Apple's $900B Milestone; Plus, Pandora Gaps to New Low Post-Earnings

VRX is testing trendline resistance after a surprise FDA approval

by Emma Duncan

Published on Nov 3, 2017 at 10:04 AM

U.S. stocks are mixed this morning following October's nonfarm payrolls report and the latest round of corporate earnings. Among the stocks making moves are Dow component Apple Inc. (NASDAQ:AAPL), music streaming service Pandora Media Inc (NYSE:P), and drug concern Valeant Pharmaceuticals International Inc (NYSE:VRX). Here's a closer look at what's moving shares of AAPL, P, and VRX.

AAPL Soars to a Fresh Record High

Shares of AAPL are soaring after the company reported a fiscal fourth-quarter earnings beat, and in response received no fewer than 10 price-target raises. Some of the most notable hikes came from Morgan Stanley and Citigroup, both of which raised their targets to $200. Meanwhile, Rosenblatt doled out an upgrade to "buy." At last check, the blue-chip tech stock was up 2.9% at $172.92, after touching a fresh record high of $174.25 earlier -- and crossing the $900 billion market cap barrier in the process.

AAPL options traders showed optimism ahead of earnings, as data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showed the tech stock with a 10-day call/put volume ratio of 2.40, which ranks in the 81st percentile of its annual range. This indicates that calls were bought to open at a faster-than-usual pace during the past two weeks. What's more, all but six of the 29 analysts following AAPL stock carry "buy" or "strong buy" recommendations.

Pandora Gets Downgraded After Third-Quarter Loss

Pandora Music stock has taken a turn for the worse after reporting a steeper-than-projected third-quarter loss last night. In response, P has seen no fewer than four downgrades and eight price-target cuts. J.P. Morgan, B. Riley, Suntrust Robinson, and Stifel all downgraded Pandora to the equivalent of a "hold" from "buy," while notable price-target cuts included Wells Fargo's drop to $7 from $10 and Cowen's revision to $6 from $8. P stock is trading 23% lower at $5.70, after earlier plummeting to a record low of $5.42. 

With Pandora stock already down 43% year-to-date through last night's close, some shorts already took profits ahead of today's big bear gap. Pandora short interest dropped more than 14% during the past two reporting periods to 67.7 million shares. That said, short interest still accounts for over 38% of the stock's float, or 15.5 times P's average daily volume. While short selling is temporarily restricted in light of today's sell-off, it seems the bears remain firmly in control on this name.

Valeant Pharma Rallies After FDA Drug Approval

Valeant Pharmaceuticals is on the upswing again today, following up Tuesday's debt reduction announcement with a surprise approval from the Food and Drug Administration (FDA) for its twice-rejected glaucoma drug, Vyzulta. The approval came just after Thursday's close, and has pushed VRX up 4% to trade at $11.50 -- just south of recent resistance at its 10-day moving average. 

VRX is still down 21% on the year, but has recently attracted an influx of calls from options traders at the ISE, CBOE, and PHLX. The drug stock's 10-day call/put volume ratio of 4.64 ranks higher than 96% of all ratios in the past year. This indicates that calls were heavily preferred over puts during the past two weeks. 


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