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.
Thursday, January 28, 2016
Option Trade – Honeywell International Inc. (NYSE:HON) Calls
**OPTION TRADE: Buy the HON Feb 2016 100.000 call (HON160219C00100000) at approximately $1.10. Sell price is left to your own judgment.
Honeywell International Inc. (NYSE: HON), a diversified technology and manufacturing company, will report earnings tomorrow morning, Friday, 29th January, and the Wall Street consensus is that earnings will be $1.59 per share.
Honeywell has a lot of positives going for it - the company is leveraged to several markets that look relatively healthy going into 2016, management has credibility when it comes to margin improvement efforts, and the balance sheet is in pretty good shape.
Berkshire Asset Management boosted its position in Honeywell International Inc. (NYSE:HON) by 0.7% during the fourth quarter, according to its most recent disclosure with the SEC. The institutional investor owned 96,149 shares of the company’s stock after buying an additional 655 shares during the period.
A number of other hedge funds have also recently modified their holdings of HON. Lenox Wealth Advisors boosted its stake in shares of Honeywell International by 10.2% in the fourth quarter.
Honeywell can also look forward to increased unit content - Honeywell used to make about $1.2 million in revenue per plane in the past decade, but content should improve by 10% or so as new programs like Airbus A350, Embraer L500, and Boeing 737 MAX should carry over $2 million/plane in Honeywell content.
The company's environmental and building controls businesses should fare well in a relatively stronger North American and European non-residential construction market.
Ongoing use of natural gas as a fuel for electricity will help part of the catalyst business and the Solstice air conditioning product seems to be performing well.
Honeywell management has seemed calm and prepared for what is likely to be a weaker 2016 than investors were expecting around mid-2015. Integrating the large Elster acquisition will keep senior management busy, but here too I think the company has set expectations at a "beatably" conservative level.
Honeywell had its price target lifted by investment analysts at Barclays from $104.00 to $107.00 in a research note issued to investors on Tuesday, last week.
Thursday, January 28, 2016
Option Trade – Visa Inc (NYSE:V) Puts
**OPTION TRADE: Buy the V Feb 2016 68.000 put (V160219P00068000) at approximately $1.00. Sell price is left to your own judgment.
Visa Inc (NYSE: V), a payments technology company, is set to issue its Q116 quarterly earnings data after the market closes today, Thursday, January 28th. Analysts expect the company to announce earnings of $0.69 per share and revenue of $3.63 billion for the quarter.
Although Visa Inc is expected to report a jump in first-quarter earnings, boosted by higher volumes, there are many analysts that have expressed concerns that Visa, which gets a large chunk of revenue from outside the United States, could take a blow from the quarter's strong dollar and falling oil prices. According to some analysts, Mastercard's entry into China could push costs up during the period, and will continue to do so for the year.
Stock analysts at Oppenheimer lowered their Q4 2015 earnings estimates for Visa in a research report issued on Thursday, according to Zacks Investment Research. Oppenheimer analyst G. Greene now forecasts that the firm will post earnings per share of $0.67 for the quarter, down from their previous forecast of $0.68.
In other Visa news, EVP William M. Sheedy sold 60,930 shares of the business’s stock in a transaction that occurred on Wednesday, December 16th. The shares were sold at an average price of $79.47, for a total value of $4,842,107.10.
The share price has dropped -11.27% from its peak and so far this year has moved backward -7.31%. The stock has a market capitalization of $174.63 billion. In one month, its share price decreased -8.50% and kept distance of 20.02% from the worst level in 52 weeks.
Wednesday, January 27, 2016
Option Trade – Facebook Inc (NASDAQ:FB) Calls
**OPTION TRADE: Buy the FB Jan 2016 100.000 call (FB160129C00100000) at approximately $1.00. Sell price is left to your own judgment.
Facebook Inc (NASDAQ: FB), which is engaged in building products to create utility for users, developers, and advertisers, will release its fourth-quarter earnings report today after closing bell today. Facebook is expected to report unadjusted earnings per share of 41 cents on profit of $1.19 billion, up from 25 cents per share on $701 million in profit. Revenue is seen growing to $5.36 billion from $3.85 billion.
Facebook reported a surprisingly strong profit growth last quarter, helped by a spike in mobile users and advertising. The company has been spending aggressively on hiring and building data centers. Analysts have said the growth in video views presents the most significant near-term opportunity for Facebook as it looks to grab a bigger slice of the TV advertising market.
Some of the new developments hint that the company’s performance this year will be nothing short of last year’s. Facebook may be making a foray into the technology hardware sector through its Oculus VR acquisition, but its primary source of revenue has been, and will remain to be, ad dollars.
Two new features launched in 2015 are particularly expected to have given a solid boost to the company’s bottom line in the fourth quarter -- its “Dynamic Product Ads” feature launched in 2015 is redefining conventional e-commerce – and, the video advertising feature Facebook introduced in the second quarter of 2015.
Going into 2016, some of the latest products, including Facebook’s “Sports Stadium”—a new dedicated way to engage sports fans through its platform—Facebook’s artificial intelligence assistant “M,” and the monetization of “Messenger” and “WhatsApp” through e-commerce, spell a positive outlook for the company.
Wednesday, January 27, 2016
Option Trade – Paypal Holdings Inc (NASDAQ:PYPL) Calls
**OPTION TRADE: Buy the PYPL Feb 2016 33.000 call (PYPL160219C00033000) at approximately $1.00. Sell price is left to your own judgment.
Paypal Holdings Inc (NASDAQ: PYPL), a technology platform company, which enables digital and mobile payments on behalf of consumers and merchants around the world, is expected to report 4th quarter earnings after the close today, Wednesday, Jan 27th, 2016.
Analysts are looking for earnings per share of $0.35 on revenue of $2.51B. The consensus range is $0.32-$0.37 for EPS on revenue of $2.43B-$2.60. The company has registered positive earnings surprises in two of the last four quarters with an average beat of 6.7%.
Shares of PayPal have recently moved to $31.97 and the average price target from Wall Street research analysts covering the stock is $40.90. The share price has dropped -24.86% from its peak and so far in this year moved backward -11.69%. The stock has a market capitalization of $38.57 billion. The company with 8.62 million shares changed hands has PE of 34.01. During the day, the stock touched a high of $31.98 and low of $31.39. In one month, its share price fell -13.85% and kept distance of 6.57% from worst level in 52 weeks.
PayPal Holdings Inc‘s stock had its “buy” rating reiterated by equities research analysts at Jefferies Group in a research report issued last Wednesday. They currently have a $44.00 target price on the stock. Jefferies Group’s price target points to a potential upside of 38.85% from the stocks previous close.
Also, Bryan Keane of Deutsche Bank reiterated a Buy rating on PayPal with a $44 price target ahead of earnings. The company is gaining market share and Keane expects this trend to continue. Thanks to economies of scale, the analyst anticipates sustainable margin expansion.
Most of the analysts covering Paypal remain bullish on the company’s stock. A total of 19 analysts have provided ratings in the last 3 months; 14 of them suggest a Buy, 3 recommend a Hold rating and 2 suggest to Sell. The stock currently has a consensus rating of “Buy” and an average target price of $41.21.
Wednesday, January 27, 2016
Option Trade – Ford Motor Company (NYSE:F) Calls
**OPTION TRADE: Buy the F Feb 2016 12.000 call (F160219C00012000) at approximately $0.38. Sell price is left to your own judgment.
Ford Motor Company (NYSE: F), is forecast to report unadjusted earnings per share of 48 cents on $1.88 billion in profit, up from 1 cent on profit of $52 million on Thursday, before markets open. Revenue is expected to grow to $36.32 billion, up from $33.8 billion.
Earlier this month, Ford revised its full-year guidance for 2015 in light of a recent accounting change that it said will increase its reported 2015 pre-tax profits by about $1.5 billion. The company now expects to report a "record" pre-tax profit for 2015 in the "upper half" of the $10 billion to $11 billion range.
Sales of Ford's F-150 and its Super Duty siblings were very strong during the fourth quarter. That usually means that Ford will have a strong profit to report. It was a good three months for the Blue Oval. Ford's U.S. sales rose 7.7% in the fourth quarter versus the same period of 2014. And sales of Ford's most profitable product line, the F-Series pickups, rose 9.7% over the same period.
Ford also did well in most of its overseas regions during the quarter. While China's slowing economy has hurt Ford's commercial-vehicle sales in the country, Ford's retail sales of cars and SUVs have continued to be strong despite the slowdown, with solid growth through the quarter.
Strong sales of Ford's Kuga SUV have helped power good results in China despite an overall market slowdown. The Kuga is closely related to the U.S.-market Ford Escape.
The biggest single driver of Ford's bottom line is sales in North America, particularly in the U.S., and those were very strong during the quarter. The strength of Ford's fourth-quarter sales in Europe and Asia Pacific add to the reasons for optimism.
Wednesday, January 27, 2016
Option Trade – Alibaba Group Holding Ltd (NYSE:BABA) Puts
**OPTION TRADE: Buy the BABA Feb 2016 65.000 put (BABA160219P00065000) at approximately $1.80. Sell price is left to your own judgment.
Alibaba Group Holding Ltd (NYSE: BABA), an online and mobile commerce company, is expected to report $4.07 in unadjusted earnings per share on $11.17 billion in profit in its fiscal third quarter ended December, up from $2.27 per share on $5.88 billion in profit tomorrow, before the market opens. Revenue is expected to rise to $32.96 billion from $25.94 billion from the year-ago quarter.
A prolonged downturn in China's economy is affecting the entire retail sector, including Alibaba's core e-commerce business.
Short sellers seem to be betting on more turbulence in China's domestic stock markets, which have shed 17 percent since the start of the year. Shares of most US-listed Chinese companies have moved in tandem with that drop, and Alibaba's own shares are down 14 percent since the start of the year.
There is plenty of bearish sentiment on the Chinese stock markets right now, and it is believed that they could have an additional downside of up to 20 percent before things finally settle down.
In terms of fundamentals, the company's shares now trade at a multiple of about 30 for the current fiscal year, which looks quite reasonable if one assumes the company can maintain its recent profit and revenue growth of 20-30 percent.
But that said, US investors seem to be more focused these days on China's stock markets, which looks somewhat illogical, rather than the actual business of Alibaba and other US-listed Chinese companies. That means Alibaba is likely to come under continued pressure, perhaps justifying the huge surge in short-selling interest.
A slowdown in Alibaba's growth rate looks almost inevitable in any scenario due partly to the company's own large size and market share and China's own economic slowdown that's likely to accelerate.
Alibaba shares are trading around $71 and are down 32 percent over the past 12 months. Its shares are down 13 percent for the year so far.
Tuesday, January 26, 2016
Rockwell Automation (NYSE:ROK) Puts
**OPTION TRADE: Buy the ROK Feb 2016 80.000 put (ROK160219P00080000) at approximately $0.60. Sell price is left to your own judgment.
Rockwell Automation (NYSE: ROK), a provider of industrial automation power, control and information solutions that help manufacturers achieve a competitive advantage for their businesses, is expected to report lower first-quarter sales and profit hurt by slowing industrial production growth in the energy and mining sectors.
Rockwell Automation will announce its Q116 earnings results before the market opens on Wednesday, January 27th. Analysts expect the company to announce earnings of $1.34 per share and revenue of $1.39 billion for the quarter. Rockwell Automation has set its FY16 guidance at $5.90-6.40 EPS.
Rockwell Automation last released its quarterly earnings data on Tuesday, November 10th. The company reported $1.57 earnings per share (EPS) for the quarter, missing the consensus estimate of $1.79 by $0.22. The business earned $1.61 billion during the quarter, compared to analysts’ expectations of $1.68 billion. During the same quarter last year, the company earned $1.86 EPS. The firm’s revenue for the quarter was down 9.8% on a year-over-year basis. On average, analysts expect Rockwell Automation to post $5.95 EPS for the current fiscal year and $6.35 EPS for the next fiscal year.
Rockwell Automation’s customers have become more cautious with respect to capital expenditures and operating expenses. The company expects organic sales in the first quarter of fiscal 2016 to be down in the mid single digits due to a high single-digit decline in the U.S. Rockwell Automation cautions that sequential growth in the balance of fiscal 2016 will not be sufficient to drive organic growth for the year.
The fiscal fourth quarter faced the largest negative impact from currency (8%) than any other quarter in fiscal 2015. At current exchange rates, Rockwell Automation expects a headwind from currency in the fiscal first quarter as well.
The rout in oil and gas prices will continue to weigh on Rockwell Automation’s results. Rockwell Automation has an exposure of roughly 12% to oil and gas. The company also noted that capital spending is still very constrained in China.
The global mining industry has been noticeably sluggish due to oversupply and weak commodity prices, particularly in China and Australia. Persistent weakness in the mining industry and a lack of major projects will continue to affect Rockwell Automation’s results in the coming quarters.
Also, SVP Frank C. Kulaszewicz sold 2,634 shares of the business’s stock in a transaction that occurred on Monday, December 7th. The stock was sold at an average price of $106.50, for a total value of $280,521.00. As well, VP Steven W. Etzel sold 313 shares of the business’s stock in a transaction that occurred on Monday, December 7th.
Tuesday, January 26, 2016
Textron Inc. (NYSE:TXT) Calls
**OPTION TRADE: Buy the TXT Feb 2016 38.000 call (TXT160219C00038000) at approximately $0.90. Sell price is left to your own judgment.
Textron Inc. (NYSE: TXT), a multi-industry company engaged in aircraft, defense, industrial and finance businesses to provide customers with products and services worldwide, is expected to report a rise in its revenue and profit in the fourth quarter on Wednesday.
Textron Inc. will release its Q415 earnings data before the market opens on Wednesday, January 27th. Analysts expect Textron to post earnings of $0.82 per share and revenue of $4.19 billion for the quarter.
Textron currently has an average rating of “Buy” and a consensus target price of $50.98.
TXT has been the subject of several research reports. JPMorgan Chase & Co. raised Textron from a “neutral” rating to an “overweight” rating and set a $50.00 price target for the company in a research note on Wednesday, December 16th. Vetr raised Textron from a “buy” rating to a “strong-buy” rating and set a $49.82 price target for the company in a research note on Tuesday, December 29th. Credit Suisse lifted their price target on Textron from $47.00 to $50.00 and gave the stock an “outperform” rating in a research note on Monday, December 14th. Finally, Cowen and Company reissued an “outperform” rating and issued a $53.00 target price (up previously from $52.00) on shares of Textron in a research note on Thursday, December 10th.
Tuesday, January 26, 2016
Fortinet Inc (NASDAQ:FTNT) Puts
**OPTION TRADE: Buy the FTNT Feb 2016 25.000 put (FTNT160219P00025000) at approximately $1.00. Sell price is left to your own judgment.
Fortinet Inc (NASDAQ: FTNT), a provider of network security solutions, is set to post its Q415 quarterly earnings results after the market closes on Thursday, January 28th. Analysts expect Fortinet to post earnings of $0.18 per share and revenue of $296.28 million for the quarter.
Stating Q4 channel checks point to a slowdown in momentum, Deutsche's Imtiaz Koujalgi has downgraded Fortinet to Hold ahead of the unified threat management/next-gen firewall appliance vendor's Thursday afternoon Q4 report. His target has been cut by $15 to $34.
Piper downgraded Fortinet last week, while citing a soft Q4 reseller survey, a shift in IT spending priorities, growing price pressure, and tough comps.
Reynolds Capital Management closed out its position in shares of Fortinet Inc during the fourth quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The institutional investor previously had a 5,600 share position in the company, valued at approximately $152,376.
Also, the Chief Financial Officer of Fortinet Inc, Del Matto Andrew H had sold 3,250 shares worth of $116,708 in a transaction dated December 1, 2015. In this transaction, 3,250 shares were sold at $35.91 per share.
Fortinet Inc. has lost 3.78% in the last five trading days and dropped 13.73% in the last 4 weeks. Fortinet Inc. has dropped 37.07% during the last 3-month period. Year-to-Date the stock performance stands at -12.7%.