Buzz Stocks: AbbVie Inc, EMC, and QUALCOMM

Today's stocks to watch in the news include ABBV, EMC, and QCOM

Oct 15, 2014 at 9:20 AM
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U.S. stocks are pointed lower ahead of the bell, as traders digest lackluster economic data and news of another Ebola case in the U.S. On the M&A front, today's stocks to watch include pharmaceutical firm AbbVie Inc (NYSE:ABBV), as well as tech issues EMC Corporation (NYSE:EMC) and QUALCOMM, Inc. (NASDAQ:QCOM).

  • ABBV is dominating pre-market headlines, after the firm said it's reconsidering its takeover of U.K. peer Shire PLC (ADR) (NASDAQ:SHPG) in the wake of Uncle Sam's attempts to curb tax inversions. Should ABBV abandon its bid -- and analysts at Bernstein think there's a 75% chance it will -- the firm would be on the hook for about $1.6 billion in breakup fees to SHPG, and some believe a U-turn could have broader implications for overseas M&A. AbbVie Inc's board will meet to discuss the merger on Monday, Oct. 20. Against this backdrop, ABBV shares are pointed 4.6% lower ahead of the bell, after settling at $54.13 on Tuesday, likely much to the delight of short sellers. Short interest increased by more than 19% during the past two reporting periods, and represents nearly nine sessions' worth of pent-up buying demand, at the stock's average pace of trading.

  • EMC is headed 1.2% lower, after landing at $27.61 on Tuesday, as traders weigh reports that Hewlett-Packard Company (NYSE:HPQ) has ended merger talks between the two. The shares of EMC Corporation are up nearly 10% in 2014, but have tumbled in step with the broader equities market of late, and are now testing support atop their 32-week moving average. The company will unveil its quarterly earnings before the open on Wednesday, Oct. 22, and if history is any indicator, the shares could stage a retreat. During the past eight quarters, EMC has averaged a one-week post-earnings loss of 1.3%. Nevertheless, analysts remain optimistic, with 21 out of 25 offering up "buy" or better endorsements.

  • Finally, QCOM is modestly lower in pre-market action, on news the company will pay $2.5 billion for British chipmaker CSR Plc, trumping rival Microchip Technology Inc. (NASDAQ:MCHP). A negative reaction on the charts would bode well for the recent crop of QUALCOMM, Inc. option bears, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.69 sits just 8 percentage points from an annual high. In other words, short-term options players have rarely been more put-biased during the past year. Technically speaking, QCOM has surrendered 3.2% in 2014, and is currently perched at $71.86, just north of its 20-month moving average.

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