Activision Traders Sell the News, While Toyota Scores Points with Trump

Activist investor Bill Ackman is jockeying for control of ADP

Aug 4, 2017 at 10:34 AM
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U.S. stocks are on the rise this morning, thanks to a big payrolls beat. Video game stock Activision Blizzard, Inc. (NASDAQ:ATVI),  payrolls giant Automatic Data Processing (NASDAQ:ADP), and auto company Toyota Motor Corp (ADR) (NYSE:TM) are three stocks in the news this morning. Here's a quick look at what's moving shares of ATVI, ADP, and TM.

ATVI Stock Stumbles After Earnings

Activision Blizzard reported better-than-expected earnings this morning, and hiked its full-year guidance amid widespread popularity for its "Overwatch" title. In response, analysts handed out no fewer than nine price-target hikes. Most ambitious was Jefferies, with the firm's upwardly revised target of $78 implying expected upside of 21.7% to Thursday's intraday record high of $64.06.

Given the equity's year-to-date rally of more than 72%, it's no surprise that, out of the 16 analysts tracking ATVI stock, 13 maintain a "buy" or better recommendation. However, it seems like ATVI bulls priced a bit too much optimism into the shares ahead of earnings; at last check, the stock was down 2.7% at $62.27.

Ackman Pushes for Control of ADP 

Automatic Data Processing is hot in headlines this morning, as hedge fund manager Bill Ackman's Pershing Square makes a bid to gain control of the company. Ackman is proposing a slate of five new members to ADP's board of directors -- including himself -- and Pershing is also making a push to oust CEO Carlos Rodriguez. Pershing currently holds an 8% stake in ADP.

ADP stock is fractionally lower at $111.49 this morning, erasing early gains. The shares hit a record high last month of $121.77, just days after news initially broke that Ackman was building a stake. The activist investor's interest in ADP could explain why the stock's short-term options are pricing in such high volatility expectations. ADP sports a Schaeffer's Volatility Index (SVI) of 37% which stands higher than 83% of all other readings from the past year.

Toyota, Mazda Team Up on Electric Autos

Following the automaker's stronger-than-expected fiscal first-quarter earnings report, Toyota announced that it will be taking a 5% stake in Mazda, while Mazda scoops up a 0.25% interest in Toyota. The two Japanese car giants will construct a $1.6 billion U.S. plant with an eye toward electric vehicle production -- a move that's earned one high-profile endorsement already this morning. 

The U.S.-traded shares of Toyota stock are up 0.6% at $113.44 at last glance, extending a recovery from the lows around $104 set in April and June. However, Schaeffer's put/call open interest ratio (SOIR) of 2.92 ranks in the 98th percentile of its annual range. This suggests short-term options players have rarely been more put-heavy on TM during the past 12 months.


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