Buzz Stocks: Orbital Sciences Corp, Sanofi, and ADRC

Today's stocks to watch include ORB, SNY, and ARCP

Oct 29, 2014 at 9:16 AM
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Futures are little changed this morning, as investors await this afternoon's policy statement from the Federal Open Market Committee (FOMC). Among specific equities on the radar are rocket manufacturer Orbital Sciences Corp (NYSE:ORB), healthcare company Sanofi SA (ADR) (NYSE:SNY), and real estate investment trust American Realty Capital Properties Inc (NASDAQ:ARCP).

  • ORB is bracing for a 15% drop out of the gate, after an unmanned rocket ship that it built and launched exploded shortly after lift off. Orbital Sciences Corp -- which is currently in the process of merging with Alliant Techsystems Inc. (NYSE:ATK) -- has tacked on 30.3% year-to-date to trade at $30.37, and option traders have responded in kind. Over the past 20 sessions, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 5.80 calls for every put. With 9.2% of the stock's float sold short, though, a portion of this call buying may have been at the hands of short sellers hedging their bearish bets against any additional upside.

  • After plunging 9% yesterday to close at $48.07 on a revenue warning, SNY is poised to drop an additional 6% at the open following reports its board has unanimously voted to oust CEO Christopher A. Viehbacher. "There was a lack of trust, the relationship wasn't close enough," said Chairman Serge Weinberg, who will step into the role on an interim basis. The news was met with a handful of bearish brokerage notes, including one from Morgan Stanley, which cut its outlook to "equal weight" from "overweight" and reduced its price target to 82 euros from 95 euros. Should Sanofi SA (ADR) continue to struggle, an additional round of downgrades and/or price-target cuts could be on the horizon. At present, 60% of covering analysts maintain a "strong buy" rating on the shares, and the consensus 12-month price target of $61.77 stands at a 28.5% premium to current trading levels.

  • After uncovering incorrect financial statements, ARCP announced it is replacing both its chief financial officer and chief accounting officer, sending shares 21% lower ahead of the bell. "The audit committee believes that this error was identified but intentionally not corrected, and other AFFO and financial statement errors were intentionally made." Heading into today's session, the stock was wallowing 3.7% below its year-to-date breakeven line, and closed last night at $12.38. Option traders were keeping the faith, though, as evidenced by the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 54.17. Echoing this is American Realty Capital Properties Inc's Schaeffer's put/call open interest ratio (SOIR) of 0.16, which ranks lower than 98% of similar readings taken in the past year. In other words, short-term speculators have rarely been as call-heavy on the stock as they are now.

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