Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Mar 13, 2024 at 12:03 PM
  • Midday Market Check

         

Published on Mar 13, 2024 at 11:08 AM
  • Buzz Stocks

Intel Corp (NASDAQ:INTC) is in the spotlight today, after Bloomberg reported the Pentagon intends to scrap plans to spend $2.5 billion on a chip grant to the company. Those familiar with the situation said it's up to the Commerce department to make up for the shortfall, as President Joe Biden signed into law a defense funding package that allotted $3.5 billion to Intel to produce defense and intelligence-related semiconductors. 

At last glance, Intel stock was down 1.1% to trade at $44.72. The stock has been choppy on the charts since its late-January post-earnings bear gap, of 12%, which has yet to be filled. Since the start of the year, the equity is down 10.8%. 

Options traders appear to be betting on a rebound, however. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), INTC's 50-day call/put volume ratio of 3.69 ranks higher than all other readings from the past year. 

There is plenty of room for optimism amongst analysts. Of the 33 analysts in coverage, 27 carry a "hold" or worse rating on Intel stock. Plus, the 12-month consensus price target of $44.59 is roughly in line with current levels. 

Published on Mar 13, 2024 at 10:33 AM
  • Buzz Stocks

Shares of Petco Health and Wellness Company Inc (NASDAQ:WOOF) are 7% higher to trade at $2.74, but earlier was as high as $2.71 after the pet supply retailer's fourth-quarter revenue beat Wall Street's estimates. A major C-suite change happened, too, with CEO Ron Coughlin stepping down, and Michael Mohan taking point as interim.

In response to the event and update, WOOF's typically quiet options pits are seeing an uptick in activity. So far, 1,321 calls and 899 puts have been traded so far -- six times the intraday average. The most popular position is the March 3 put, followed by the 2.50 put from the same monthly series.

Over the last 10 weeks, options traders were much more bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Petco stock's 50-day put/call volume ratio of 2.70 stands higher than 96% of readings from the past year. In other words, options traders have had an unusually healthy appetite for long puts of late. 

Analysts have yet to chime in, but the sentiment heading into today was also pessimistic. Of the 14 in coverage, nine recommend a tepid "hold" rating.

On the charts, the equity is holding just above its Feb. 2 record low of $2.34. Most of the security's recent runs higher have pushed into the 60-day moving average, a layer of resistance since November. The security is down more than 17.5% this year. 

Published on Mar 13, 2024 at 10:08 AM
  • Buzz Stocks

Eli Lilly And Co (NYSE:LLY) today announced a new partnership with Amazon.com's  (AMZN) pharmacy to deliver drugs ordered via its LillyDirect service, including weight loss medication Zepbound, straight to consumers. The stock is down 0.4% at $751.86 at last check, with today's update also weighing on Walgreens Boots Alliance (WBA), which last month lost its spot on the Dow Jones Industrial Average (DJIA) to AMZN.

The $720 level emerged as a floor for Eli Lilly stock after it hit a March 4, record high of $800.78, which contributed to its impressive 130.8% year-over-year lead. The 40-day moving average has also been acting as a consistent level of support so far this year.

Short-term options traders have been much more bullish than usual. This is per LLY's Schaeffer's put/call open interest ratio (SOIR) of 0.67 that sits higher than 5% of annual readings. 

 

Published on Mar 13, 2024 at 8:00 AM
Updated on Mar 13, 2024 at 9:30 AM
  • Indicator of the Week
 
Published on Mar 13, 2024 at 9:11 AM
Updated on Mar 13, 2024 at 9:13 AM
  • Opening View

Stock futures are little changed this morning. Nasdaq-100 Index (NDX) futures are staging the biggest swing with a 48-point deficit, while futures on the S&P 500 Index (SPX) trade flat following yesterday's record close. Investors are awaiting tomorrow's producer price index and retail sales data, though in the meantime, mortgage rates dropped below 7% -- coming in at 6.84% for last week. Elsewhere, oil prices are on the rise following a drop in U.S. crude inventories. 

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

  • What the SPX's price/earnings ratio says about this year, per Schaeffer's Senior Quantitative Analyst Rocky White. 
  • Options bulls unfazed by Kohl's stock selloff. 
  • Plus, Dollar Tree stores closing; TSLA downgraded; and WOOF surges. 

futures march13

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1 million call contracts and 794,205 put contracts exchanged Tuesday. The single-session equity put/call ratio stayed at 0.68, while the 21-day moving average remained at 0.71.
  2. Dollar Tree Inc (NASDAQ:DLTR) stock is down 7.3% premarket, after the discount retailer announced disappointing fourth-quarter results, as well as the closure of nearly 1,000 stores. On the charts, this will effectively end DLTR's recent rally, as the stock has been climbing since mid January. Should these losses hold, the stock will slip into negative territory year over year and in 2024. 
  3. Tesla Inc (NASDAQ:TSLA) stock is off 2.2% before the bell, after a downgrade from Wells Fargo to "underweight" from "equal weight," as well as a price-target cut to $125 from $200. Since the start of the year, the electric vehicle (EV) giant is down 25.8% heading into today. 
  4. The shares of Petco Health and Wellness Company Inc (NASDAQ:WOOF) are up 9.8% in electronic trading, after the company announced strong fourth-quarter results as well as a c-suite shakeup. Ron Coughlin is stepping down as CEO, Chairman, and a member of the board, with previous independent director Michael Mohan taking his place. Year over year, the equity is down 73.3%. 
  5. Tomorrow's economic data will be a lot to unpack. 

buzzmar13

Unemployment Rate Falls in South Korea

Markets in Asia were mostly lower in reaction to the inflation data stateside. Unemployment in South Korea fell from 3% in January to 2.6% for February, helping the Kospi add 0.4% in response. But that was it for the winner’s circle; Japan’s Nikkei fell 0.3%, pivoting into the red for a third consecutive loss, while Hong Kong’s Hang Seng lost 0.07% and China’s Shanghai Composite shed 0.4%.

Across the pond, it's slightly more optimistic, especially after U.K. gross domestic product (GDP) data showed a modest rise of 0.2% for January and several retail giants enjoy big gains after posting upbeat outlooks. At last check, Germany’s DAX and London’s FTSE 100 are flat, while France’s CAC 40 is up 0.5%.

Published on Mar 12, 2024 at 4:26 PM
Updated on Mar 12, 2024 at 4:34 PM
  • Market Recap
 
Published on Mar 12, 2024 at 2:46 PM
  • Buzz Stocks

Options traders are eyeing Kohl's Corp (NYSE:KSS) stock's post-earnings slide today, after the retailer's mixed fourth-quarter report. The company posted stronger-than-expected earnings, but disappointing revenue and a downbeat 2024 forecast. At last glance, KSS was off 6% at $25.55. 

So far, 13,000 calls and 17,000 puts have exchanged hands in the options pits, which is already double KSS' average daily options volume. The March 26 put is the most popular, followed by the March 30 call. 

On the charts, KSS is down 10.7% year to date after a volatile start to the year. On track for its eighth daily loss in the past 10 days, the stock's 100-day moving average appears to be providing some support for today's pullback. 

KSS March12

It's worth noting that the stock has plenty of short squeeze potential. Short interest represents 27.3% of the stock's available float, and would take nearly six days to cover, at Kohl's stock's average pace of trading. 

Published on Mar 12, 2024 at 12:47 PM
  • Quantitative Analysis
  • Editor's Pick

Subscribers to Chart of the Week received this commentary on Sunday, March 10.

Here at Schaeffer’s, we pride ourselves on offering a vast book of subscription options covering every type of trader looking to invest in the market: long term, short term, neutral, directional, or a little bit of everything. In 2024, subscribers to several products have already raked in impressive gains, and within the last few weeks alone, some weekend plays are worth a closer look. Plus, we’ll dive into our monthly pick from our Option Advisor newsletter, which more than doubled investor’s money in less than two weeks.

Our Weekend Trader subscribers have enjoyed a particularly quick run of doubled profits, with both American Express (AXP) and Toast (TOST) pocketing +100% and +102%, respectively. The former turned in a surge of consecutive winning sessions following our call recommendation, while an unwinding of short interest from the latter guided the software giant higher.

Schaeffer's Profits Scored

Another weekend product that saw an impressive 2.5x return was Weekend Player. Denmark-based pharmaceutical giant Novo Nordisk (NVO) rewarded subscribers in less than two months, our June 105 call surpassing the $105 mark almost immediately upon entry, and then promptly marching up the charts. At the time of Senior Market Analyst Chris Prybal’s recommendation, NVO was sporting a two-year gain of 95% and six of the top 12 open interest (OI) positions were puts. Prybal also suggested a round of price-target hikes could be on the way. This came to fruition in droves, with the stock’s average 12-month price target now representing a 3.2% upside to current trading levels. On Wednesday, March 6, subscribers were told to close their position, as in gap situations like we had that morning on NVO, we take the volume weighted adjusted price (VWAP) over the first hour of trading. The closing level of this option is $32.29, which resulted in a +268% profit for Weekend Player subscribers.

NVO Chart

Our monthly newsletter Option Advisor – the prodigal child of Schaeffer’s Research -- is also scoring wins for investors. At the time of our Palantir Technologies (PLTR) March 22 call recommendation on Friday, Feb. 23, a strong 2024 profit forecast had recently taken software name PLTR above its 2023 highs. Despite a recent pullback, the stock recently crossed above the $50 billion valuation, an additional layer of support to monitor that could help pad its 182% year-over-year lead. The shares also had an implied volatility (IV) that was lower than 83% of the readings from the past year, indicating premium was affordably priced.

Analysts remained skeptical despite this technical outperformance, with 11 of the 14 firms in coverage carrying a tepid "hold" or worse rating, while the 12-month consensus target price of $18.71 was a 20.7% discount to current levels. This left the door wide open for upgrades and/or price-target hikes. Plus, short interest had increased 13.2% in the last two reporting periods, and the 114.72 million shares sold short made up 6% of PLTR’s available float. In other words, the stock looked ripe for a short squeeze.

A news blast kickstarted the contrarian gap higher. On Wednesday, Palantir inked a $178.4 million deal with the U.S. Army for its Tactical Intelligence Targeting Access Node, or TITAN, project, to develop 10 artificial intelligence (AI)-powered ground stations. Upon our recommended close on the 6th, subscribers we able to walk away with a +100% profit, doubling their original investment in only a week and a half.

This is all to say, a common theme runs rampant throughout each of these big winners: everyday life through a contrarian lens. Be it software or technology services, medicinal focuses with weight loss or pharmaceutical concerns, or the use of a credit card to render all these services useful in the first place. In other words, casting a wide net with a contrarian angle, combined with the best picks from Schaeffer’s trading team, looks to be one of the best weapons to have in your Wall Street arsenal.

PLTR Chart

Published on Mar 12, 2024 at 12:07 PM
  • Midday Market Check

         

Published on Mar 12, 2024 at 11:22 AM
  • Buzz Stocks

On Holding AG (NYSE:ONON) stock is plummeting today, after the footwear retailer's disappointing fourth-quarter results and net sales forecast. Down 13% at $29.24 at last glance, ONON is on the short sell restricted (SSR) list today. 

This bear gap has the equity dropping below its 20-day moving average, which provided close support this month, though long-term support at its 320-day moving average is still keeping a cap on losses. Since last March, ONON is up 42.5%. The stock is also holding on to a modest year-to-date gain. 

In response, options traders are chiming in at six times the volume typically seen at this point. So far, 30,000 calls and 29,000 puts have already been traded, with new positions opening at the most popular contract, the March 25.50 put. 

It's also worth noting that short interest represents 14.5% of the stock's available float. It would take shorts nearly seven days to cover their bets, at On Holding stock's average pace of trading -- plenty of pent-up buying power for those betting on a bounce. 

Published on Mar 12, 2024 at 10:40 AM
  • Buzz Stocks

Oracle Corp (NYSE:ORCL) stock was last seen up 10.1% to trade at $125.70, after the tech company beat fiscal third-quarter earnings thanks in part to artificial intelligence (AI) demand. The company also teased a joint announcement with chip giant Nvidia (NVDA) ahead of a global AI conference for developers on Monday, March 18.

ORCL drew no fewer than 16 price-target hikes in response, the highest coming from Mizuho to $160 from $140. Analysts remain split on ORCL, however, with half the brokerage firms in coverage calling it a "hold," so a round of upgrades could push ORCL higher.

Shares today finally cleared $129 -- where rallies ran out of steam in June and September -- to notch an all-time high of $129.37. The 80-day moving average, which coincides with a short-term floor at $111, served as a springboard for today's rally, which could also mark ORCL' best day since June 2022. In the last 12 months, Oracle stock added 49%.

Options traders aren't missing a beat. So far today, 116,000 calls and 63,000 puts have crossed the tape, volume that's 20 times the intraday average amount. Most active is the March 130 call, followed by the April 130 call, with positions being opened at the former.

That call bias is nothing new. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ORCL's 50-day call/put volume ratio of 2.48 ranks higher than 89% of annual readings.

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