Buzz Stocks: International Business Machines Corp., Microchip Technology Inc., and Puma Biotechnology Inc

Today's stocks to watch in the news are IBM, MCHP, and PBYI

by Karee Venema

Published on Dec 3, 2014 at 9:33 AM
Updated on Apr 20, 2015 at 5:32 PM

Markets are sticking close to the flatline this morning, ahead of a busy economic day. Meanwhile, among specific equities to watch are IT giant International Business Machines Corp. (NYSE:IBM), semiconductor specialist Microchip Technology Inc. (NASDAQ:MCHP), and drugmaker Puma Biotechnology Inc (NYSE:PBYI).

  • IBM said it has signed a seven-year, $1.25 billion deal with London-based advertising firm WPP, in which the former will provide cloud infrastructure services to the latter. This continues a recent string of collaborations by Big Blue, with more on the horizon, according to IBM's general manager for strategic outsourcing in Europe. On the charts, International Business Machines Corp. is staring at a 13.3% year-to-date deficit, and closed Tuesday at $162.67. However, option traders have kept the faith. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), IBM's 50-day call/put volume ratio of 1.67 ranks in the 99th annual percentile, meaning calls have been bought to open over puts with more rapidity just 1% of the time within the past year.

  • MCHP upped its fiscal third-quarter guidance, saying it expects a 2% to 5% sequential decline in net sales, versus its previous forecast of a 2% to 7% drop. Additionally, the company raised the lower end of its profit range by 1 penny to 60 cents. The news was met with a price-target hike to $52 from $48 at Susquehanna, with the brokerage firm underscoring its "positive" rating. In October, the stock plunged after issuing an industry warning, but has rallied nearly 12% from its Oct. 10 close at $39.96 to trade at $44.65. Should Microchip Technology Inc. extend this uptrend, another round of bullish brokerage notes could be on the horizon. At present, 71% of covering analysts maintain a tepid "hold" recommendation, and the consensus 12-month price target of $47.96 sits just 7.4% above last night's closing price.

  • PBYI has plunged 15% right out of the gate to $191.50, after saying it will postpone filing for marketing approval of its experimental breast cancer drug -- PB272 -- until early 2016. Adding to the bearish bias is a price-target cut at UBS to $290 from $325 at UBS, although the brokerage firm reiterated its "buy" rating. This morning's price move represents a change of pace for the stock, which had more than doubled in value in 2014 heading into today's session. Surprisingly, sentiment has been tilted toward the bearish side, as evidenced by the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 50.14, which ranks higher than all other readings taken in the past year. Although some of this put buying may have been at the hands of shareholders protecting paper profits, this skepticism toward Puma Biotechnology Inc is witnessed outside of the options pits, as well. Specifically, short interest accounts for 9.6% of the security's available float, and would take nearly six sessions to cover, at average daily trading levels.

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