Buzz Stocks: Southwest Airlines Co, Biogen Inc, and Relypsa Inc

U.S. stocks are down as mixed earnings reports pour in. Among equities in focus today are airline Southwest Airlines Co (NYSE:LUV), and biotech stocks Biogen Inc (NASDAQ:BIIB) and Relypsa Inc (NASDAQ:RLYP).

• LUV is down 10.2% at $37.75 -- on pace for its worst percentage drop in more than seven years -- after earnings fell short of expectations, and amid concerns about the impact of terrorism fears and political stress on airlines. In addition, LUV predicted a drop in third-quarter revenue per available seat mile (RASM). Just yesterday, the airline struggled with widespread computer glitches, and the "major outage" forced LUV to delay or completely cancel hundreds of flights. Year-over-year, Southwest Airlines is up 9.1%, although the stock has declined nearly 21% since hitting its 2016 high in early April. Option players and analysts were optimistic ahead of earnings.  LUV's 50-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 4.17, in the 79th percentile of its annual range, showing a healthier-than-usual appetite for bullish bets among option traders. Meanwhile, eight of 11 analysts rate LUV a "strong buy," leaving the door wide open for potential post-earnings downgrades.

• BIIB is up 6.6% at $279.65, after beating analysts' earning expectations and raising its full-year outlook. Biogen Inc also announced a $5 million share buyback program, and the upcoming departure of CEO George Scangos. This bull gap puts the biotech atop its 200-day moving average for the first time since early June, and the shares have now rebounded more than 25% since hitting a two-year low of $223.02 on June 27. BIIB's Schaeffer's put/call open interest ratio (SOIR) of 1.32 sits in the 99th percentile of its annual range, suggesting short-term option players have rarely been more put-biased in the past 12 months. Analysts seem upbeat on BIIB, however, with 70% rating the shares a "buy" or better, and without a single "sell" in sight.

• RLYP is up 58.6% at $31.87, following news that Swiss-based Galenica AG will purchase the biotech for $32 per share, or a total of $1.53 billion. Following this news, Wedbush reiterated its "outperform" rating, and opined that "there is room for at least one additional bidder," and even called out Sanofi SA (ADR) (NYSE:SNY) as "a likely additional suitor." There's likely some option players kicking rocks, with Relypsa Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.40 sitting in the 80th percentile of its annual range. Elsewhere, short interest accounts for 62% of RLYP's float, an amount that would take six days to cover, at RLYP's average daily volume.

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