down 4.1% to trade at $7.96, after the company launched a public offering of common stock valued at 22 million shares. In response, options traders have perked up this morning.

More specifically, in just the first hour of trading today, over 2,500 SPWR options have changed hands, four times the average intraday amount and volume pacing for the 95th percentile of its annual range. Leading the charge is the June 7 put, where it looks like new positions are being sold. There are also new positions being opened at the weekly 11/22 8.5-strike call. 

SunPower stock, despite its 62% year-to-date lead, is fresh off its eighth straight weekly loss. Even the breakouts amid the spin-off news were quickly rejected by the shares' descending 30-day moving average. Since its Aug. 1 three-year high of $16.04, SPWR is now down 50%.

Pessimists of all sorts are likely cheering this recent downtrend. Although short interest declined by 11% in the most recent reporting period, more than 28% of the security's total available float is sold short, or 5.6 times the average daily trading volume. Plus, all but one analyst in coverage rates SPWR a "hold" or worse.

Published on Nov 18, 2019 at 10:19 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Chemical stock Huntsman Corporation (NYSE:HUN) has been consolidating on the charts since early September, recently finding nice support from the 200-day moving average. While the $24-$25 range -- site of the shares' early 2019 highs -- is certainly on the radar as potential resistance, HUN just snagged a bullish analyst note, and options traders have been picking up calls at a rapid pace. 

Goldman Sachs this morning added the security to its conviction list, and the bullish sentiment matches that of the Street. By the numbers, 60% of covering firms have "strong buy" ratings on HUN, and the average 12-month price target for all those in coverage is $26.38 -- roughly 14% above current levels.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the 10-day call/put volume ratio for Huntsman is 12.18, a number that ranks in the 79th annual percentile. Said another way, there's been a notable bullish bias among options traders in recent weeks. That said, the Schaeffer's Volatility Index (SVI) for HUN is 32%, and ranks in the 11th annual percentile, so near-term options premiums still appear muted.

HUN traders have built up large positions at the January 2020 23- and 25-strike calls, home to the top two open position levels. In the front-month December series, peak open interest is actually on the put side at the 23 strike. Huntsman shares were last seen up 0.6% at $23.38.

Published on Nov 18, 2019 at 2:28 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move

Stocks are hitting fresh highs to start the week, although oil prices are lower. Among three names making notable moves higher today are biotech issue Karuna Therapeutics Inc (NASDAQ:KRTX), cosmetics concern Coty Inc (NYSE:COTY), and Russian online services stock Yandex NV (NASDAQ:YNDX). Here's a quick look at what's moving the shares of KRTX, COTY, and YNDX.   

KRTX's Schizophrenia Drug Fuels Major Breakout

The best stock on the Nasdaq today by a wide margin is Karuna Therapeutics, last seen up 421.7% to trade at $92.23. That's not a typo; KRTX earlier nabbed a record high of $94.40, after the company's experimental drug for schizophrenia met the main goals of a mid-stage trial. Karuna is expected to meet with the Food and Drug Administration (FDA) in the middle of 2020 to discuss the next steps. KRTX is now trading more than five times its June 28 initial public offering price of $16. 

While all four analysts rate the stock a "buy" or better, bull notes could still vault it higher. KRTX's average 12-month price target sits at $39, which is now a 41% discount to its current perch. 

COTY Climbs After Taking Control of Kylie Jenner's Company

Coty stock is up 1.1% to trade at $12.03 at last check, after the cosmetics company announced it bought a majority stake in Kylie Jenner's make-up business for $600 million. Coty now owns 51% stake in Jenner's business, and values it at $1.18 billion. COTY is up 82.4% in 2019, and last week's pullback found support at its pre-bull-gap levels from Nov. 6. 

Now actually looks like a nice time to buy premium on COTY, as its Schaeffer's Volatility Index (SVI) of 32% ranks in the bottom annual percentile, pointing to low volatility expectations at the moment.

YNDX Restructuring Catches Options Traders' Eye

Yandex stock is up 11.4% to trade at $39.87, after announcing it will restructure its corporate governance to better acclimate to regulatory risk. In addition, Yandex announced a $300 million stock buyback, and the double-dose of headlines had the stock crossing the $40 threshold earlier for the first time since Aug. 1. YNDX has now tacked on 37.5% since an early October encounter with the $29 level. 

Options traders have responded in kind. More than 11,000 contracts have changed hands today, double the average intraday amount and volume pacing for the 97th percentile of its annual range. Leading the charge is the December 36 put, where new positions are being opened. There's also opening action at the weekly 11/22 40-strike call.

Published on Nov 19, 2019 at 9:32 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Broadcom Inc (NASDAQ:AVGO) is trading up 1.9% at $317 this morning after Morgan Stanley named the semiconductor stock a top pick, upgrading its view to "overweight" from "equal-weight" and lifting its price target to $367 from $298. The brokerage firm cited overly pessimistic sentiment around the security, writing that it's bullish on Broadcom's software business, which should have the company well-positioned to benefit from the era of big data.

Speaking of sentiment, call buying has been very popular in recent weeks at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), but near-term open interest is still unusually put-heavy. This is according to AVGO's Schaeffer's put/call open interest ratio (SOIR) of 1.19, which ranks in the 84th annual percentile. This skew is due to the heavy put open interest in the January series, which holds the top two open interest positions at the 250- and 260-strike puts.

Looking back at the charts, the setup does look to favor the bulls, with AVGO shares close to breaking out to fresh highs. The stock has added 11.6% in the past three months, and could now find support at the $305 area, the site of previous resistance from June through September. If Broadcom does keep pushing higher, we'll likely see more bullish brokerage notes, since it's fast approaching the average analyst price target of $323.30.

 

Published on Nov 19, 2019 at 9:58 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

The shares of cable TV company MSG Networks Inc (NYSE:MSGN) are lower this morning, following a downgrade from Guggenheim to "sell" from neutral." The brokerage firm maintained its $15 price target -- a 19% discount to last night's close -- and said it foresees a challenged position for the entertainment name amid upcoming contract renewals with Altice USA (ATUS) and Comcast (CMCSA), which make up 40% of MSGN's subscriber base. The stock is down 5.3% at last check, to trade at $17.50.

A bear note from Guggenheim isn't the only thing creating headwinds from MSGN. The stock recently ran up to its 140-day moving average, which also acted as a ceiling on the charts earlier this year. And while the security has managed a roughly 34% gain off its late-August six-year lows with a little help from a massive bull gap later that same month, the stock is still down 25% for the year. 

The brokerage's bear note is in good company, though. Prior to today, five of the six analysts in coverage called MSG Networks a "hold" or worse. Plus, the consensus 12-month target price of $17.86 is a slight discount to last night's close. 

Short sellers are likely celebrating today's dip. While short interest dropped 21.9% in the last reporting period, the 14.47 million shares sold short represent 32.3% of the stock's available float, or over two weeks of trading at MSGN's average pace.

Published on Nov 19, 2019 at 10:06 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

At the top of the Nasdaq this morning sits U.K.-based biotech Myovant Sciences Ltd (NYSE:MYOV), up 141% to trade at $14.62. Powering today's breakout is relugolix, the company's treatment for advanced prostate cancer that met its primary and secondary goals in a late-stage trial. 

Myovant Sciences stock is now trading north of double digits for the first time since a late-May bear gap. It's set to be MYOV's best single-session gain ever by a wide margin, although the overhead 320-day moving average now looms as a ceiling.

A short squeeze could help the security topple that trendline. Short interest increased by 21% in the most recent reporting period to a record high 4.04 million shares. This takes up almost 14% of MYOV's total available float, or more than two weeks' worth of buying power, at its average pace of trading.

For those wanting to take advantage of the biotech stock's next leg higher, now is a good time to buy options premium. MYOV's Schaeffer's Volatility Index (SVI) of 154% ranks in the modest 7th percentile of its annual range, pointing to low short-term volatility expectations at the moment.

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