Buzz Stocks: Morgan Stanley, Weight Watchers International, Inc., and PMC-Sierra Inc

Today's stocks to watch include Morgan Stanley (MS), Weight Watchers International, Inc. (WTW), and PMC-Sierra Inc (PMCS)

Oct 19, 2015 at 10:19 AM
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U.S. benchmarks are lower this morning, as Wall Street reacts to the latest disappointing economic news out of China. Today's equities in focus are financial holding company Morgan Stanley (NYSE:MS), dietary specialist Weight Watchers International, Inc. (NYSE:WTW), and semiconductor concern PMC-Sierra Inc (NASDAQ:PMCS).

  1. MS is 6.6% lower at $31.71 this morning, after the company's quarterly profit came up well short of the Street's expectations -- much like sector peer Goldman Sachs Group Inc (NYSE:GS) last week. The banking interest blamed the shortfall on fears concerning the timing of a planned U.S. interest rate hike and concerns about China's economy. Technically, the shares have lost 23% since hitting a seven-year high of $41.04 in late July. Digging deeper, the stock today slipped below its previously supportive 20-day moving average, which could now act as resistance. Option players have grown bearish in light of Morgan Stanley's recent struggles, as the firm's 50-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 1.36 ranks higher than 97% of the readings taken in the past 52 weeks.
  • WTW has rocketed almost 80% higher out of the gate, trading at $12.21 after billionaire Oprah Winfrey dished out $43.2 million for a 10% stake in the company. Winfrey will also join Weight Watchers International, Inc.'s board. As part of the deal, the firm entered into a five-year agreement with Winfrey to use her name, image, and likeness to endorse the company and its products, subject to her approval. WTW has been a technical laggard this year, losing half its value. Bearish option players and short sellers have jumped in. Currently, 57% of the equity's float is sold short, and it would take over 15 days to buy back these shorted shares, at WTW's average daily trading volume. In addition, WTW's 10-day ISE/CBOE/PHLX put/call volume ratio of 29.94 indicates long puts have been initiated over long calls at a nearly 30-to-1 pace. This reading stands at a 52-week high.
  • PMCS has attracted Microsemi Corporation (NASDAQ:MSCC) as a suitor, garnering a roughly $2.2-billion buyout offer -- topping Skyworks Solutions Inc's (NASDAQ:SWKS) $2 billion proposal. PMC-Sierra Inc gapped higher on the latest offer to a nine-year peak of $11.73, and is now up 14.4% at $11.71. On Wall Street, the brokerage bunch has been quite skeptical of the stock, doling out nine "hold" or worse recommendations, versus just two "strong buys." Given this morning's show of technical strength -- which has PMCS up more than 27% in 2015 -- a round of upgrades could be just around the corner.

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