Buzz Stocks: Tesla, Adobe Systems, and Baidu

Today's stocks to watch in the news are TSLA, ADBE, and BIDU

Dec 12, 2014 at 9:02 AM
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Futures are lower this morning, as crude gets dealt another blow. Meanwhile, among specific stocks to watch are electric car maker Tesla Motors Inc (NASDAQ:TSLA), software specialist Adobe Systems Incorporated (NASDAQ:ADBE), and Beijing-based Internet issue Baidu Inc (ADR) (NASDAQ:BIDU).

  • TSLA's president of its China operations, Veronica Wu, has resigned. Wu has been on the job for less than nine months, and will be replaced by Tom Zhu, who currently leads the charging network development division in China. Although TSLA is sporting a nearly 39% year-to-date gain, the stock has struggled in recent weeks. In fact, since hitting its most recent high of $259.99 on Nov. 18, shares of Tesla Motors Inc have shed 19.7%, and closed last night at $208.88. This is likely music to the ears of options traders, who have been initiating long puts over calls at a rapid-fire rate. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, TSLA's 10-day put/call volume ratio of 1.09 ranks just 2 percentage points from an annual bearish peak.

  • ADBE is ready to rally 5% out of the gate, after the company announced better-than-expected fiscal fourth-quarter earnings, as well as the $800 million all-cash acquisition of Fotolia -- a "microstock" firm that specializes in photo licensing. Wall Street has taken kindly to the news, with ADBE receiving no fewer than five price-target hikes. The most generous outlook came from Jefferies, which boosted its target by $7 to $90 -- and underscored its "buy" rating -- representing expected upside of 29% to yesterday's close at $69.74, as well as a trek into uncharted territory. Heading into today's session, shares of Adobe Systems Incorporated were already up an impressive 16.5% year-to-date, yet traders have shown a preference for puts over calls among options slated to expire in three months or less. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.98 ranks in the 68th annual percentile, meaning short-term speculators are more put-heavy than usual toward ADBE.

  • BIDU is buying a minority stake in car-booking service Uber Technologies Inc. According to reports, the roughly $600 million investment will provide Uber with cash, as well as exposure to BIDU's online resources in China. On the charts, BIDU has had a standout year, advancing nearly 29% to its current perch at $229.23. More recently, Baidu Inc (ADR) has been consolidating near its 50-day moving average, after hitting a record peak of $251.99 in mid-November. As such, sentiment is tilted toward the bullish side. In the options pits, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.13 ranks higher than 84% of similar readings taken in the past year. Elsewhere, all 13 analysts covering the shares maintain a "strong buy" rating, and the consensus 12-month price target of $271.55 stands at an 18.5% premium to Thursday's closing price.


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