3 Stocks Seeing Heavy Call Trading After Bull Notes

Most analysts are bullish on CARS even though it's been horrible on the charts

by Josh Selway

Published on Jul 2, 2019 at 2:08 PM

U.S. stocks are struggling to gain momentum today due to trade tensions. Meanwhile, three names making big moves are online retailer Revolve Group (NYSE:RVLV), drugmaker Dova Pharmaceuticals Inc (NASDAQ:DOVA), and auto retailer Cars.com Inc (NYSE:CARS). Here's a breakdown of what's moving the shares of RVLV, DOVA, and CARS.

Analysts Scramble to Issue Bull Notes on RVLV

RVLV stock broke out initially after its early June initial public offering (IPO), trading as high as $48.36 on June 19. The shares quickly pulled back to consolidate in the $32-$35 range for a few sessions, but today they're breaking out of that range, up 9.4% at $35.88. The move was sparked by a rush of analyst notes, as the stock's blackout period comes to an end. Almost all of the analyst notes were positive, with several analysts citing the company's path to profitability and its use of e-commerce data. The highest price target came from Jefferies, which called for a move to $60.

Options trading has picked up on Revolve, with new positions opening at the July 35 and 40 calls. Those buying the contracts are wagering on the security extending its upside through the next few weeks.

Bullish Betting Spikes After DOVA Jumps Again

DOVA stock is extending its recent run higher, after Evercore ISI upgraded its opinion to "outperform" from "in line," citing the recent Food and Drug Administration (FDA) decision for the company's blood disorder treatment Doptelet. The shares were last seen trading up 14% at $16.30, setting them up for their highest close since November. At the same time, the equity was trading above $30 this time last year.

So far today more than 2,100 calls have traded, compared to a daily average of just 594. It appears traders are closing positions at the deep in-the-money July 10 call, while other bulls could be buying the August 17.50 call.

Another Analyst Says to Buy Cars.com

Citigroup upgraded its stance on CARS shares to "buy" from "neutral," saying the stock's valuation looks too low even with the potential for a buyout -- something that was rumored at the beginning of 2019. The security is trading 5.6% higher at $20.98, but remains firmly in its long-term downgrade, topping out just below the 80-day moving average that has served as resistance since March. Oddly enough, Citi's rating matches the general opinion on the Street, where five of six covering firms say the underperforming equity is a "strong buy."

Call traders are also hammering Cars.com today, with the contracts crossing at four times the expected pace. A large chunk of the activity has taken place at the August 22.50 call, where new positions are being opened.


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