Buzz Stocks: ON Semiconductor, Gilead, Weatherford

Today's stocks to watch in the news are ONNN, GILD, and WFT

Dec 1, 2014 at 9:39 AM
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Markets are being pressured lower this morning by a downgrade to Japan's credit rating, as well as a continued sell-off in commodities. Among specific equities in focus are LED specialist ON Semiconductor Corp (NASDAQ:ONNN), drugmaker Gilead Sciences, Inc. (NASDAQ:GILD), and oil-and-gas issue Weatherford International Plc (NYSE:WFT).

  • ONNN is up nearly 5% right out of the gate, as traders cheer the company's new $1 billion stock buyback program. "We believe that at current levels, our stock offers compelling value, and therefore the repurchase program should deliver substantial value to our shareholders," said CEO Keith Jackson. Heading into today's session, ON Semiconductor Corp was enjoying an impressive 27.4% year-over-year gain, but has failed to make any notable moves into double-digit territory. That hasn't stopped analysts from taking a glass-half-full approach toward ONNN, with more than 71% of those covering the stock maintaining a "buy" or better rating. Plus, the consensus 12-month price target of $10.69 stands at an 13% premium to the stock's current perch at $9.44, and sits in territory not charted since July 2011.

  • GILD has unveiled a freshly inked partnership with Mylan Inc (NASDAQ:MYL), with the former allowing a subsidiary of the latter to manufacture and distribute its HIV drug tenofovir alafenamide -- pending approval from the Food and Drug Administration (FDA) -- in 112 countries. On the charts, Gilead Sciences, Inc. has rallied more than 33% in 2014, and hit a record peak of $116.83 in late October, before easing back to its current perch at $100.26. In spite of this technical tenacity, put players have been active in the stock's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.46 ranks in the bearishly skewed 72nd percentile of its annual range. Plus, GILD's Schaeffer's put/call open interest ratio (SOIR) of 1.04 arrives higher than 78% of similar readings taken in the past year. Simply stated, short-term speculators are more put-biased than usual.

  • Lubrizol -- a division of Warren Buffett's Berkshire Hathaway Inc. (NYSE:BRK.A) -- said it will purchase a pair of units from WFT for a minimum of $750 million. It's been a tough ride for shares of WFT lately, due to the steep sell-off in crude, and in November alone, the equity shed 20% to close Friday at $13.10. Option traders have kept the faith, though, as evidenced by the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 10.76, which ranks just 6 percentage points from a 52-week peak. Meanwhile, those purchasing Weatherford International Plc's front-month options are willing to pay a pretty penny. Specifically, the security's Schaeffer's Volatility Index (SVI) of 55% rests above 86% of similar readings taken in the past year, meaning premium on WFT's December-dated options is relatively expensive at the moment.

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