2 Stocks Making Big Moves On M&A Buzz

NXPI is selling off, while ARNC is gaining on buyout reports

Jul 26, 2018 at 2:43 PM
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Facebook's earnings report is destroying the tech sector today, though the Dow is holding positive territory. Three names traders should keep a close eye on are media ratings firm Nielsen N.V. (NYSE:NLSN), chipmaker NXP Semiconductors NV (NASDAQ:NXPI), and metals specialist Arconic Inc (NYSE:ARNC). While shares of NLSN and NXPI are sliding, ARNC is getting a boost.

NLSN In Danger Of Analyst Downgrades

NLSN stock earlier hit an all-time low of $21.49, and was last seen down 24.3% at $22.38, after the company missed top- and bottom-line estimates for the second quarter, and gave a weak outlook for the current quarter. Plus, CEO Mitch Barns announced he'll be retiring at the end of the year. Overall, the shares have shed almost half their value in the past 12 months.

While there's yet to be even one bear note on NLSN following the disappointing earnings release, traders should be wary of downgrades going forward. By the numbers, nine of the 11 brokerage firms covering the equity have "buy" or "strong buy" ratings on Nielsen.

NXPI Stock Falls After Qualcomm Ditches Buyout

NXP Semiconductors is selling off after Qualcomm said it was abandoning its deal to buy the company due to a lack of Chinese regulatory approval. Even though the company responded with a plan for a $5 billion buyback, NXPI remains down 6.3% at $92.20, and earlier fell to a nearly two-year low of $90.25. This is near the area where the equity bottomed after earnings back in early May, and going back further, NXPI traded as high as $125.93 back in February. Adding insult to injury is a price-target cut to $105 from $127.50 at Morgan Stanley. More brokerage notes could come through following today's news, since 10 of the 11 covering analysts are sitting on the fence with "hold" ratings.

ARNC Jumps On Takeover Report

Arconic stock is surging today, up 11.4% at $21.45, on pace for its best close since April, after the Wall Street Journal reported that the company was considering takeover offers from private equity firms. While the shares are still well below their January highs near $31, they're set for their first close atop the 100-day moving average since February.

Meanwhile, short sellers have been moving in on ARNC, with the number of shorted shares rising by 15.9% in the last reporting period. It would now take over five sessions to buy back all the shares held short on the stock, going by average daily trading volumes.


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