Buzz Stocks: Apple Inc., Merck & Co., Inc., and Smith & Wesson Holding Corp

Today's stocks to watch in the news include Apple Inc. (AAPL), Merck & Co., Inc. (MRK), and Smith & Wesson Holding Corp (SWHC)

Sep 2, 2016 at 9:49 AM
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U.S. stocks have opened higher after a lackluster jobs report weighed on the odds of a September rate hike. Among specific equities in focus are tech titan Apple Inc. (NASDAQ:AAPL), healthcare stock Merck & Co., Inc. (NYSE:MRK), and gun maker Smith & Wesson Holding Corp (NASDAQ:SWHC).

  • AAPL is 0.9% higher at $107.72 on news that Ireland's government has agreed to appeal the decision from the European Commission seeking $14.5 billion in back taxes from Apple Inc. The ruling has been weighing on the shares all week, and CEO Tim Cook had some strong words about the matter on Thursday. Overall, the blue chip has had a choppy 2016, and has badly underperformed the Dow, up little more than 2% year-to-date. Plus, the shares could be in trouble should Ireland's appeal not work out in AAPL's favor, and/or the stock continue to struggle. At present, 26 of 30 analysts rate the shares a "buy" or better, leaving them vulnerable to future downgrades. 
  • MRK is a up 0.3% at $63.07 following news the company is abandoning the development of its osteoporosis drug, after finding the treatment increased patients' risk of a stroke. Merck & Co. Inc. has put in a strong performance so far in 2016, adding more than 19% -- putting it a stone's throw from its early August 14-year high. Not surprisingly, the options pits -- recently dominated by bears -- have turned more bullish. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MRK's 10-day call/put volume ratio of 3.21 sits within the top quartile of its 12-month range. 
  • SWHC has plummeted 7.3% to trade at $27.41, even though the firearms expert beat earnings expectations, and raised its current-quarter and full-year outlook. Pressuring the shares is a downgrade to "hold" from "buy" at Craig-Hallum, which also cut its price target by $2 to $33, explaining that demand for firearms is now "as good as it gets." Meanwhile, Wedbush and Wunderlich Securities raised their price targets on Smith & Wesson Holding Corp to $32 and $36, respectively. This morning's sharp move lower may come as a shock to bullish options traders, who have bought to open 5.68 calls for every put over the last two weeks on the ISE, CBOE, and PHLX. Those traders had good reason to be optimistic, too -- prior to today, SWHC had made an upside move in the session following its earnings report for seven straight quarters.

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