Earnings Roundup: Nielsen N.V. Ordinary Shares (NLSN) and JetBlue Airways Corporation (JBLU)

Nielsen N.V. Ordinary Shares (NLSN) and JetBlue Airways Corporation (JBLU) are tumbling on the charts after disappointing third-quarter earnings

Oct 25, 2016 at 10:50 AM
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Earnings are highlighting today's stock market news, with a slew of companies reporting quarterly results. Among the equities on the move after earnings this morning are media ratings firm Nielsen N.V. Ordinary Shares (NYSE:NLSN) and discount airlines JetBlue Airways Corporation (NASDAQ:JBLU). Below we'll take a look at how traders are responding to the latest financial results from NLSN and JBLU.

NLSN missed analysts' estimates for its third-quarter earnings and revenue, citing restructuring costs, and giving a disappointing full-year forecast. As a result, the shares are plummeting 14.9% to $46.80, paring their year-to-date gains to a narrow 0.5%. The brokerage bunch has yet to weigh in on these results, but a round of bearish attention is not out of the question. At the moment, five out of nine analysts rate the stock a "strong buy," without a single "sell" in sight. Plus, the average 12-month price target of $58.71 sits well overhead, and in record-high territory.

Not everyone had high expectations going into earnings, though. Short interest on NLSN, though only 3.3% of the stock's available float, represents more than a week's worth of trading, at NLSN's typical daily pace. And though options volume has been light on an absolute basis, near-term speculators have been unusually put-heavy. Specifically, NLSN has a top-heavy Schaeffer's put/call open interest ratio (SOIR) of 5.12 -- in the top quartile of all readings taken in the past year.

Technically, NLSN had been stuck in a sideways pattern between $50 and $55 since March, briefly breaking out to tap a record high of $55.94 in July. The shares recently bounced off support at the 200-day moving average, but today's drop has Nielsen N.V. Ordinary Shares (NYSE:NLSN) trading well below this trendline, as well as the round $50 mark, on track for its lowest close since mid-February.

Meanwhile, JBLU is off 1.5% at $18.47 after the company's quarterly earnings fell short of expectations. The drop could have some bullish traders scrambling, though analysts have yet to make a move. Roughly 73% of brokerage firms tracking JBLU recommend buying the stock, and not one recommends selling. This upbeat outlook is a bit surprising, considering the shares have shed 29.5% over the past 12 months.

JBLU has been fighting back from its late-June annual low, but several rally attempts have stalled out near the $19 level. On Monday, in fact, the shares closed at $18.75 -- nose-to-nose with the declining 200-day moving average. That trendline served as support for JBLU since 2012, limiting numerous pullbacks, but has been hanging overhead since New Year's, and now seems to be applying downward pressure on the shares.

Despite these recent technical woes, traders have been optimistic. Short interest on JBLU has been declining over the last two years, including a 16% drop during the most recent two-week reporting period alone, and now accounts for less than 5% of the stock's total float.

And calls have been flying off the shelves at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where options traders purchased nearly 18 JBLU calls for each put over the past 10 days. This call/put volume ratio ranks just 4 percentage points from an annual high.

Digging deeper, a huge portion of the recent action has occurred at the December 20 call, which currently holds the highest open interest of all JetBlue Airways Corporation (NASDAQ:JBLU) options, with 39,887 contracts outstanding, compared to 6,556 for the next highest position. Indeed, major exchanges confirm most of these positions were bought to open during the past two weeks.

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