Analysts Rush to Raise Xilinx Price Target After Earnings

Put buyers have been active ahead of earnings

Jan 24, 2019 at 9:18 AM
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The shares of Xilinx, Inc. (NASDAQ:XLNX) are set to soar 9.4% out of the gate -- and could take aim at its June 2000 record high of $98.31 -- after the chipmaker reported fiscal third-quarter adjusted earnings of 92 cents per share on $800 million in revenue -- more than analysts were expecting. Plus, the San Jose-based company said it expects current-quarter revenue to arrive at a higher-than-anticipated $815 million to $835 million.

Analysts have been quick to chime in, with XLNX stock receiving an onslaught of price-target hikes. No fewer than four brokerage firms -- including Credit Suisse and Needham -- raised their XLNX price targets to $110, a 22.8% premium to last night's close at $89.55. Overall, analysts are split on the tech stock, with 10 maintaining a "buy" or better rating, and 10 saying it's a "hold" or "strong sell."

Options traders, meanwhile, have been bracing for a post-earnings retreat. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), XLNX's 10-day put/call volume ratio of 1.07 ranks in the 89th annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.

While some of this put buying may have been at the hands of vanilla options bears, it's also possible Xilinx shareholders were using options to hedge against any downside risk. The stock has been in a long-term uptrend, tacking on 40% since bouncing off a familiar floor near $65 last June. Plus, a late-December bounce off its key 80-day trendline has put XLNX stock a chip-shot away from its Dec. 3 18-year high of $95.18.

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