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 – Yelp Inc (NYSE:YELP) Calls
Thursday, February 09, 2017
**OPTION TRADE: Buy the YELP MARCH 17 2017 45.000 call at approximately $1.25. Sell price is left to your own judgment.
Yelp Inc (NYSE:YELP), connecting people with local businesses by bringing word of mouth online and providing a platform for businesses and consumers to engage and transact, as well as providing local business review sites, is set to report fourth-quarter 2016 results today, Feb 9, after the market closes. For the fourth quarter, analysts expect Yelp to post earnings of $0.03 per share and revenue of $194.51 million for the quarter.
Yelp delivered strong results in the third quarter, surpassing both top- and bottom-line expectations on the back of significant improvement in cumulative reviews and local advertising accounts. Nearly 70% of the paid reviews came from Yelp’s mobile app, per management. Given its strong results, management had raised its revenue expectations for the fiscal.
Ahead of Thursday night's earnings, it looks like YELP is looking likely to have a big post-earnings move, possibly a single-session swing of about 15%. Over the last three quarters, Yelp Inc has made notable moves to the upside in the session after earnings, averaging a single-day gain of 15.5%.
There is plenty of positive reaction to Yelp's leadership position as a leading destination for reviews/info on local businesses and like the recent trajectory of accelerating local ad rev. growth, upward est. revisions, and improving incremental EBITDA margins.
There is a feeling of investment positives for the appreciation of Yelp’s focus on national accounts, along with investments to drive app usage frequency and retrenchment from all international operations.
Looking forward to 2017, the monetization of "request a quote" represents compelling option value, and it is believed that the 2H16 conversion of Class B shares to Class A could shine a light on Yelp's strategic asset value.
Some of the key investment positives for Yelp were that it was a leading destination for local business information and reviews, with robust execution and recent upward revision in expectations.
Salesforce growth bodes well for local ad revenue growth in 1H17,” and the company’s emphasis on national accounts could make business less volatile, driving potential upside.
RBC Capital Markets set a $55.00 price target on Yelp Inc. in a research note released on Monday. The firm currently has a buy rating on the local business review company’s stock.
Three investment analysts have rated the stock with a sell rating, fifteen have assigned a hold rating and nineteen have issued a buy rating to the company’s stock. The stock has an average rating of Hold and an average target price of $37.87.
Yelp has a 50-day moving average price of
$40.32 and a 200-day moving average price of $37.55. Yelp has a 52 week low of
$14.53 and a 52 week high of $43.41. The company’s market capitalization is
Option Trade – Puma Biotechnology Inc (NASDAQ:PBYI) Calls
Wednesday, February 08, 2017
**OPTION TRADE: Buy the PBYI MARCH 17 2017 45.000 call at approximately $4.00. Sell price is left to your own judgment.
PLEASE NOTE: This option trade is outside the guidelines for this membership – therefore, it is up to the individual trader to make his/her own decision as to whether or not to execute the trade.
Also note: This is a very high-risk trade, as discussed below.
Puma Biotechnology Inc (NASDAQ:PBYI), a biopharmaceutical company that focuses on the development and commercialization of products for the treatment of cancer, has pulled back dramatically since reaching a high of $73.27 in October, 2016 – making for an oversold situation -- and if the future news is positive – then there is likely to be a big bullish stock rise occurring.
Bear in mind that Puma Biotech's share price has declined 36.7% in the past one year
The Reasoning behind the Trade
Option trading with small-cap biotechnology companies is similar to playing in a minefield. One bad FDA report or a missed data test, and the stock can lose 50% in a single day.
However, on the other-hand, the stock could be the reversal of the story above.
This trade could be based around the outcome that will be experienced with Roche's (RHHBY) Aphinity study. The Aphinity study enrolls women undergoing adjuvant (post-surgical) breast cancer therapy, with the aim of demonstrating the benefit, if any, of adding Perjeta to one year of Herceptin and chemotherapy, the current standard of care.
The position of up or down for Puma will depend on whether or not the results are positive for Aphinity.
A successful Aphinity study will deliver a significant boost in Perjeta sales, so obviously that's great for Roche.
Puma is seeking FDA approval for neratinib as an extended adjuvant breast cancer therapy. That means treating post-surgery breast cancer patients first with one year Herceptin/chemo (standard adjuvant therapy) and then switching them to one year of neratinib.
If Aphinity is positive, Puma is in trouble because Perjeta/Herceptin becomes the new standard of care for adjuvant breast cancer therapy. That squeezes out neratinib, in part because there are no data to support the use of neratinib after Perjeta/Herceptin. [Puma disagrees, insisting neratinib is still viable even with the addition of Perjeta to adjuvant breast cancer therapy.]
If Aphinity is a win, Roche shares go higher, Puma shares fall.
If Aphinity fails, Roche shares fall and Puma shares soar. Greatly!
Analysts and Hedge Funds
A number of large investors have recently increased their holdings of the company. JPMorgan Chase & Co. boosted its stake in shares of Puma Biotechnology by 31.4% in the second quarter. JPMorgan Chase & Co. now owns 231,875 shares of the biopharmaceutical company’s stock valued at $6,907,000 after buying an additional 55,345 shares during the period. Nationwide Fund Advisors acquired a new stake in shares of Puma Biotechnology during the second quarter valued at approximately $480,000. Teacher Retirement System of Texas boosted its stake in shares of Puma Biotechnology by 13.7% in the second quarter. Teacher Retirement System of Texas now owns 3,848 shares of the biopharmaceutical company’s stock valued at $115,000 after buying an additional 465 shares during the period.
One research analyst has rated the stock with a sell rating, four have assigned a hold rating and four have given a buy rating to the company’s stock. Puma Biotechnology has an average rating of “Hold” and an average target price of $68.56.
Puma Biotechnology Inc has a 50 day moving
average of $33.25 and a 200 day moving average of $46.05. Puma Biotechnology
Inc has a 52-week low of $19.74 and a 52-week high of $73.27. The firm’s market
capitalization is $1.22 billion.
Option Trade – GNC Holdings Inc (NYSE:GNC) Puts
Tuesday, February 07, 2017
**OPTION TRADE: Buy the GNC MARCH 17 2017 7.500 put at approximately $0.70. Sell price is left to your own judgment.
Super Bowl reject GNC Holdings Inc (NYSE:GNC), a specialty retailer of health, wellness and performance products, including vitamins, minerals and herbal supplement products (VMHS), sports nutrition products and diet products, is expected to report earnings on 02/16/2017 before market open. The report will be for the fiscal Quarter ending Dec 2016. Based on 6 analysts' forecasts, the consensus EPS forecast for the quarter is $0.37. The reported EPS for the same quarter last year was $0.63.
Last quarter GNC plummeted 24.8% after missing earnings. The stock has continued to fall since, and now with earnings approaching more bearishness is apparent with the anticipation of more weakness.
And shares of GNC Holdings Inc are continuing to sink ahead of next Thursday morning's earnings report.
GNC's earnings history is instructive. Following four of the past five quarterly data releases, the stock has stumbled sharply in the ensuing session -- losing 26.6%, on average.
Not only would a repeat performance land GNC shares at all-time lows, it would extend their year-over-year deficit. Down to $8.32, the supplements retailer has surrendered two-thirds of its value over the past 12 months.
All eight analysts tracking the shares have doled out a "hold" or worse rating. Plus, 16.4% of the stock's float is sold short -- roughly equivalent to its April 2013 all-time peak. At GNC's average trading volume, it would take a week to cover these positions.
GNC Holdings’ charts and earnings history both hint at extended losses in the not-too-distant future.
GNC Holdings had a really rough trading day yesterday as shares tumbled 7.76%, or a loss of $-0.7 per share, to close at $8.32. After opening the day at $9.00, shares of GNC traded as high as $9.03 and as low as $8.30. Volume was 5.12 million shares over 18,911 trades, against an average daily volume of 2.55 million shares and a total float of 68.4 million.
As a result of the decline, GNC now has a market cap of $569.09 million.
The stock has a P/E Ratio of 3.4.
In the last year, shares of GNC have traded between a range of $35.90 and $8.28, and its 50-day SMA is currently $11.77 and 200-day SMA is $19.37.
Option Trade – Alaska Air Group, Inc. (NYSE:ALK) Calls
Tuesday, February 07, 2017
**OPTION TRADE: Buy the ALK FEB 17 2017 100.000 call at approximately $0.45. Sell price is left to your own judgment.
Alaska Air Group, Inc. (NYSE:ALK), the parent company of Alaska Airlines,) will report fourth-quarter earnings before the market open on February 8. Analysts expect to see earnings of $1.45 per share, down a penny from the same period last year.
Despite strengthening oil prices, Alaska Air has been extremely strong over the last seven months, and the stock has recently hit a new record high. Even with shares near a record high, the stock has a favorable valuation that could send the stock higher if the quarterly numbers impress Wall Street. The company has a fantastic earnings track record, and has not reported weaker than expected earnings since the second quarter 2013.
Alaska Air Group not only has a decent short-term momentum, but it is seeing solid activity on the earnings estimate revision front as well.
These positive earnings estimate revisions suggest that analysts are becoming more optimistic on ALK’s earnings for the coming quarter and year. In fact, consensus estimates have moved sharply higher for both of these time frames over the past four weeks, suggesting that Alaska Air could be a solid choice for this options trade.
In the past 30 days, 3 estimates have gone higher for Alaska Air while none have gone lower in the same time period. The trend has been pretty favorable too, with estimates rising from $1.29 a share 30 days ago, to $1.34 per share, a move of 3.9%.
Alaska Air Group has become the fifth-largest U.S. airline following the completion of the acquisition of Virgin America. The buyout helped Alaska Air Group to significantly expand its presence, particularly in the West Coast.
The company’s remarkable traffic results in December are also impressive. The company’s traffic growth can be attributed to new routes and focus on enhancing customer service. In addition, Alaska Air’s efforts to reward shareholders are commendable. The carrier, which started paying dividends in mid-2013, announced a 38% hike in its quarterly dividend to $0.275 per share last year. The resumption of commercial flights to Havana by the carrier is believed to be a move that will benefit the company's top line immensely as Havana is a favorite tourist spot.
Analysts and Hedge Funds
Alaska Air Group was upgraded by analysts at Vetr from a “sell” rating to a “hold” rating on Jan. 16. They now have a $90.70 price target on the stock.
At the same time, Alaska Air Group was upgraded by analysts at Zacks Investment Research from a “hold” rating to a “buy” rating. They now have a $104.00 price target on the stock.
According to Zacks, “Alaska Air Group has outperformed the broader industry over the past three months. It became the fifth-largest U.S. airline after it completed the acquisition of Virgin America. The buyout helped Alaska Air Group to significantly expand its presence, particularly in the West Coast. The deal also gave the carrier greater access to key cities across the U.S. Alaska Air Group is now striving to get the Federal Aviation Administration certification. Following receipt of the operating certificate, which is expected to take one year, the two airlines can operate as a single carrier. Apart from the deal, we are positive on the flight services to Havana and new services from Portland and San Francisco.”
Also, Alaska Air Group was upgraded by analysts at Bank of America Corporation from a “neutral” rating to a “buy” rating. They now have a $110.00 price target on the stock, up previously from $97.00.
Of the 10 analysts who cover the stock, six rate it a “strong buy”, one rates it a “buy”, and three rate it a “hold”. The stock receives S&P Capital IQ’s 3 STARS “Hold” ranking. Analysts have also kept a bullish price target of $102.55, which is 8.8% above the stock’s current price.
SRB Corp increased its stake in Alaska Air Group, Inc. by 8.4% during the third quarter, Holdings Channel reports. The institutional investor owned 2,301 shares of the company’s stock after buying an additional 179 shares during the period. SRB Corp’s holdings in Alaska Air Group were worth $152,000 at the end of the most recent reporting period.
The stock has started to move higher lately, adding 7.5% over the past four weeks, suggesting that investors are starting to take note.
Alaska Air Group, Inc. has a 12 month low of $54.51 and a 12 month high of $96.27. The stock has a 50-day moving average of $91.90 and a 200 day moving average of $76.84. The company has a market cap of $11.73 billion, a price-to-earnings ratio of 13.34 and a beta of 0.80.
Option Trade – GrubHub Inc (NYSE:GRUB) Calls
Monday, February 06, 2017
**OPTION TRADE: Buy the GRUB MARCH 17 2017 45.000 call at approximately $1.00. Sell price is left to your own judgment.
GrubHub Inc (NYSE:GRUB), a provider of an online and mobile platform for restaurant pick-up and delivery orders, reports Q4 results before the market open Wednesday, and earnings are projected to rise 32% to 25 cents while revenue increases 37% to $137.3 million.
GrubHub is the leader in its field, connecting nearly 8 million diners with over 45,000 restaurants in more than 1,100 cities.
Analysts have also been bullish on GrubHub's potential earnings gains from any tax cuts the White House and Congress may deliver, and investors are also watching which new chains it can snag to widen selection.
Looking at the big picture, GrubHub is a turnaround stock. By January 2016, shares had fallen 63% from their April 2015 all-time high. But the stock has since recouped nearly all of those losses, earning it a spot on the IBD 50 list of leading growth stocks.
Over the past 18 months, the company has been investing in key markets to deepen its penetration, as well as expanding to new markets where it "can see rapid growth," Chief Executive Matt Maloney said on the company's third-quarter conference call Oct. 26.
In a world where convenience is key and time is valuable, GrubHub has made a name for itself in food delivery.
"I-want-it-now" millennials are pushing more services online, and GrubHub boasts not only the largest online food ordering platform in the U.S., but also considerable name recognition and a first-mover advantage.
The Chicago-based firm also is expected to be one of the biggest beneficiaries of the highly anticipated corporate tax reform set to be enacted by President Donald Trump, as it conducts nearly all its business in the U.S. GrubHub is currently swallowing a tax rate of approximately 40%.
Credit Suisse analyst Paul Bieber calls GrubHub a "favorite Trump trade," saying that a lower rate would "significantly increase GrubHub's (earnings) potential." He estimates a 5% reduction would drive 10 cents to 12 cents of incremental earnings per share on an annual basis. Bieber has an outperform rating and 48 price target on GrubHub.
Looking ahead, Chief Executive Matt Maloney said "the majority of our spend and our investments will be in driving efficiency and increasing the network and availability of our drivers in the markets we are already in."
Along with Seamless, which was acquired in 2013 to drive scale, GrubHub now boasts some 7.7 million active diners in over 1,000 cities ordering from more than 45,000 local restaurants.
That list of restaurants keeps growing by leaps and bounds, and accelerates as time passes. In 2015, it added 1,750, while in the first half of 2016 alone it's estimated to have added 2,000 more. Morgan Stanley's Nowak projects that 2,205 were added in the second half of last year.
What's unclear is how many outlets GrubHub added after landing a couple of big fish last year. It inked deals with Subway and P.F. Chang's, among other pacts, during the third quarter. Subway has nearly 45,000 restaurants worldwide with nearly 27,000 of those in the United States, while P.F. Chang's has more than 200 restaurants domestically, but it's unclear how many of those outlets GrubHub will be serving.
Along with a wider selection, GrubHub has made other improvements to its platform to increase conversion rates, meaning turning an app user to a purchaser.
GrubHub also launched a full rebrand earlier in 2016, and says that improved marketing has helped contribute to its active diner growth, which hit 19% in the third quarter.
Analysts and Hedge Funds
Morgan Stanley upgraded GrubHub Inc. from Equalweight to Overweight with a price target of $44.00 (from $36.00).
Analyst Brian Nowak comments "We raise our PT to $44 based on our forward DCF. Our PT implies GRUB would trade at 18x our '17E adj EBITDA...still a 6% discount to its 19.5X historical median, but roughly in-line with the appropriate growth adjusted multiple across our coverage universe at 18x 2017 EV/EBITDA for 27% growth (See Exhibit 16). In 2016, GRUB proved it was able to grow even as new entrants (Postmates, Doordash, Uber, Amazon, etc) came into the market. Looking ahead, we see continued restaurant and diner growth...combined with platform optimization driving faster than expected top and bottom-line results."
Wedbush lifted their Q1 2017 earnings estimates for GrubHub in a research note issued on Thursday. Wedbush analyst A. Turner now expects that the firm will earn $0.23 per share for the quarter, up from their previous forecast of $0.22. Wedbush has an “Outperform” rating and a $47.00 price target on the stock.
AO Asset Management LLC increased its position in shares of GrubHub Inc by 21.2% during the third quarter. The institutional investor owned 208,900 shares of the company’s stock after buying an additional 36,600 shares during the period.
As well, KCG Holdings Inc. purchased a new stake in GrubHub Inc during the third quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission (SEC). The firm purchased 15,779 shares of the company’s stock, valued at approximately $678,000.
One analyst has rated the stock with a sell rating, seven have issued a hold rating and thirteen have issued a buy rating to the company’s stock. The company currently has a consensus rating of “Buy”.
GrubHub Inc has a market capitalization of $3.50 billion and a P/E ratio of 74.36. The company’s 50-day moving average is $38.86 and its 200-day moving average is $38.81. GrubHub Inc has a 12 month low of $18.68 and a 12 month high of $44.58.
Option Trade – GlaxoSmithKline plc (ADR) (NYSE:GSK) Calls
Monday, February 06, 2017
**OPTION TRADE: Buy the GSK MARCH 17 2017 40.000 call at approximately $0.40. Sell price is left to your own judgment.
GlaxoSmithKline plc (ADR) (NYSE:GSK), a healthcare company, is scheduled to report fourth-quarter 2016 and full-year results on Feb 8. Last quarter, the company delivered a positive earnings surprise of 7.79%.
Glaxo's share price was up 2.4% this year so far, outperforming the 0.6% decline witnessed by the Large-Cap Pharma industry.
Glaxo's performance has been pretty good so far, with the company's earnings beating expectations thrice in the four trailing quarters. Overall, the company has delivered an average positive surprise of 8.96%.
The company has been operational in 150 countries including the US, and has 84 manufacturing sites based in 36 countries around the globe. Due to its robust drug pipeline, positive foreign exchange, and a 5% dividend yield, majority analysts have upgraded its status and raised its price target.
While it's been a tough few years for GlaxoSmithKline, better days could be ahead. The big drugmaker reported encouraging results in the third quarter of 2016, with sales up 8% and core earnings per share 12% higher using constant exchange rates.
Glaxo's HIV drugs Tivicay and Triumeq continue to be huge winners. The company's vaccines business also is performing very well. There are a few weaknesses in Glaxo's current product lineup, though. Most notable is that sales are falling for the company's top-selling drug, Seretide/Advair.
The good news for GlaxoSmithKline, however, is that it has several strong new products and potentially more on the way. New drugs now account for a quarter of Glaxo's total pharmaceutical sales. The company hopes to soon win regulatory approval for shingles vaccine Shingrix and autoimmune disease drug sirukumab.
Glaxo's pipeline appears to be solid as well. The company expects key data for between 20 and 30 programs by the end of 2018.
Earnings growth should be on the way for Glaxo, which will help the company keep the dividend payments flowing. Wall Street expects Glaxo to increase earnings over the next five years by an average annual rate of 11.7%.
GlaxoSmithKline PLC was upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating recently. The brokerage currently has a $44.00 price target on the pharmaceutical company’s stock. Zacks Investment Research’s price target suggests a potential upside of 13.17% from the stock’s current price….
According to Zacks, “Glaxo should continue to see a strong performance at all of its business segments – Pharmaceuticals, Vaccines and Consumer Healthcare. Also, the company’s diversified base and presence in different geographical areas should support its top line. We are positive on Glaxo’s efforts to develop its pipeline. Performance of new products as well as of those acquired from Novartis has been encouraging. These should support the top line and ease the impact of the loss of Advair sales. Moreover, Glaxo’s shares have outperformed the Large Cap Pharma industry in the past one year. However, persistent challenges like stiff competition, genericization and pricing pressure, impact the company’s performance. In particular, pricing dynamics and competitive pressure will affect Advair sales. Estimates are stable ahead the company’s Q4 release.”
GlaxoSmithKline PLC has been given an average recommendation of “Buy” by the eighteen analysts that are presently covering the firm. One investment analyst has rated the stock with a sell recommendation, seven have assigned a hold recommendation and ten have given a buy recommendation to the company. The average price target among brokerages that have issued a report on the stock in the last year is $48.33.
Over the past two quarters, Consumer Healthcare delivered a strong performance across the Oral Health and Wellness Power brands in all regions, particularly the international markets. The trend is expected to continue in the to-be-reported quarter as well.
Cost savings from restructuring initiatives and continued efficiencies should boost operating profits.
GlaxoSmithKline PLC’s 50-day moving average is $38.86 and its 200-day moving average is $41.12. The company has a market cap of $95.67 billion, a PE ratio of 255.32 and a beta of 0.94. GlaxoSmithKline PLC has a one year low of $37.20 and a one year high of $45.58.