Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jan 25, 2023 at 11:47 AM
  • Midday Market Check
 
Published on Jan 25, 2023 at 11:12 AM
  • Intraday Option Activity
  • Buzz Stocks

Options traders are chiming in as well, with 250,000 calls and 254,000 puts across the tape so far, which is three times the average intraday volume. Most popular is the weekly 1/27 230-strike put, followed by the 225-strike put in the same series, with positions currently being opened at both. 

 
Published on Jan 25, 2023 at 11:06 AM
Updated on Jan 25, 2023 at 11:06 AM
  • Buzz Stocks

No fewer than four analysts have raised their price targets on Raytheon Technologies Corp (NYSE:RTX) following yesterday morning's fourth-quarter report. The aerospace giant reported better-than-expected earnings thanks to recovering global air traffic and higher global defense budgets, though revenue missed estimates. 

RTX is down 1.5% to trade at $98.03 despite these bull notes, after yesterday soaring to a record high of $108.84 before settling with a more modest gain. Year-over-year, the equity is up 8.4%. 

The majority of analysts are already bullish on Raytheon Technologies stock, with eight of the 12 in coverage carrying a "buy" or better rating. After these price-target hikes, the 12-month consensus price target of $107.35 is a 9.5% premium to current levels. 

Calls have been more popular than usual of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), RTX's 10-day call/put volume ratio of 4.19 ranks higher than 86% of readings from the past year. 

Published on Jan 25, 2023 at 9:11 AM
Updated on Jan 25, 2023 at 9:25 AM
  • Opening View

Dow futures are down 287 points ahead of the open, while the Nasdaq-100 Index (NDX) eyes a triple-digit drop as well, and the S&P 500 Index (SPX) sit firmly in the red. Investors are still sifting through earnings, with all eyes on Microsoft's (MSFT) post-earnings plunge, following a dismal forecast for its current quarter. 

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

  • Schaeffer's Senior Quantitative Analyst Rocky White unpacks this S&P 500 signal
  • Zscaler stock could suffer a short-term pullback. 
  • Plus, BA drops after earnings; ENPH sees bear notes; and OMC's investor news.

Futures Jan25

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.1 million call contracts and 758,093 contracts traded on Tuesday. The single-session equity put/call ratio fell to 0.68 and the 21-day moving average stayed at 0.81.
  2. Boeing Co (NYSE:BA) is down 2.4% premarket, after the airliner reported lower-than-expected fourth-quarter results, despite also announcing its first positive free cash flow since 2018, as demand recovered. Heading into today, BA is up 11.3% for 2022. 
  3. Piper Sandler downgraded Enphase Energy Inc (NASDAQ:ENPH) to "neutral" from "overweight," with a steep price-target cut to $255 from $350, citing a potential reset in the U.S. solar market in 2023. BofA Global Research also slashed its price target to $236 from $277. ENPH is down 4.3% in electronic trading, but remains up 71.3% year-over-year.
  4. Omnicom Group Inc (NYSE:OMC) is up 1.9% before the bell, after news that BlackRock added to its stake in the company, making its holding 9.4%. Year-over-year, the equity is up 13.9%. 
  5. There are no notable economic indicators scheduled for today.

buzzjan25

European Markets Eye German Economic Data

While stocks in China and Hong Kong are still closed for the Lunar New Year Holiday, markets in South Korea and Japan snagged crucial wins. South Korea’s Kospi added 1.4%, led by gains in the tech sector on expectations of a slower pace of rate hikes. The Nikkei in Japan, meanwhile, logged its fourth-straight win after tacking on 0.4%, holding above the psychologically significant 27,000 level.

The major bourses in Europe are lower this afternoon, despite upbeat German business sentiment data. The widely watched Ifo Institute survey showed the Business Climate Index rose to 90.2 points, signaling “considerably less pessimistic expectations.” Still, Germany’s DAX and France’s CAC 40 are both 0.4% lower at last check, while London’s FTSE 100 is down 0.2%.

Published on Jan 25, 2023 at 9:17 AM
  • Buzz Stocks
  • Analyst Update

Barclays downgraded Sunrun Inc (NASDAQ:RUN) and SunPower Corporation (NASDAQ:SPWR) this morning, noting it expects growth for residential solar companies to slowdown in 2023 and 2024. The Wall Street broker is especially wary of Sunrun and SunPower, both of which could face headwinds following the withdrawal of a rooftop solar incentive in California -- where roughly 50% of both companies' growth stems from.

The analyst in coverage downgraded RUN to "equal weight" from "overweight" and cut its target price to $35 from $44. There's room for analysts' optimism to unwind too, considering 14 of 17 in coverage recommend a "buy" or better. SPWR was downgraded to "underweight" from "equal weight," with a price-target cut to $18 from $26. Conversely to its sector peer, the majority of analysts are pessimistic towards SunPower stock, with 14 of 16 rating it a "hold" or worse.

In response to the downgrade, Sunrun stock is 4.4% lower to trade at $24.95 before the opening bell. Should it hold, this negative price action will drag RUN closer to its year-to-date breakeven mark, and add to its 3.5% year-over-year deficit. SunPower stock is down 5.3%, trading at $15.36 premarket. The shares sport a marginal 12-month deficit, but could potentially add to an already significant 10% year-to-date loss

Published on Jan 25, 2023 at 8:39 AM
  • Indicator of the Week
 
Published on Jan 24, 2023 at 4:27 PM
  • Market Recap

The Dow added 104 points on Tuesday, brushing off disappointing guidance from 3M (MMM) and a New York Stock Exchange (NYSE) technical glitch that impacted several blue chips. The S&P 500 closed slightly below breakeven despite struggling for direction for most of the session, while the Nasdaq settled firmly lower, with Microsoft (MSFT) set to report earnings after the bell.

In addition to monitoring the earnings season, traders also unpacked S&P Global flash readings that pointed to contracting manufacturing and services activity in January, though both indexes rose on a monthly basis.

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

  • Checking in with American Airlines stock.
  • This rideshare stock scored a fresh upgrade.
  • Plus, unpacking Lockheed Martin's earnings beat; retail stock downgraded; bearish signal flashing for ZS.

Closing Index Summary January 242023

 NYSE and Nasdaq Stats January 242023

5 Things to Know Today 

  1. The Department of Justice (DOJ) filed a second antitrust lawsuit against Alphabet (GOOGL) in just over two years, targeting its online advertising business. (CNBC)
  2. Germany will reportedly send Leopard 2 tanks to Ukraine to help fight Russia's invasion, while the United States could soon supply Abrams tanks. (Reuters
  3. Quarterly win boosted Lockheed Martin stock.
  4. Analysts warns of impending reset for retail name.
  5. Here's why Zscaler stock could tumble once again.

Earnings January 242023

Unusual Options Activity January 242023

Gold, Oil Prices Moving in Opposite Directions

Oil prices settled sharply lower on Tuesday, following the latest manufacturing and service sectors pointed to contraction, as well as a round of disappointing earnings reports. March-dated crude dropped $1.49, or 1.8%, to settle at $80.13 per barrel.

Meanwhile, gold prices scored a fourth consecutive gain to settle at their highest level since April. Recession fears and the prospect of a less hawkish Federal Reserve also boosted the safe-haven metal. February-dated gold rose $6.80, or roughly 0.4%, to settle at $1,935.40 per ounce.

Published on Jan 24, 2023 at 2:16 PM
  • Quantitative Analysis
  • Editor's Pick

Subscribers to Chart of the Week received this commentary on Sunday, January 22.

Google parent Alphabet Inc (NASDAQ:GOOGL) has joined the growing list of tech behemoths that are initiating sizable layoffs. CEO Sundar Pichai explained it by noting that the company had previously hired for “a different economic reality than the one we face today.” Some of the other big names taking the initiative toward laying off workers are Amazon.com (AMZN), Microsoft (MSFT), and Facebook parent Meta Platforms (META). It’s not just Big Tech, either; Salesforces (CRM), crypto-adjacent Coinbase (COIN), and even niche companies like Teladoc (TDOC) are all cutting costs by reducing their workforce.

GOOGL is also making noise in the options pits, appearing on Schaeffer’s Senior Quantitative Analyst’s list of S&P 400 (SP400) stocks that have attracted the highest weekly options volume within the last two weeks. Per White, Alphabet stock saw 1,883,919 calls and 2,414,110 puts exchanged over this 10-day period. The most popular was the January 2023 107.50 put, followed by the 125 put in the same series. As of this writing, GOOGL was last seen trading up 4% at $96.83.

MAOCotw

On Friday, GOOGL gapped higher on the heels of the layoff news, breaking above the long-term downtrend line that began at the equity’s February 2022 record peak of $151.54. Back in a supportive stance is the 80-day moving average, which has been a ceiling for the shares during the past several months but performed as long-term support in early 2021. Friday’s bull gap also has the shares sporting a nearly 10% year-to-date lead.

CotwGOOGLJan20

Data out of the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is showing more of a preference for calls in the longer term, which means Friday’s outperformance could be short-lived, should this bullish sentiment unwind. GOOGL’s 50-day call/put volume ratio comes in at 2.22, which is twice the amount of puts traded in the past 10 weeks and ranks in the 97th annual percentile.

In conclusion, while the barrage of layoffs may have a positive short-term outlook for the tech companies and their respective stock performance, a careful consideration of the risk v. reward is recommended when buying for the long term.

Published on Jan 24, 2023 at 2:07 PM
  • Earnings Preview
 
Published on Jan 24, 2023 at 1:12 PM
  • Quantitative Analysis

Software stock Zscaler Inc (NASDAQ:ZS) has recovered nicely from its early January rut near the $105 level -- a more than two-year low. The shares have added 10.5% already this year, with the bulk of this price action occurring over the last two sessions. However, this recent pop has Zscaler stock trading near a historically bearish trendline.

More specifically, ZS just came within one standard deviation of its 60-day moving average after a lengthy stretch below the trendline. For the purpose of this study, Schaeffer's Senior Quantitative Analyst Rocky White defines that as the equity trading below the moving average for 80% of the time over the past two months, and closing south of the trendline in eight of the last 10 sessions.

According to White's data, five similar signals have occurred during the past three years. Zscaler stock was lower one month later after 80% of these signals, averaging a one-month loss of 5.9%. A similar move from the security's current perch would put ZS just above $116. 

ZS Chart January 242023

The security recently notched a bear note, with Deutsche Bank cutting its target price to $140 from $190. What's more, JPMorgan Securities initiated coverage with a "neutral" rating and a $124 target price. Of the 32 in coverage, 22 still say “buy” or better, and the equity’s 12-month consensus price target of $170.29 is a 37.7% premium to current levels, both of which indicate more bear notes could soon roll in.

ZS’ Schaeffer's Volatility Scorecard (SVS) is incredibly low right now, sitting at 24 out of 100. In simpler terms, Zscaler stock is a prime selling candidate. 

Published on Jan 24, 2023 at 11:57 AM
  • Midday Market Check
 
Published on Jan 24, 2023 at 11:08 AM
  • Options Recommendations
 

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