2 Stocks Sinking on FAANG Fears

Morgan Stanley is concerned about the impact of Amazon Air on FedEx

Dec 4, 2018 at 2:30 PM
facebook twitter linkedin

U.S. stocks are swimming in red ink today, as bank stocks decline with Treasury yields and Apple (AAPL) falls on re-emerging concerns about demand. In fact, Apple supplier Cirrus Logic, Inc. (NASDAQ:CRUS) is in the spotlight today, after the company cut its guidance. Meanwhile, concerns about a different FAANG member have FedEx Corporation (NYSE:FDX) shares sinking, while drugmaker Revance Therapeutics Inc (NASDAQ:RVNC) is bucking the broad-market trend to trade comfortably higher, thanks to upbeat data. Here's a closer look at what's moving the shares of CRUS, FDX, and RVNC.

Cirrus Logic Latest Apple Supplier to Cut Guidance

Cirrus Logic shares fell out of the gate today, after the company cut its third-quarter revenue outlook, citing smartphone weakness. The chipmaker is just the latest Apple supplier to cut guidance, with Lumentum (LITE) and Qorvo (QRVO) slicing their revenue outlooks last month.

CRUS stock is well off its intraday lows, however. The equity has trimmed its deficit to 0.8% to trade at $38.35, at last check. The security gapped lower in mid-November amid reports of iPhone production cuts, and has spent most of the subsequent time stalling beneath resistance in the $39 area.

Recent options buyers are likely cheering, though. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows more than nine Cirrus Logic puts bought to open for every call in the past two weeks. This ratio registers in the 97th percentile of its annual range, pointing to a healthier-than-usual appetite for bearish bets lately. Echoing that, CRUS has seen about 4,700 puts change hands so far today -- 10 times the average intraday pace -- with possible buy-to-open action spotted at the weekly 12/7 38-strike put.

Amazon Air Fears Fuel FDX Stock Decline

FedEx stock is down 7.2% to trade at $213.47 -- set for its worst day since September 2011 -- after Morgan Stanley said "the market is missing the risk Amazon Air poses" to FedEx and UPS (UPS). Specifically, due to FAANG member Amazon's (AMZN) plans to expand its fleet, the brokerage firm expects potential revenue losses to accelerate to 10% by 2025, from 2% currently. As such, Morgan Stanley cut its price target on FDX to $230 from $240.

The security is now down nearly 22% from its mid-January peak of $274.66, putting it in bear-market territory. In fact, FedEx shares have been in a channel of lower highs and lows since that peak, with recent rebound attempts stalling beneath its 80-week moving average.

Nevertheless, there's still plenty of room on the bearish bandwagon. Fifteen analysts maintain "strong buy" endorsements on FDX, with another brokerage firm issuing a "buy" rating. That's compared to just three "holds" and not one "sell." Plus, the consensus 12-month price target of $287.59 represents a premium of about 35% to the security's current perch.

Revance Stock Climbs on Drug Trial Data

RVNC stock is among the best of the Nasdaq today, after the company said its long-acting injectable, RT002, successfully reduced frown lines in another late-stage trial. The company also signed a licensing deal for the Botox rival with China's Fosun Pharma, resulting in an upfront payment of $30 million, and the potential for milestone payments and royalties.

Revance Therapeutics shares were last seen 15.1% higher to trade at $23.99. The stock is now set to end above its 60-day moving average for the first time since early August. From a longer-term perspective, however, RVNC has been in a channel of lower highs and lows since trading north of $37 back in early January, and remains nearly 32% lower year-to-date.

A short squeeze could help the security break out of its trading range, though. Short interest represents 8.3% of the equity's total available float, or more than 13 sessions' worth of pent-up buying demand, at RVNC's average pace of trading.

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners