Early Edge: Lumber Liquidators, Zoetis, SodaStream

Lumber Liquidators Holdings Inc (NYSE:LL), Zoetis Inc (NYSE:ZTS), and SodaStream International Ltd. (NASDAQ:SODA) are all making headlines

May 10, 2016 at 10:13 AM
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Headlines are hitting Wall Street in a flurry this morning, with a dismal sales forecast weighing on one notable retail stock and a big quarterly loss sending shares of Elon Musk's other company plunging. Also edging their way into the spotlight are flooring specialist Lumber Liquidators Holdings Inc (NYSE:LL), veterinary drug company Zoetis Inc (NYSE:ZTS), and carbonated beverage concern SodaStream International Ltd. (NASDAQ:SODA).

  • Although LL recently won a tentative ruling over cancer-related flooring claims, the firm posted a wider-than-expected first-quarter loss and a fourth-straight quarterly drop in sales. What's more, Lumber Liquidators Holdings Inc -- which said it expects legal costs to remain "elevated in the foreseeable future" -- suspended its stock buyback program. As such, the shares have plunged 13.6% out of the gate to $11.62, bringing their year-to-date deficit to 33%. Options traders are likely cheering, considering the stock's weekly 5/13 12-strike put has seen the biggest rise in open interest over the past 10 sessions -- with the majority of the action of the buy-to-open kind.

  • Bill Ackman is continuing to try and ease the pain Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has caused his portfolio. Specifically, after recently reducing its stake in one snack maker, the activist investor's Pershing Square Capital Management is reportedly looking to sell roughly 16.85 million shares of ZTS for about $800 million -- leaving the hedge fund with about 25 million shares of the company. At last check, ZTS was down 2% at $46.57. Longer term, the shares are clinging to a 1% year-over-year lead, with rallies repeatedly rejected in the $48-$50 region over the past 52 weeks. Options traders are keeping the faith on a round-number breakout, though, and have initiated new long positions at Zoetis Inc's June 50 call over the last two weeks.

  • After closing a dime below its 200-day moving average on Monday, SODA has popped 13.2% to $16.67 -- taking a commanding lead over a trendline that's contained the stock for most of the past 12 months. Helping to boost the shares is SodaStream International Ltd.'s stronger-than-forecast first-quarter earnings, with CEO Daniel Birnbaum projecting the firm's "growth plan ... will lead to increased profitability and greater shareholder value over the long-term." With the stock now trading at its highest level of the year, short sellers could continue to jump ship. While short interest dropped 9.9% in the two most recent reporting periods, it still accounts for 14.7% of SODA's available float, or 33.8 times the average daily trading volume.

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