“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, July 31, 2017

by Ian Harvey

IMPORTANT NOTE: There is no stop-loss or pre-determined sell price recommended – this is left to the discretion of the individual trader.


Option Trade - Twilio Inc. (NYSE:TWLO) Calls

Thursday, August 03, 2017

** OPTION TRADE: Buy the TWLO AUG 18 2017 30.00 CALL at approximately $1.00. Sell price is left to your own judgment.

Twilio Inc. (NYSE:TWLO), offering a Cloud Communications Platform, which enables developers to build, scale and operate real-time communications within software applications, went public at $15 last June, nearly doubled on its first trading day, and more than doubled again to nearly $70 per share three months later. But then that honeymoon ended, and the stock tumbled all the way back to the high $20s.

Twilio is scheduled to release their next quarterly earnings announcement on Monday, August, 7th 2017.

Wall Street analysts forecast that Twilio Inc. will announce sales of $86.23 million for the current quarter. Six analysts have issued estimates for Twilio’s earnings. The lowest sales estimate is $85.60 million and the highest is $86.52 million. Twilio reported sales of $64.51 million during the same quarter last year, which indicates a positive year-over-year growth rate of 33.7%.

By historical standards, Twilio Inc. remains a cheap stock. TWLO’s current price-earnings ratio amounts above the average P/E ratio of 51.65 times earnings. For now, TWLO is the toast of Wall Street as its ABR stands at 2.00 with 5 out of 13 analysts rating the stock a buy.

Over the past 2 quarters, Twilio Inc. is up 8.75%, compared with a fall of nearly -1.80% for 3 months and about 12.17% for the past 30 days.

Following a sharp correction from its post-IPO highs, Twilio stock is ready to march higher on the heels of a strong growth trajectory.

Influencing Factors

Investors overreacted to news of Uber reducing its spend on Twilio, creating a tactical buying opportunity.

Twilio's pay-as-you-go revenue model positions the company to earn tremendous revenues from explosive growth in mobile and data consumption across many applications, not just Uber.

For an understanding on what Twilio does; it is a software platform for developers (aka, the coders who breathe life into your apps) to build communication capabilities into their applications.

Examples are more illustrative. Uber and Lyft use Twilio so that you can call and text your drivers. Airbnb uses it to confirm reservations with hosts via text. Instacart uses it to notify you when your groceries are at the door. Recently even Morgan Stanley (NYSE: MS) signed on to enable financial advisers to communicate with clients via text.

Twilio operates a software communications platform called the Twilio Super Network, which route messages and calls from apps to users. Twilio has relationships with a variety of global internet and network service providers (effectively a middleman between users and the networks), and uses its proprietary software to optimize and select the network through which to route your message. Over 1 million developers across ~40,000 companies (who are Twilio's customers) access the Twilio Super Network through an API, allowing their applications to have communications features without worrying about the backend. Twilio owns two of the top 10 most-used APIs, indicating its popularity among developers. Every single time a message is sent and received, Twilio earns a small fee.

A smart business model and unique technology assets adaptable to shifts in the app economy make Twilio a logical long-term hold in the tech sector.

Analysts and Hedge Funds Opinions

Twilio Inc. was upgraded by analysts at Vetr from a “buy” rating to a “strong-buy” rating in a report released on Thursday, July 6th. The brokerage presently has a $32.00 price target on the technology company’s stock. Vetr‘s price objective suggests a potential upside of 10.38% from the stock’s current price.

Also, Twilio Inc. was upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating in a note issued to investors on Wednesday, July 19th. The brokerage currently has a $34.00 target price on the technology company’s stock. Zacks Investment Research‘s target price would indicate a potential upside of 16.56% from the stock’s current price.

According to Zacks, “Twilio offers cloud-based software that helps developers make and receive phone calls, text messages and video chats. Estimates for the stock have remained unchanged, of late. The company’s key initiatives, which include product innovation, global expansion and acquisitions, are helping it in gaining customers, which bodes well for long-term growth. We opine that proliferation in cloud and mobile penetration across the globe will continue to fuel Twilio’s customer growth over the long run. However, its largest customer, Uber’s recent strategy on utilizing communication services will dent Twilio’s overall growth prospect throughout this year. Furthermore, intensifying competition in the communications market and growing prevalence of in-app push notifications are major concerns. Notably, the stock has underperformed the broader market in the last one year.”

As well, Baird analyst William Power initiated coverage of the in-app communications specialist after Monday's close. He is starting Twilio stock with an outperform rating and a $35 price target.

Several other analysts have also recently commented on the company…..

  • JMP Securities reiterated an “outperform” rating and set a $37.00 price objective on shares of Twilio in a research report on Monday, April 3rd.
  • William Blair reiterated an “outperform” rating on shares of Twilio in a research report on Friday, March 17th.
  • Canaccord Genuity reiterated a “buy” rating and set a $33.00 price objective on shares of Twilio in a research report on Wednesday, May 24th.
  • Finally, J P Morgan Chase & Co upgraded shares of Twilio from a “neutral” rating to an “overweight” rating and lifted their price objective for the stock from $26.93 to $36.00 in a research report on Friday, April 7th.

Three investment analysts have rated the stock with a hold rating, fifteen have assigned a buy rating and one has given a strong buy rating to the company’s stock. The company has a consensus rating of “Buy” and an average target price of $35.97.

Several institutional investors have recently made changes to their positions in the stock…..

  • Perigon Wealth Management LLC raised its stake in shares of Twilio by 4.7% in the first quarter. Perigon Wealth Management LLC now owns 15,325 shares of the technology company’s stock worth $442,000 after buying an additional 693 shares during the period.
  • Nuveen Asset Management LLC bought a new stake in shares of Twilio during the first quarter worth about $2,178,000.
  • Nepsis Capital Management Inc. raised its stake in shares of Twilio by 16.2% in the second quarter. Nepsis Capital Management Inc. now owns 221,210 shares of the technology company’s stock worth $6,439,000 after buying an additional 30,899 shares during the period.
  • Finally, Pacific Heights Asset Management LLC bought a new stake in shares of Twilio during the second quarter worth about $7,860,000.

In other Twilio news, Director James Mcgeever acquired 10,000 shares of Twilio stock in a transaction that occurred on Thursday, May 11th. The stock was acquired at an average price of $23.19 per share, with a total value of $231,900.00.

Summary

Remember, Twilio is volatile, even if its year-to-date performance doesn't reflect that at first glance.

Twilio’s 50 day moving average price is $29.00 and its 200-day moving average price is $29.01. Twilio has a 1-year low of $22.80 and a 1-year high of $70.96. The company’s market capitalization is $2.62 billion.


Option Trade - Snap Inc (NYSE:SNAP) Calls

Wednesday, August 02, 2017

** OPTION TRADE: Buy the SNAP SEPT 15 2017 14.00 CALL at approximately $0.80. Sell price is left to your own judgment.

Snap Inc. (NYSE:SNAP), formerly Snapchat, Inc, a camera company, is scheduled to report its next quarterly earnings results on Wednesday, August 9th, 2017. Equities analysts forecast that Snap Inc. will announce ($0.27) earnings per share (EPS) for the current fiscal quarter. Eight analysts have provided estimates for Snap’s earnings, with the lowest EPS estimate coming in at ($0.39) and the highest estimate coming in at ($0.10).

Snap last posted its quarterly earnings results on Wednesday, May 10th. The company reported ($2.31) earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of ($2.05) by $0.26. The firm had revenue of $149.60 million during the quarter, compared to analyst estimates of $158.32 million. The business’s quarterly revenue was up 285.6% on a year-over-year basis.

A call options trade on Snap will be classed as high-risk, but if it does take effect then it will likely be very profitable.

Eddy Elfenbein, portfolio manager for AdvisorShares, sees the strongest case for investing in social media company Snap, which closed the week 44 percent below the level at which it closed on its March IPO day.

"Almost everything has gone wrong with this company, and there's a huge short interest out there," he said. "In the very near term and as a very speculative trade, I think it is one worth going in to."

The big move expected in Snap is not merely a function of the earnings report it is expected to release on August 9, but also of the end of the company's share lockup period on Monday.

While the potential for more investors to sell their shares is clearly spooking traders, Jim Strugger, derivatives strategist for MKM Partners, sided with Elfenbein in recommending that the brave take the other side at that point.

"Next week might be a nice little catalyst as this lockup expires," Strugger said. "We'd actually, on the speculative front, get some long the name and buy some calls out in September to play for some upside."

Jason Helfstein of Oppenheimer internet equity research believes that Wall Street will watch whether Snap's "well-telegraphed" user growth is slowing, or actually flattening out.

"The question is, 'Have consensus expectations come down enough?'" Helfstein said on Monday. "We think they could beat. Maybe not by a lot, but they can actually come ahead of the headline beat."

NOTE: The way strategists gauge expected moves is by summing the cost of bullish call options and of bearish put options that both expire just after earnings. Since the purchaser of both options contracts would make money so long as the underlying stock either rose or fell by more than the total cost of the trade, this cost can be seen as the magnitude of the move that traders collectively expect to see.

The lockup technically expired on Saturday, meaning that a wave of early investors, employees, and insiders are finally eligible to sell shares this week. While we don’t know the exact number of new shares available, JPMorgan estimated that about 400 million shares would be freed up after this lockup phase.

Of course, just because a bunch of shareholders can now sell their stock doesn’t necessarily mean that they will. However, a simple concern about supply and demand—especially considering the new availability could drive down borrowing fees for short sellers—has caused investors to approach this expiration with caution.

Snap Chief Executive Evan Spiegel wants his workers to focus on making great products. Recently, we learned that Snap partnered with NBC News to produce a twice-daily headline news show, called “Stay Tuned,” for the Snapchat app.

The show is supported by sponsorships and advertising, and NBC will reportedly share a portion of its ads revenue with Snap. Comcast CMCSA-owned NBCUniversal invested $500 million in Snap during the company’s IPO.

Analysts and Hedge Funds Opinions

Snap Inc.‘s stock had its “outperform” rating reaffirmed by research analysts at Oppenheimer Holdings, Inc. in a research report issued to clients and investors on Tuesday, July 11th. They presently have a $23.00 price target on the stock. Oppenheimer Holdings, Inc.’s price target would suggest a potential upside of 68.25% from the company’s previous close.

Several other analysts have also recently commented on the company…..

  • Credit Suisse Group restated an “outperform” rating and issued a $25.00 price target (down previously from $30.00) on shares of Snap in a research report on Monday, July 10th.
  • Drexel Hamilton restated a “buy” rating and issued a $30.00 price target on shares of Snap in a research report on Wednesday, July 5th.
  • Piper Jaffray Companies initiated coverage on Snap in a research note on Thursday, March 23rd. They set a “neutral” rating and a $23.00 target price for the company. They noted that the move was a valuation call.
  • Canaccord Genuity initiated coverage on Snap in a research note on Friday, April 28th. They set a “hold” rating and a $22.00 target price for the company.
  •  Cowen and Company initiated coverage on Snap in a research note on Monday, March 27th. They set an “outperform” rating and a $26.00 target price for the company.
  • Finally, Pivotal Research reissued a “sell” rating and set a $10.00 target price on shares of Snap in a research note on Saturday, March 11th.

Eight research analysts have rated the stock with a sell rating, eighteen have given a hold rating and sixteen have issued a buy rating to the company’s stock. The stock has a consensus rating of “Hold” and a consensus price target of $21.63.

Several institutional investors have recently made changes to their positions in the stock…..

  • FMR LLC bought a new stake in Snap during the first quarter valued at approximately $737,133,000.
  •  JPMorgan Chase & Co. bought a new stake in Snap during the first quarter valued at approximately $252,388,000.
  • BlackRock Inc. bought a new stake in Snap during the first quarter valued at approximately $211,934,000.
  • Vanguard Group Inc. bought a new stake in Snap during the first quarter valued at approximately $152,135,000.

Summary

The Los Angeles tech company behind Snapchat offers a simple sales pitch to investors: We’ll release features niftier than anything our competitors can produce.

In its first four months as a publicly traded company, Snap Inc. has kept its part of the bargain. It has debuted a new mapping tool that reveals the location of friends and trending events, launched several short video series and made it easier for any advertiser to buy commercial time on Snapchat. The firm also caught up to rival Instagram by matching options for replaying messages.

Snap’s 50 day moving average price is $19.18 and its 200-day moving average price is $20.72. Snap has a 52 week low of $17.00 and a 52 week high of $29.44. The company’s market capitalization is $11.72 billion.


Option Trade - Etsy Inc. (NASDAQ:ETSY) Calls

Tuesday, August 01, 2017

** OPTION TRADE: Buy the ETSY Aug 18 2017 15.00 CALL at approximately $0.55. Sell price is left to your own judgment.

Etsy Inc. (NASDAQ:ETSY), operating a marketplace where people around the world connect, both online and offline, to make, sell and buy goods, is expected to report fiscal Quarter ending June, 2017, on Thursday, August 8, after the market closes. Wall Street analysts expect $-0.01 EPS, up $0.05 or 83.33 % from last year’s $-0.06 same quarter earnings.

Etsy, a marketplace for vintage and handmade products, collects various fees when items are sold, including a $0.20 listing fee, a 3.5% transaction fee, and a 3% + $0.25 payment-processing fee. The company generated $365 million of revenue in 2016, derived from $2.84 billion of products sold through its platform.

Shares are off their 2017 lows on hopes that the management changes and layoffs will result in an earnings turnaround.

Etsy, Inc. saw EPS growth of 53.3% last year, and is looking great for this year too.

In fact, the current growth estimate for this year calls for earnings-per-share growth of 90.5%. Furthermore, the long-term growth rate is currently an impressive 20.0%, suggesting pretty good prospects for the long haul.

And if this wasn't enough, ETSY stock has actually seen estimates rise over the past month for the current fiscal year by about 61.9%.

Shares are up 27.4% year-to-date.

Influencing Factors

On May 2, Etsy reported first quarter results and met the Consensus Estimate of $0.00.

But while investors have been focused on the lack of earnings growth, sales continue to climb.

Revenue was up 18.4% to $96.9 million driven by growth in both Markets and Sellers Services. Markets revenue was up 14.1% due to growth in transaction fee revenue while Seller Services jumped 23.9% year-over-year due to revenue growth in Etsy Payments.

In the quarter, it launched Etsy Studio, it's first new market since 2005. It is trying to target the craft supplies market and believes it can have an edge in that category.

For the year, sales are expected to grow 19% with another 17.7% in 2018.

The company has been under pressure from activist investors to make a profit. In May, Etsy announced that former CEO Chad Dickerson would step down and be replaced by Josh Silverman, who had been a director on the Board since Nov 2016.

Silverman became CEO effective May 3, 2017.

Dickerson had been CEO for six years. Many investors felt a change at the top was needed to move forward.

In order to accelerate the timeframe to profitability, the company has had to make some difficult decisions, including laying off staff.

In May, it announced it would cut 80 positions but by June it had made even more severe cuts, eliminating another 140 positions.

In total, it would see the elimination of about 230 positions, or 22% of the workforce.

The vast majority of the jobs were in marketing, product management and general and administrative positions. Most were in the Brooklyn headquarters.

And cutting expenses is just the first stage.

Analysts and Hedge Funds Opinions

Zacks Investment Research upgraded shares of Etsy, Inc. from a hold rating to a buy rating in a research note issued to investors on Tuesday, July 4th. They currently have $17.00 price target on the specialty retailer’s stock.

According to Zacks, “Etsy, Inc. offers e-commerce services. It provides online and offline marketplaces to buy and sell goods. The company’s product include art, home and living, mobile accessories, jewelry, wedding, and others. It operates primarily in Berlin, Germany, Dublin, Ireland, Hudson, New York, London, United Kingdom, Melbourne, Australia, Paris, France, San Francisco, California and Toronto, Canada. Etsy, Inc. is headquartered in Brooklyn, New York. “

Etsy, Inc. has been assigned a $14.00 price target by stock analysts at Roth Capital in a research note issued to investors on Monday. The brokerage currently has a “hold” rating on the specialty retailer’s stock. Roth Capital’s price target points to a potential downside of 2.57% from the stock’s previous close.

Several other analysts have also recently commented on the company…..

Etsy, Inc.‘s stock had its “equal weight” rating restated by analysts at Morgan Stanley in a report released on Thursday, July 20th. They currently have a $13.50 target price on the specialty retailer’s stock, up from their prior target price of $9.50. Morgan Stanley’s target price would indicate a potential downside of 6.05% from the stock’s previous close.

Citigroup Inc. reiterated a “neutral” rating and set a $14.00 price target (up previously from $12.95) on shares of Etsy in a research report on Thursday, May 25th.

Maxim Group set a $13.00 price target on shares of Etsy and gave the stock a “buy” rating in a research report on Wednesday, May 3rd.

Several institutional investors have recently made changes to their positions in the stock…..

Vanguard Group Inc. increased its stake in Etsy by 4.8% in the first quarter. Vanguard Group Inc. now owns 7,547,529 shares of the specialty retailer’s stock worth $80,230,000 after buying an additional 346,034 shares during the period.

Janus Capital Management LLC increased its stake in Etsy by 38.4% in the first quarter. Janus Capital Management LLC now owns 6,222,005 shares of the specialty retailer’s stock worth $66,140,000 after buying an additional 1,726,152 shares during the period.

State Street Corp increased its stake in Etsy by 3.3% in the first quarter. State Street Corp now owns 2,299,951 shares of the specialty retailer’s stock worth $24,453,000 after buying an additional 73,146 shares during the period.

Summary

Analysts are bullish enough that they see significant improvement in earnings by 2018.

Even though Etsy is expected to lose $0.01 in 2017, they are forecast to make $0.17 in 2018. It would be their first profitable year since the 2015 IPO.

Etsy has a one year low of $9.41 and a one year high of $16.05. The firm’s market cap is $1.60 billion. The firm’s 50-day moving average price is $14.58 and its 200 day moving average price is $12.43.


Option Trade - Sprint Corp (NYSE:S) Puts

Monday, July 31, 2017

** OPTION TRADE: Buy the S Aug 18 2017 8.000 PUT at approximately $0.45. Sell price is left to your own judgment.

U.S. national wireless carrier, Sprint Corp (NYSE:S) is scheduled to report first-quarter fiscal 2017 financial numbers on August 01, before the market opens.

For the three months that ended June, Wall Street expects Sprint to lose a penny per share on revenue of the $8.24 billion. This compares to the year-ago quarter when the company lost 46 cents per share on $8.84 billion in revenue. Meanwhile, the so-called “whisper number” expects Sprint to deliver a break even quarter.

In the fourth quarter, Sprint reported a loss of 7 cents a share on revenue of $8.5 billion, wider than the 4 cents Wall Street was looking for.

Moreover, the company's earnings failed to surpass the Consensus Estimate in two of the last four quarters, with an average miss of 14.29%.

The price performance of Sprint was not quite impressive over the past three months. The stock lost 5.3% whereas the industry declined 6.7% over the same time frame.

Influencing Factors

The U.S. wireless industry has become intensely competitive because of the presence of spectrum crunch, the growing popularity of iPhone and Android smartphones as well as threats from online mobile video streaming, cloud computing and video conferencing services.

As the U.S. boasts a high rate (95%) of wireless penetration, competition in this space is intense, with participants like Verizon Communications, AT&T Inc., T-Mobile US Inc. This, in turn, may pressurize Sprint's top and bottom lines.

Sprint has been continually making efforts to lure customers from rival carriers by offering attractive promotional plans and lucrative discounts. The marketing costs of such promotions raises concern by causing high cash burn and heavy losses for the company and may even impede margins in the coming quarters.

Moreover, the company has a debt-laden balance sheet and has been witnessing losses each year since 2007.

Analysts and Hedge Funds Opinions

Jefferies Group LLC reaffirmed a “sell” rating and issued a $5.00 price objective on shares of Sprint Corporation in a report on Friday, July 14th.

Several other analysts have also recently commented on the company…..

  • Vetr cut shares of Sprint Corporation from a “buy” rating to a “hold” rating and set a $9.26 price objective on the stock. in a report on Tuesday, April 25th.
  •  Zacks Investment Research cut shares of Sprint Corporation from a “buy” rating to a “hold” rating in a report on Wednesday, April 5th.
  • Finally, SunTrust Banks, Inc. assumed coverage on shares of Sprint Corporation in a report on Tuesday, April 18th. They issued a “hold” rating and a $9.00 price objective on the stock.

Six investment analysts have rated the stock with a sell rating, fourteen have issued a hold rating and four have given a buy rating to the company’s stock. Sprint Corporation has an average rating of “Hold” and a consensus target price of $7.25.

In other Sprint Corporation news, VP Paul W. Schieber, Jr. sold 24,465 shares of the business’s stock in a transaction dated Wednesday, June 14th. The stock was sold at an average price of $8.22, for a total transaction of $201,102.30. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this link. Insiders own 0.18% of the company’s stock.

Summary

Sprint stock is down about 15% since reaching its 52-week high of $9.65 in January.

Bear-in-mind, the stock has averaged a 12.2% move on earnings in recent quarters.

Sprint Corporation’s 50 day moving average is $8.23 and its 200 day moving average is $8.49. The company’s market cap is $32.81 billion. Sprint Corporation has a 52-week low of $5.83 and a 52-week high of $9.65.


Option Trade - Emerson Electric Co. (NYSE:EMR) Calls

Monday, July 31, 2017

** OPTION TRADE: Buy the EMR Aug 18 2017 60.00 CALL at approximately $0.80. Sell price is left to your own judgment.

Emerson Electric Co. (NYSE:EMR), a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world, will report third-quarter fiscal 2017 results before the opening bell tomorrow August 01.

Wall Street analysts expect $0.69 earnings per share, down $0.11 or 13.75 % from last year’s $0.80 for the same quarter earnings. This translates into $444.74M profit for EMR giving the stock a 21.57 P/E. This is assuming the current $0.69 EPS is accurate. Emerson Electric Co.’s Wall Street analysts see 18.97 % EPS growth, taking into account the $0.58 EPS reported in the previous quarter.

In the last reported quarter, the company's earnings were in line with the Consensus Estimate. Emerson has an average positive surprise of 4.3% over the trailing four quarters, with two beats, one miss and one in-line earnings.

It is expected that Emerson to score an earnings beat in the about-to-be-reported quarter.

Influencing Factors

Emerson is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings—with the most up-to-date information possible—is a pretty good indicator of some favorable trends underneath the surface for EMR in this report.

The Most Accurate Estimate for the current quarter is currently at 70 cents per share for EMR, compared to a broader Consensus Estimate of 69 cents per share. This suggests that analysts have very recently bumped up their estimates for EMR, giving the stock a Earnings ESP of +2.94% heading into earnings season.

Emerson continues to benefit from global infrastructure growth. Its core businesses hold dominant positions in markets tied to energy efficiency and infrastructure spending. Particularly, the Commercial & Residential Solutions segment is expected to act as a major catalyst for the soon-to-be-reported quarter, fueled by improving trends in the U.S. and Asian construction markets.

Favorable trends in power, life sciences and improving MRO spending by oil and gas are expected to raise the top line for the quarter under review.

 Also, Emerson's restructuring efforts, undertaken over the past few quarters, are likely to boost upcoming results. During the fiscal year, Emerson has offloaded three of its businesses - Network Power, Leroy-Somer and Control Techniques - and generated $5.2 billion in proceeds.

These restructuring actions better equips Emerson to cross-leverage its remaining portfolio and navigate between businesses. The streamlined business structure will be conducive to earnings and margin expansion during the fiscal third quarter. During the previous quarter, Emerson's total segment and EBIT margin increased 40 basis points (bps) and 30 bps, respectively, on a year-over-year basis, on the back of restructuring actions.

As well, the company is likely to see inorganic growth on the recent Pentair Valves & Controls buyout. Other acquisitions including Locus Traxx, PakSense and Blending & Transfer Systems business of FMC Technologies are expected to drive third-quarter fiscal sales as well.

Analysts and Hedge Funds Opinions

Stifel Nicolaus reaffirmed a “buy” rating and set a $68.00 price objective on shares of Emerson Electric in a research report on Wednesday, July 19th.

Several other analysts have also recently commented on the company…..

  • Cowen and Company reaffirmed a “hold” rating and set a $62.00 price objective on shares of Emerson Electric in a research report on Tuesday, May 2nd.
  • Royal Bank Of Canada reissued a “hold” rating and issued a $58.00 target price on shares of Emerson Electric in a research report on Tuesday, April 11th.
  • Finally, Morgan Stanley reissued an “overweight” rating on shares of Emerson Electric in a research report on Tuesday, July 11th.

Four analysts have rated the stock with a sell rating, fourteen have given a hold rating and three have given a buy rating to the stock. The stock presently has an average rating of “Hold” and a consensus target price of $62.96.

Several institutional investors have recently made changes to their positions in the stock…..

  • Lebenthal Asset Management LLC increased its stake in Emerson Electric by 0.3% in the fourth quarter. Lebenthal Asset Management LLC now owns 79,344 shares of the industrial products company’s stock valued at $4,423,000 after buying an additional 265 shares in the last quarter.
  • RB Capital Management LLC bought a new stake in shares of Emerson Electric during the fourth quarter valued at $251,000.
  • Pinnacle Financial Partners Inc. increased its stake in shares of Emerson Electric by 70.5% in the fourth quarter. Pinnacle Financial Partners Inc. now owns 55,940 shares of the industrial products company’s stock valued at $3,118,000 after buying an additional 23,135 shares during the period.

Summary

Emerson Electric Co has risen 18.47% since July 31, 2016 and is up-trending. It has outperformed the S&P 500 by 1.77%.

Emerson Electric Company has a 12 month low of $49.22 and a 12 month high of $64.36. The firm’s 50 day moving average price is $59.85 and its 200-day moving average price is $59.67. The company has a market capitalization of $38.37 billion, a P/E ratio of 25.43 and a beta of 1.20.


A SMORGASBOARD OF OPTIONS TRADES

Add the following trades that appeared in the article “Earnings Predictions for the Week Beginning July 31, 2017.”

These trades will be included in the results.

Wednesday, August 02

Square Inc (NYSE:SQ) - The mobile payment company is set to report Q2 results after the market close Wednesday, and analysts see per-share losses shrinking to 5 cents from 8 cents a year ago as revenue grows 22% to $536 million. Square recently announced it will join forces with JPMorgan Chase (JPM) to boost its online payment services.

Option trade to consider: Buy the SQ Sep 15 2017 27.00 Call at approximately $1.60.

Take Two Interactive Software Inc (NASDAQ:TTWO) - Take-Two is expected to swing to a profit of 20 cents a share vs. the prior-year quarter's loss of 21 cents a share, on a 5% increase in revenue to $287 million. Aside from RDR2, TTWO has significant other initiatives in mobile, e-sports and an unannounced sequel to GTA V in the development pipeline.

Option trade to consider: Buy the TTWO Aug 18 2017 85.00 Call at approximately $1.40.

Zynga Inc (NASDAQ:ZNGA) - Popular legacy games, such as Words With Friends and Zynga Poker, have been optimized for mobile devices while simultaneously developing new mobile games.  Analysts see "Words With Friends" parent Zynga logging 2 cents EPS, up from break-even last year, as sales rise 17% to $205 million.

Option trade to consider: Buy the ZNGA Sep 15 2017 4.00 Call at approximately $0.10.

Thursday, August 03

GrubHub Inc (NYSE:GRUB) - Wall Street expects EPS to rise 13% to 26 cents, as revenue jumps 32% to $158 million. Cowen recently upgraded Grubhub, saying competition was "in check" and that the company stands to benefit as online ordering and delivery become more popular for a restaurant industry trying attract stay-at-home diners and make up for weaker sales.

Option trade to consider: Buy the GRUB Aug 18 2017 47.50 Call at approximately $2.30.

Sempra Energy (NYSE:SRE) - Shares are gaining upward momentum, signifying a potential uptrend. Sempra Energy has risen 8.27% since July 28, 2016.

Option trade to consider: Buy the SRE Aug 18 2017 115.00 Call at approximately $0.75.

Cooper Tire & Rubber Co (NYSE:CTB) - its outlook for the rest of the year looks bleak, and the second quarter did not pan out as expected. The company saw weakness particularly in North America and China, and auto manufacturing inventories remained well above normal levels in the U.S. and China due to softer demand than underlying production.

Option trade to consider: Buy the CTB Aug 18 2017 37.00 Put at approximately $1.45.


Option Trade - Under Armour Inc (NYSE:UAA) Puts

Monday, July 31, 2017

** OPTION TRADE: Buy the UAA Aug 18 2017 20.00 PUT at approximately $1.45. Sell price is left to your own judgment.

Note: Do not confuse the ticker symbols…………

Ever since what was effectively a 2-for-1 stock split back in April 2016, there had been two publicly traded classes of Under Armour (ticker: UA, UAA) stock: Class A shares that traded under the ticker symbol "UA", and Class C shares, which traded under ticker symbol "UA.C."

Adding more confusion to the situation, the two tickers just changed again in early December. The two classes of Under Armour stock now trade under the ticker symbols UA and UAA.

The Trade

Baltimore-based athletic apparel and accessories maker Under Armor (UAA) is scheduled to report its quarterly numbers before the market open on August 1. Analysts forecast a loss of $0.06 for the quarter, versus a gain of $0.01 during the same period last year.

After years of blistering growth, Under Armor began to show weakness toward the end of 2015, and the company has yet to give the market a reason to come back into the stock. Earnings have been on the decline, and this quarter is expected to mark the second straight quarterly loss for the company. While the market definitely expects a loss, the Street has a whisper number of a penny above the consensus, expecting a loss of $0.05. Even with the stock trading in the lower end of its 52-week range, its valuation remains a concern. UAA has a P/E of 49.3, and for the full year analysts expect earnings to fall 4.4%.

Overall earnings estimates have been revised lower since the company's last earnings release.

Shares are down sharply this year, as its growth pace has been cut in half by a painful mix of slowing customer traffic at retailers and increased value-based competition.

The sports-apparel specialist's most recent report showed just a 7% sales uptick to mark a dramatic break from the 20% gains investors had come to expect. Gross profit margin declined, too, as the company was forced to cut prices to manage bloated inventory levels.

The stock has lost 35.1% on the year.

Influencing Factors

The biggest problem for the company right now is its North American sales. While Nike (NKE) has been showing positive earnings growth in North America, Under Armor has been experiencing sales declines. North American sales were down 1% during the first quarter, and until the company is able to show improved sales in North America, which accounts for 80% of its total sales, the market will stay away from the stock.

CEO Kevin Plank has said that he will build “the greatest retail store in the world” and even set an opening deadline of 2019. Under Armour is actually planning to open a brick-and-mortar store. This is surprising, considering that most retailers are cutting down on physical store footprints because consumers have become less interested in shopping in person. And, this type of business is few and far between, and the chances of UAA getting it right are slim.

One of the things UAA relies on heavily is its image as a premier sports brand that focuses on athletic performance. However, the Kohl’s partnership offers a mid-tier option that takes away from the high-end image Under Armour is trying to maintain.

One of the reasons it’s difficult to digest Under Armour’s wishy-washy strategic plan is that the company is operating in a challenging space with very little room for error.

Not only is UAA suffering from an oppressive operating environment, there are a lot of questions as to whether the company’s style — heavily geared toward athletic performance — will be popular with consumers going forward.

Analysts and Hedge Funds Opinions

Instinet analyst Simeon Siegel reiterated his bearish stance ahead of the athletic apparel maker's second-quarter results. Analysts expect a second-straight quarterly loss. With the stock shedding 33% so far this year, Siegel said sentiment is already poor, but that's unlikely to change given that investor concerns are growing. "We remain concerned over shares of [Under Armour] due to cautious channel checks and the potential for a shift in the perceived growth [opportunity] may ultimately place a focus on profitability metrics, any of which paint the shares as quite expensive," Siegel wrote in a note to clients. He reiterated his reduce rating and his stock price target at $15, which is 22% below current levels.

Ten research analysts have rated the stock with a sell rating, twenty-four have issued a hold rating and seven have given a buy rating to the stock.

In other Under Armour news, Director A B. Krongard sold 4,799 shares of the company’s stock in a transaction dated Wednesday, May 10th. The stock was sold at an average price of $21.33, for a total value of $102,362.67.

Summary

With a price-to-earnings ratio of 51.44 and a questionable growth story, UAA stock is expensive. Despite the stock’s massive decline so far this year, it’s not a buy; UAA has earned its negative sentiment.

Based on the current valuation, and overall negativity in the stock, a bearish play seems to be appropriate at this stage.

Under Armour has a market capitalization of $8.56 billion, a P/E ratio of 49.09 and a beta of -0.05. The stock’s 50 day moving average is $20.95 and its 200 day moving average is $21.32. Under Armour has a 1-year low of $18.35 and a 1-year high of $43.85.


Option Trade - Pfizer Inc. (NYSE:PFE) Calls

Monday, July 31, 2017

** OPTION TRADE: Buy the PFE Aug 18 2017 33.00 Call at approximately $0.43. Sell price is left to your own judgment.

Pharma giant Pfizer Inc. (NYSE:PFE), a research-based global biopharmaceutical company, is set to report its second-quarter results before the bell on Tuesday.

Based on 8 analysts' forecasts, the consensus EPS forecast for the quarter is $0.65. The reported EPS for the same quarter last year was $0.64.

Expectations are for Pfizer to beat expectations when it reports -- last quarter, the company delivered a positive earnings surprise of 2.99%.

Also, Pfizer is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. In fact, the Most Accurate Estimate for the current quarter is currently at 66 cents per share for PFE, compared to a broader Consensus Estimate of 65 cents per share. This suggests that analysts have very recently bumped up their estimates for PFE, giving the stock an Earnings ESP of 1.54% heading into earnings season.

So far, the company's large-cap pharma peers are a perfect nine-for-nine on earnings beats, although industry share prices have slumped on weak outlook. Drug stocks soared after the promise of regulatory reform, but the market has seen a bit of a pullback thanks to the administration's relative inaction.

Analyst Marc Goodman highlighted management’s dedication to pursuing mergers and acquisitions that will drive earnings or the multiple. Tax reform could also be a positive catalyst for the company in the near or medium term.

The Street expects sales for Ibrance and Prevnar-13, to come in at $756 million and $1.24 billion respectively.

Influencing Factors

New products like Xeljanz (rheumatoid arthritis) and Ibrance (breast cancer) as well as older products like Lyrica (neuropathic pain) and Eliquis (blood thinner) are likely to contribute to the top line meaningfully. Xeljanz (5 mg taken twice daily) was approved in the EU in March 2017, which may boost the drug's sales in the to-be reported quarter.

Also, revenues from the blockbuster prostate cancer drug Xtandi, added to Pfizer's portfolio following the September 2016 Medivation acquisition, are likely to propel U.S. revenues.

The Hospira acquisition is expected to be an important growth driver as well.

Also, Pfizer launched Inflectra, a biosimilar version of Johnson & Johnson JNJ blockbuster drug Remicade in November2016. Inflectra recorded sales of $17 million in the U.S. and $78 million globally in the first quarter. The biosimilar may generate more sales in the soon-to-be reported quarter.

The bottom line should be driven by cost savings and share buybacks.

Also, key cancer candidate, Bavencio/avelumab received FDA approval for metastatic Merkel cell carcinoma (MCC) in March 2017 and for advanced bladder cancer in May. The drug may bring in some revenues in the second quarter.

Acute lymphoblastic leukemia (ALL) candidate, Besponsa, was also approved in the EU in late June 2017.

Analysts and Hedge Funds Opinions

Pfizer was upgraded by analysts at Zacks Investment Research from a “sell” rating to a “hold” rating.

According to Zacks, “Pfizer has been working on strengthening its product portfolio as well as key pipeline milestones through acquisitions and licensing deals. New products like Ibrance and contribution from acquisitions are expected to drive revenues. Also, cost-savings and share buybacks should help Pfizer achieve its earnings guidance. Investor focus will remain on the stock as Pfizer has several key pipeline milestones in 2017. However, genericization of key drugs, lost alliance revenues, pricing pressure and rising competition remain potent headwinds. Mounting competition in the immuno-oncology market is also a significant concern. Meanwhile, Pfizer’s shares have underperformed the large-cap pharma industry this year so far. The company has a mixed record of earnings surprises in recent quarters. Estimates have remained stable ahead of its Q2 earnings release. “

Several other analysts have also recently commented on the company…..

  • 7/17/2017 – Pfizer was given a new $39.00 price target on by analysts at Sanford C. Bernstein. They now have a “buy” rating on the stock.
  • 7/14/2017 – Pfizer had its “hold” rating reaffirmed by analysts at Jefferies Group LLC. They now have a $35.00 price target on the stock, up previously from $34.00.
  • 7/10/2017 – Pfizer was given a new $43.00 price target on by analysts at Cowen and Company. They now have a “buy” rating on the stock.
  •     6/23/2017 – Pfizer was upgraded by analysts at BidaskClub from a “strong sell” rating to a “sell” rating.
  •     6/16/2017 – Pfizer had its “neutral” rating reaffirmed by analysts at Jefferies Group LLC. They now have a $34.00 price target on the stock.

Two investment analysts have rated the stock with a sell rating, twelve have given a hold rating and ten have given a buy rating to the company’s stock. The stock currently has a consensus rating of “Buy” and an average price target of $37.68.

Several institutional investors have recently made changes to their positions in the stock…..

Norges Bank purchased a new stake in Pfizer during the fourth quarter valued at about $1,896,890,000.

DZ BANK AG Deutsche Zentral Genossenschafts Bank Frankfurt am Main purchased a new stake in Pfizer during the fourth quarter valued at about $289,666,000.

Appaloosa LP purchased a new stake in Pfizer during the fourth quarter valued at about $156,229,000. I.G. Investment Management LTD. increased its stake in Pfizer by 24.7% in the fourth quarter.

I.G. Investment Management LTD. now owns 11,087,884 shares of the biopharmaceutical company’s stock valued at $360,134,000 after buying an additional 2,194,738 shares in the last quarter.

Summary

Pfizer, Inc. has a market capitalization of $197.83 billion, a PE ratio of 27.90 and a beta of 1.01. The stock’s 50 day moving average price is $33.36 and its 200 day moving average price is $33.24. Pfizer, Inc. has a 52-week low of $29.83 and a 52-week high of $37.39.






Search Stock Options
Made Easy



Enjoy Relaxed or Fast-Paced Trading? Choose your Membership Style...

Whether you prefer to take a laid-back approach to your trading,

or to charge ahead in your options trading,

 Stock Options Made Easy Armchair Trader and Cut-to-the-Chase Trader Memberships put everything you need to succeed at your fingertips for just  $39 or $79 per month.






Subscribe to our FREE
newsletter for all the latest options news!


Enter Your Email Address

Enter Your First Name











Follow S_O_M_E on Twitter