Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Dec 10, 2018 at 2:14 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Intraday Option Activity
  • Analyst Update

The shares of Xperi Corp (NASDAQ:XPER) are up a whopping 45.5% to trade at $18.63, leaping higher after settling all legal matters with Samsung Electronics over a new patent license agreement. In addition, the tech company also raised its fourth-quarter and fiscal year outlook. Two brokerage firms have issued price-target hikes in response, including to $35 from $25 at Benchmark. What's more, options traders have entered the fray at an alarming rate.

At last check, 1,317 options have changed hands, 28 times what's typically seen at this point in the day, with volume nearing an annual high. Leading the charge is the December 17 put, followed by the December 18 call, and new positions are being opened at each contract. The January 2019 21-strike call is also seeing new positions being opened today.

This is shaping up to be the security's best day ever by a long shot, and helps break the stock out of long-standing downtrend that culminated in a seven-year low of $12.08 on Oct. 26. The shares are now on track to close above their 200-day moving average for the first time since March 2017. Nevertheless, XPER still is down nearly 23% year-to-date.

Daily Stock Chart XPER

Short sellers have been in covering mode even before today's rally, and a short squeeze could definitely keep the wind at XPER's back. Short interest fell by 8% in the most recent reporting period to 4.40 million shares, the lowest since May 1. This still represents a healthy 9.3% of the stock's total available float, and 12.2 times the average daily trading volume. 
Published on Dec 10, 2018 at 2:57 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Intraday Option Activity
  • Analyst Update

The shares of Glu Mobile Inc. (NASDAQ:GLUU) are trading up 5.6% at $7.48, after Cowen and Company named the mobile app maker their best pick for 2019. The brokerage firm also raised its GLUU price target to $9.50 from $8 -- territory not charted since November 2007 -- saying the stock's current price discounts next year's launches, which include a Walt Disney (DIS) Pixar game.

As a result, GLUU options are in high demand today, with the contracts crossing at 1.3 times the average intraday pace. The December 8 call is most active, and it looks like new positions are being purchased here for a volume-weighted average price of $0.20. If this is the case, breakeven for the call buyers at the close next Friday, Dec. 21, is $8.20 (strike plus premium paid).

This call-heavy trading is reflective of the broader trend seen in GLUU's options pits, with call open interest of 56,336 contracts dwarfing put open interest of 11,596. The December 6 call is home to peak open interest of 10,503 contracts, the bulk of which were initiated in late October when the security was trading near $7.

Outside of the options arena, short sellers have been covering their bearish bets, with short interest down 17.9% in the most recent reporting period. There's more sideline cash available to fuel additional upside, with the 7.17 million shares still sold short accounting for a healthy 6.3% of GLUU's float.

It's been an impressive year for GLUU shares, which are up nearly 79% from their Dec. 31 close. The stock topped out at an 11-year high of $8.42 in early November, but have since pulled back to test support at their 50-day and 120-day moving averages. Below here is Glu Mobile's 180-day trendline, which has cushioned pullbacks since March 2017.

gluu stock daily chart on dec 10

 

Published on Dec 10, 2018 at 3:13 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move

The U.S. stock market has muscled its way back near breakeven, thanks to a rebound in tech shares. Three names in particular traders should monitor today are drugmaker MacroGenics Inc (NASDAQ:MGNX), boat maker Marine Products Corp. (NYSE:MPX), and truck manufacturer Navistar International Corp (NYSE:NAV). Let's take a closer look at what's moving shares of MGNX, MPX, and NAV.

MGNX Stock Hits All-Time Low

MGNX stock has dropped 23.8% today to trade at $12.51, landing on the short-sale restricted (SSR) list, after the Food and Drug Administration (FDA) put a partial hold on the company's Phase 1 trial for MGD009. Raymond James responded to the news with a downgrade to "underperform" from "outperform." MacroGenics shares earlier hit an all-time low of $11.16, and have now lost almost 62% since their March high of $32.74.

Additional bear notes could come through and pressure the equity even more, since nine of the 10 brokerage firms in coverage have "buy" or "strong buy" ratings. What's more, the average 12-month price target stands all the way up at $31.73.

Downgrade Smashes MPX Stock

MPX stock is trading down 23% at $16.81, due to a downgrade to "sell" from "neutral" at B. Riley FBR, which also lowered its price target to $16 from $19. The shares have fallen below their 200-day moving average for the first time since April, set for their lowest close since June. At the same time, they still sport a 32.5% year-to-date lead.

Today's losses come to the delight of short sellers, with short interest surging almost 73% in the past two reporting periods. More than 6% of Marine Products' float is held by shorts, and it would take them almost two weeks to cover, based on the average daily trading volume. Of course, the shares are on the SSR list today.

Goldman Downgrade Exacerbates NAV Slide

NAV shares earlier hit a 52-week low of $25.69, last seen trading down 5.9% at $27, after a downgrade to "sell" at Goldman Sachs, which slashed its price target to $23 from $43 -- the lowest on Wall Street. The brokerage firm is predicting a downturn in domestic truck production by the end of 2019. Navistar International stock had already been sliding under the pressure of its 20-day moving average since early September, with its year-over-year deficit coming in at 32%. A number of analysts have remained bullish, though, indicated by the security's average 12-month price target of $43.18.

Published on Dec 10, 2018 at 3:23 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stock Market News

Shares of GoPro Inc (NASDAQ:GPRO) traded mostly lower today, on news the company will be pulling production on cameras shipped to the U.S. out of China. Despite the 90-day trade truce between China and the U.S., the camera manufacturer has previously noted plans to be proactive amid increasing tariff concerns. At last check, GPRO stock was down 0.5% to trade at $4.94, though it briefly moved higher in afternoon trading.

GoPro stock is down 35% year-to-date, and has been in a channel of lower highs and lows since early October. The shares today fell as low as $4.76, within striking distance of their April 4 low of $4.42.

Analysts are wary of the camera manufacturer, with just one "strong buy" rating, compared to three "holds" and two "sells." What's more, the consensus 12-month price target of $6.93 still stands at a 40% premium to today's price. 

Several short sellers are likely cheering, too, with short interest up 3.4% in the last two reporting periods, accounting for nearly 35 million shares, or 30.9% or the stock's available float.  It would take over seven days, at GPRO's average daily trading volume, to repurchase all of their pessimistic positions.

Published on Dec 11, 2018 at 9:22 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Analyst Update

The shares of Entera Bio Ltd. (NASDAQ:ENTX) are up 26.3% in electronic trading, after the biotech name announced a licensing deal with Amgen (AMGN) to collaborate on oral treatments for inflammatory diseases and other serious illnesses. Entera will receive up to $270 million in milestone payments, and will retain all property rights to its oral drug delivery technology.

Today's premarket upside has ENTX stock eyeing its best day ever, and trading near the top of the Nasdaq today. The shares are set to open at their highest point since mid-October, though the shares remain well below Entera Bio's late-June initial public offering (IPO) price of $8 per share.

Analysts have been relatively quiet on the Wall Street newcomer. Currently, only one brokerage firm is covering the stock, rating it a "buy" and maintaining a $12 price target, more than double Monday's closing price of $5.49.

Published on Dec 11, 2018 at 9:40 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Travelers Companies Inc (NYSE:TRV) is trading up 0.9% this morning at $124.18, trying to overcome a bear note out of RBC. The brokerage firm downgraded the insurance giant to "sector perform" from "outperform" and dropped its price target to $133 from $143. Citing the California wildfires and Hurricane Michael, RBC lowered its fourth-quarter earnings-per-share estimates for TRV, and is expecting weak pricing and a slowing economy to act as headwinds going forward.

All the same, RBC's price target is a premium to the equity's Monday close of $123, as the blue chip has continued to struggle on the charts. It touched an annual low of of $119.74 back in late October, and breakout attempts have been thwarted by the 200-day moving average since late August. In fact, TRV has essentially been in a series of lower highs since peaking near $150 back in February.

These technical struggles have prompted even more skeptics to take action. Most notably, there's been unusual put buying on Travelers during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where the put/call volume ratio for that period stands at 6.20 -- high enough to rank in the 94th annual percentile. Said simply, many have been speculating on the stock moving lower.

Short interest has also been picking up. In the last reporting period, short interest on the security increased by 13.1%, though it still represents just 1.4% of the overall float. Considering this latter number, there's theoretically plenty of room for more short sellers to roll in, which would just add more pressure to TRV on the charts.

Published on Dec 11, 2018 at 10:02 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

Leerink initiated coverage on CVS Health Corp (NYSE:CVS) with an "outperform" rating and $100 price target -- a 36.4% premium to last night's close. The brokerage firm called concerns over the company's in-house pharmacy benefits manager (PBM) exaggerated, and waxed optimistic over CVS' cost savings forecast following its Aetna buyout.

In reaction, CVS stock has shot up 2.5% to trade at $75.15, bouncing off its year-to-date breakeven mark and rising 120-day moving average. This trendline served as a ceiling back in April, but more recently caught a late-October pullback alongside the stock's 200-day moving average. Longer term, CVS Health has gained 25% since its late-March lows near $60, though its Jan. 29 annual high of $83.87 has contained recent breakout attempts.

Most analysts remain bullish toward CVS, with 11 of 15 maintaining a "buy" or better rating at last night's close, and not a single "sell" on the books. Plus, the average 12-month price target sits all the way up at $93.

Elsewhere on Wall Street, skepticism has been growing toward the equity. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CVS' 10-day put/call volume ratio of 0.80 ranks in the 94th annual percentile. While this shows that calls have outpaced puts on an absolute basis, the rate of put buying has been faster than usual.

Meanwhile, short interest is up almost 82% year-to-date to 59.83 million shares -- the most since late 2007. These bearish bets account for nearly 6% of CVS Health stock's available float, or 7.7 times the average daily pace of trading.

Published on Dec 11, 2018 at 10:24 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Options Recommendations

Taco Bell parent Yum! Brands, Inc. (NYSE:YUM) has shown resiliency during the recent broad-market sell-off, with all pullbacks since mid-October neatly contained by the stock's rising 80-day moving average. What's more, the security found a new layer of support at its +10% year-to-date return during last week's retreat from its Dec. 3 record high at $93.24.

yum daily chart dec 7

 

In spite of YUM's technical tenacity, eight of the 14 analysts covering the stock maintain a lukewarm "hold" rating. This leaves the door open for upgrades, which could draw buyers to the table.

It's an attractive time to buy premium on YUM, too, per the stock's Schaeffer's Volatility Index (SVI) of 21% -- in the 23rd annual percentile, meaning short-term options are pricing in lower-than-usual volatility expectations. Plus, our internal quantitative data shows the combination of low implied volatilities and high stock price has had bullish implications for YUM shares in the past.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this YUM commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Published on Dec 11, 2018 at 10:53 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Quantitative Analysis
  • Indexes and ETFs
  • Editor's Pick

December -- a historically bullish month -- started out rough for U.S. stocks, amid mixed signals on U.S.-China trade relations, concerns about bond yields and oil prices, and a high-profile arrest, just to name a few reasons. In fact, the S&P 500 Index (SPX) was down 4.44% as of yesterday's close, which marked the fifth trading session of the month, since Wall Street was shuttered last Wednesday, Dec. 5, to mourn President George H.W. Bush. That marks the worst December start for the stock market in decades.

Since 1950, there have been just eight other times when the SPX was down at least 2% in the first five sessions of December, per Schaeffer's Senior Quantitative Analyst Rocky White. The last time was 10 years ago, in December 2008, when the index was down 2.25% and U.S. stocks were in the throes of the financial crisis. This year's start marks the worst since December 1980. For context, December has historically been the best month of the year, looking at returns since 1950, with the index averaging a gain of 1.61%, and higher 75% of the time.

SPX bad December starts

However, as you can see on the chart above, the SPX went on to enjoy positive rest-of-month returns every time but once, back in December 2002. Even in December 2008, the index posted a 3.1% return the rest of the month.

In fact, the worse December begins for stocks, the better it seems to end. Below you'll find S&P 500 December stats based on performance during the first five trading sessions. When the stock market barometer is down 2% or more, as it is now, it's went on to average a rest-of-month return of 1.65%, and was higher 88% of the time. That's much better than the other scenarios. For instance, when the index was up 2% or more to start the month, it averaged a rest-of-December gain of 0.9%, and was higher just 50% of the time.

SPX rest-of-month December returns

In conclusion, bulls shouldn't give up hope for a Santa Claus rally. Bad starts to December typically end up resolving to the upside, not to mention the second half of the month has been the best time to own stocks, historically. From a technical standpoint, though, traders should watch the S&P's movement between the 2,600 and 2,800 levels for clues to future price action, per Schaeffer's Senior V.P. of Research Todd Salamone.

Published on Dec 11, 2018 at 11:28 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

News that Tivity Health (TVTY) bought NutriSystem (NTRI) helped Weight Watchers International, Inc. (NASDAQ:WTW) stock snap a three-day losing streak yesterday. What's more, an analyst at DA Davidson said that based on the same valuation metrics of the NTRI deal, WTW stock is undervalued by 15% to 36%. Further, the analyst reiterated a "buy" endorsement and $137 price target, saying a "successful diet season outcome" could lift the shares when Weight Watchers reports earnings in February.

At last check, WTW shares were up 1.6% to trade at $49.94. The stock has been trading in a series of lower highs and lows since its record peak of $105.72 in mid-June. Its deep decline, facilitated by two dramatic bear gaps, has slashed the equity in half since then. More recently, the stock has been trading in the $45-$55 range since the November bear gap, attempting to stay north of its year-to-date breakeven marker at $44.28. 

Despite the equity's struggles in the second half of 2018, most analysts are already optimistic toward WTW. Eight of 10 analysts issue a "strong buy" rating, with not a single "sell" in sight. Weight Watchers stock has a ways to go before it hits analysts' consensus 12-month price target of $91.92, which stands at nearly an 85% premium to current levels. 

However, near-term options traders have taken a much more pessimistic stance lately. WTW's Schaeffer's put/call open interest ratio (SOIR) of 4.04 sits in the high 87th percentile of its annual range, showing put open interest quadruples call open interest among options expiring in the next three months. The lofty percentile suggests short-term traders have rarely been this put-heavy on Weight Watchers during the past 12 months.

 

 

Published on Dec 11, 2018 at 11:33 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update

The shares of Acorda Therapeutics Inc (NASDAQ:ACOR) are spiraling today, after Goldman Sachs downgraded the drug stock to "sell" from "neutral," and nearly halved its price target to $10 from $19 -- a roughly 50% discount to last night's close, and the lowest target on Wall Street. The brokerage firm expects Ampyra revenue to ease as generics for the multiple sclerosis drug hit the market, and sees lower-than-anticipated U.S. sales for ACOR's Parkinson's drug, Inbrija.

At last check, ACOR is trading down 15.1% at $16.16, set for its worst day since Sept. 10 -- when news of a regulatory hurdle for Inbrija sent the shares tumbling more than 24%. The security has now sliced through recent support in the $17 region, home to its negative 20% year-to-date return, and is closing in on its Sept. 13 annual low of $15.60.

acor stock daily chart on dec 11

Against this backdrop, it's not hard to see why most analysts are already bearish on Acorda Therapeutics. However, two of eight brokerages still maintain a "strong buy" rating on the stock, and the average 12-month price target sits all the way up at $22.11 -- suggesting more negative analyst notes could come down the pike.

Elsewhere, short sellers have been actively targeting ACOR stock, which has likely increased pressure on the shares. Short interest is up 88.5% from the Sept. 1 reporting period to 8.03 million shares -- the most in over a year. These bearish bets accounts for 17.2% of the equity's available float, or 11.5 times the average pace of trading. Shorts are sidelined at the moment, though, with Acorda Therapeutics short-sale restricted during today's bear gap.

Published on Dec 11, 2018 at 12:04 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Analyst Update

The struggles of Amazon.com, Inc. (NASDAQ:AMZN) and its FAANG peers were well-documented amid the broad market sell-off. Today, though, AMZN is up 0.9% to trade at $1,654, after Cowen named the stock its best idea for 2019. More specifically, the brokerage firm waxed optimistic about the company's Prime and Amazon Web Services businesses, citing the former as the driver behind the long-term success of the company's retail business. 

As alluded to earlier, Amazon.com stock was not spared from the October bloodshed on Wall Street, shedding nearly 17% this quarter in total. However, the damage was contained late last month by the shares' 320-day moving average. AMZN has bounced since then, breaking out of a trendline of lower lows that started after its Sept. 4 record high of $2,050.50.

Daily Stock Chart AMZN

In the options pits, calls are still the preferred mode of action. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows AMZN with a 10-day call/put volume ratio of 1.25, which registers in the elevated 75th percentile of its annual range. This points to a healthier-than-usual appetite for bullish bets lately. Digging deeper, the weekly 12/14 1,700-strike call saw the largest increase in open interest during this time frame among contracts yet to expire, although it's unclear if these options were bought or sold. 

Whatever the motive, Amazon stock has been a strong target for premium buyers over the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 87 (out of 100). This shows a tendency for the stock to make bigger-than-expected moves over the past year relative to options traders' expectations.

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