'FANG' Stocks Hover Near Highs as Analysts Weigh In

'FANG' stocks are trading higher today, and are not far off from record-high levels

Kirra Fedyszyn
Jan 20, 2017 at 11:40 AM
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Thanks to some upbeat analyst attention, "FANG" stocks are in focus today, with Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc (NASDAQ:GOOGL) all moving higher. The four tech stocks have been hovering near record highs in recent weeks -- with one tapping a fresh all-time peak just yesterday. And while we've already seen how FB stock is moving on today's bullish brokerage note, we'll check in on AMZN, NFLX, and GOOGL, to see how traders have been playing the recent outperforming FANG stocks.

The only "FANG" component not on the receiving end of analyst attention today is AMZN, although the shares are nonetheless up 0.3% at $811.42. The company revealed today it will launch digital versions of its popular Dash buttons, allowing purchases of staple items to be made with one click from the Amazon.com homepage and app. The stock has recently been edging back toward its Oct. 6 record high at $847.21, ushered higher by its 10-day moving average in recent weeks. Longer term, the shares are sitting on a 41% year-over-year lead.

Sentiment toward AMZN is broadly upbeat, with the majority of brokerage firms calling the security a "buy" or better. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), meanwhile, call buying has been popular, per the stock's 10-day call/put volume ratio of 1.25 -- in the 87th percentile of its annual range. What's more, AMZN's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.60 shows near-the-money calls outweigh puts in the standard January series. Notably, 19 of AMZN's top 20 open interest positions reside in this series, which will expire at tonight's close. With heavy call open interest at the January 2017 820-strike call -- where 7,866 contracts are in residence -- the expiration of these options could clear resistance at this just-overhead level, and possibly put Amazon.com, Inc. on a path to fresh all-time highs.

Following the company's upbeat earnings report Wednesday evening, NFLX shares hit a record high of $143.46 in Thursday's trading. This positive price action is continuing today, with shares are up 1% at $139.96, following a price-target hike to $175 from $140 at J.P. Morgan Securities. The stock could benefit from even more bullish analyst attention, too, as 14 of 33 brokerages maintain a "hold" or worse rating on NFLX. Meanwhile, short interest -- though down 7% in the most recent reporting period -- still accounts for a full week's worth of trading, based on NFLX's average daily volume.

Options traders haven't been especially optimistic, either. In fact, NFLX's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.84 ranks in the 84th annual percentile, while its SOIR of 1.17 is docked at a 12-month peak. Either way, buyers of Netflix, Inc.'s near-term options should be getting a good deal after earnings. The stock's short-term options are pricing in unusually muted volatility expectations, per its Schaeffer's Volatility Index (SVI) of 29% -- in the low 7th percentile of its 12-month range.

GOOGL has lately been hovering just below its Oct. 28 record high of $839.00, and appears to have found a recent foothold at the $825 mark. Analysts have been in the stock's bullish corner, with 26 out of 28 issuing a "buy" or better rating. And just this morning, Pacific Crest resumed coverage on GOOGL with an "overweight" opinion and $1,030 price target -- deep into never-before-seen territory. At last check, the shares are 0.3% higher at $827.01, even as the stock shakes off a Wall Street Journal report saying Alphabet regularly puts its own products in the top advertising spots in Google searches.

Call buying has been popular in GOOGL's options pits, with the stock's 10-day call/put volume ratio at the ISE, CBOE, and PHLX clocking in at 1.54 -- higher than two-thirds of the past year's readings. And even with Alphabet Inc's earnings just around the corner -- due next Thursday evening -- the stock is presenting an unusual bargain for options buyers. GOOGL's SVI of 24% is docked lower than 99% of all comparable reading from the last 12 months, indicating near-term options are currently very well-priced, from a volatility standpoint.

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