Buzz Stocks: Biogen Inc, VMware, Inc., and Netflix, Inc.

Today's stocks to watch include Biogen Inc (BIIB), VMware, Inc. (VMW), and Netflix, Inc. (NFLX)

by Alex Eppstein

Published on Jan 27, 2016 at 9:29 AM

Updated on Jun 24, 2020 at 10:16 AM

U.S. stocks are bracing for a beat-down, due to a slide in crude oil and a mostly bad batch of earnings. Among the equities in focus are drugmaker Biogen Inc (NASDAQ:BIIB), virtualization firm VMware, Inc. (NYSE:VMW), and streaming content provider Netflix, Inc. (NASDAQ:NFLX).

BIIB is soaring ahead of the bell, after the biotech reported better-than-expected fourth-quarter earnings, thanks to strong demand for its multiple sclerosis treatment Tecfidera. Specifically, the stock is 5.5% higher in pre-market trading -- a welcome respite for Biogen Inc, which at $259.87 has already surrendered more than 15% in 2016. The expected boost should be a boon to call buyers, too. During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.75 calls for every put -- with a resultant call/put volume ratio that ranks in the 87th percentile of its annual range.

By contrast, VMW is poised for a post-earnings slump, down 7.7% ahead of the open -- and on pace to open at a near-six-year low. While the tech firm's quarterly results edged out the Street's consensus view, the shares are being pressured by a weak 2016 forecast. In related news, VMware, Inc. plans to cut 800 positions as parent company EMC Corporation (NYSE:EMC) prepares to acquire Dell. On the sentiment front, VMW is getting panned, with Summit Research and Baird cutting their ratings to the equivalent of a "hold." Plus, they were among a group of at least nine analysts to slash their price targets on the stock, with Summit moving its expected price to $40 from $80, a nearly 19% discount to last night's settlement at $49.28. Meanwhile, short sellers are likely in celebration mode, considering 17.3% of VMW's float is sold short -- or about two weeks' worth of trading activity, at typical volumes.

NFLX's plans to expand throughout Asia have hit a snag, as Indonesian telecom provider PT Telekomunikasi Indonesia has decided to block the service, citing the company's lack of regulatory compliance and concerns about adult content. As such, Netflix, Inc. is bracing for a 1.1% drop at the open -- a relatively minor setback, considering the shares have advanced almost 55% year-over-year to trade at $97.83. Should the stock shrug off this morning's likely speed bump and resume its long-term uptrend, additional short sellers could be forced to the exits. Specifically, it would take about one week to buy back the 48 million NFLX shares sold short, at average daily volumes, hinting at ample buying power sitting on the sidelines.

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