Buzz Stocks: Chesapeake Energy Corporation, Diplomat Pharmacy Inc, and Wells Fargo & Co

Today's stocks to watch in the news include Chesapeake Energy Corporation (CHK), Diplomat Pharmacy Inc (DPLO), and Wells Fargo & Co (WFC)

Nov 3, 2016 at 9:19 AM
facebook twitter linkedin


After several days of losses, U.S. stocks are pointed higher ahead of the bell, amid a generally upbeat round of data. Among specific equities in focus today are oil-and-gas stock Chesapeake Energy Corporation (NYSE:CHK), drug distributor Diplomat Pharmacy Inc (NYSE:DPLO), and embattled bank Wells Fargo & Co (NYSE:WFC). Here's a quick look at what's driving CHK, DPLO, and WFC.

  • CHK reported a surprise adjusted third-quarter profit, as lower costs offset weak commodity prices. The news has sent the shares 7.5% higher in electronic trading, relative to Wednesday's close at $5.31. These gains would be appreciated by Chesapeake Energy Corporation shareholders, who have watched the stock tumble since hitting an annual high of $8.15 on Sept. 12. On the other hand, a gap higher out of the gate could prove painful to options traders, who have been buying to open puts over calls at an accelerated clip of late. CHK's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.62 ranks in the bearishly skewed 77th annual percentile.
  • DPLO is poised to crater 34.3% out of the chute, and flirt with all-time lows, following an earnings miss. Analysts are adding insult to injury, with Avondale Partners and Leerink reducing their ratings to "market perform" from "outperform," and cutting their respective price targets to $13 and $18. At least five other brokerage firms also reduced their target prices. Even before today, it had been a dismal year for Diplomat Pharmacy Inc, which touched an annual low of $22.06 yesterday before settling at $22.38. Not surprisingly, short sellers have been bombarding the stock, with over one-fifth of its float sold short. At DPLO's average trading level, it would take nearly two weeks to buy back these positions.
  • WFC finds itself in hot water again, as the Securities and Exchange Commission (SEC) is reportedly probing the bank's sales practice disclosures. In addition, the company said it is raising its reserves, fearing potential litigation losses as high as $1.7 billion. On the charts, Wells Fargo & Co has tanked 17% year-to-date at $45.24, but this hasn't prevented options players from placing bullish bets. The stock's 10-day call/put volume ratio of 1.44 at the ISE, CBOE, and PHLX ranks in the high 72nd percentile of its annual range.

Stay on top of overnight news & big morning movers. Sign up now for Schaeffer's Opening View.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners