“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, April 16, 2018

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 - - Sangamo Therapeutics Inc (NASDAQ: SGMO) Calls

Friday, April 20, 2018

** OPTION TRADE: Buy SGMO MAY 18 2018 20.000 CALL at approximately $1.50 each. Sell price is left to your own judgment.

Biotech stocks were hammered last week, thanks to President Trump's trade war with China, as well as the high-profile clinical failure of Incyte Corp. and Merck’s late-stage combination therapy for advanced melanoma. In short, these two events sparked a wave of risk avoidance behavior among investors, which is always a negative catalyst for biotech stocks in general.

However, this widespread sell-off has arguably created some truly enticing buying opportunities.

Biotech stock Sangamo Therapeutics Inc (NASDAQ:SGMO) touched a 17-year high of $27.50 on Feb. 22, after the company announced a $3 billion gene-editing deal with Gilead Sciences (GILD). Since then, however, SGMO stock has taken a breather on the charts, pulling back to its 160-day moving average. But if past is prologue, Sangamo Therapeutics shares could be screaming "buy" once again.

The last two times SGMO stock fell to within one standard deviation of its 160-day trendline after a lengthy stretch above it, the equity was higher one month later both times. In fact, the drug stock averaged a one-month gain of 83.91% after these pullbacks.

Equities analysts forecast that Sangamo Therapeutics will post $36.08 million in sales for the current fiscal quarter. Two analysts have provided estimates for Sangamo Therapeutics’ earnings, with estimates ranging from $19.15 million to $53.00 million. Sangamo Therapeutics reported sales of $3.43 million in the same quarter last year, which indicates a positive year-over-year growth rate of 951.9%. The firm is expected to issue its next quarterly earnings report on Wednesday, May 9th.

Influencing Factors

Sangamo's stock has been red-hot over the past 12 months due to the growing interest in all-things gene therapy. The backstory is that Sangamo struck a series of licensing deals with biopharma heavyweights Gilead Sciences (NASDAQ: GILD) and Pfizer (NYSE: PFE) to develop next-generation therapies for cancer and rare diseases like the bleeding disorder hemophilia.

The Gilead partnership centers around creating adoptive cell therapies that can be manufactured at scale using Sangamo's zinc-finger nuclease (ZFN) gene-editing platform.

A partnership with Pfizer  for Sangamo's severe hemophilia is also on track to produce preliminary data by mid-year. If successful, this partnership may trigger buyout talks between the two companies. Pfizer, after all, has deep interests in novel treatments for rare diseases, and the biopharma is currently in the process of ramping up its adoptive cell therapy pipeline as well. Put simply, Sangamo would be a near-perfect fit for Pfizer.

Aside from the possibility of a buyout from one of its partners, Sangamo's deep and robust gene therapy platform also offers up another compelling reason to own this stock right now

Sangamo Therapeutics was upgraded by equities research analysts at ValuEngine from a “hold” rating to a “buy” rating in a research report issued on Monday, April 02.

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

  • Barclays restated a “buy” rating and set a $30.00 target price on shares of Sangamo Therapeutics in a research note on Sunday, February 25th.
  • Jefferies Group reaffirmed a “buy” rating on shares of Sangamo Therapeutics in a research report on Friday, February 23rd.
  • BidaskClub lowered shares of Sangamo Therapeutics from a “strong-buy” rating to a “buy” rating in a research report on Saturday, March 17th.
  • Finally, Piper Jaffray set a $25.00 price target on shares of Sangamo Therapeutics and gave the stock a “buy” rating in a report on Wednesday, January 3rd.

Three analysts have rated the stock with a hold rating and five have given a buy rating to the company. The company has a consensus rating of “Buy” and a consensus target price of $20.83.

Institutional investors that have recently made a change to their positions in the stock….

  • BlackRock Inc. raised its stake in Sangamo Therapeutics by 2.1% during the fourth quarter. BlackRock Inc. now owns 6,871,509 shares of the biopharmaceutical company’s stock worth $112,691,000 after purchasing an additional 138,348 shares during the period.
  • Teachers Advisors LLC raised its stake in shares of Sangamo Therapeutics by 15.8% in the 4th quarter. Teachers Advisors LLC now owns 946,128 shares of the biopharmaceutical company’s stock valued at $15,516,000 after acquiring an additional 128,743 shares during the period.
  • Alexandria Capital LLC purchased a new stake in shares of Sangamo Therapeutics in the 4th quarter valued at approximately $15,179,000.
  • Goldman Sachs Group Inc. raised its stake in shares of Sangamo Therapeutics by 58.4% in the 4th quarter. Goldman Sachs Group Inc. now owns 911,512 shares of the biopharmaceutical company’s stock valued at $14,948,000 after acquiring an additional 336,107 shares during the period.

Summary

Another 83.91% rally from current levels would place the stock around $35.77 -- territory not charted since late 2000.

Sangamo Therapeutics Inc has a twelve month low of $4.05 and a twelve month high of $27.50. The company has a current ratio of 5.54, a quick ratio of 5.54 and a debt-to-equity ratio of 0.13.


Option Trade - - Suncor Energy Inc. (USA) (NYSE:SU) Calls

Thursday, April 19, 2018

** OPTION TRADE: Buy SU MAY 18 2018 40.000 CALL at approximately $0.50 each. Sell price is left to your own judgment.

August 2014 was the last time oil prices above $100 a barrel, but technical analyst Louise Yamada says the charts aren't ruling out a return to triple digits.

In the short term, the managing director of Louise Yamada Advisors does see crude running up to $78, thanks to some bullish formations in the charts.

"This rally in oil has been a very slow-moving six-month process," she said. "But we do have [a] measured target from a head and shoulders that has been in place for three years that could take us to $75 or $78.”

This means that Yamada believes an 18 percent surge in oil could still occur in the short term.

The commodity is up over 9 percent year to date, holding above the $66 level on Tuesday.

And one such company that could enjoy this run-up is Suncor Energy Inc. (USA) (NYSE:SU), a world leader in mining and extracting crude oil from the vast oil sands deposits of northern Alberta, which will report first-quarter earnings after the market closes next Tuesday, April 24. Despite suffering a 3% post-earnings loss back in February, the stock has a history of positive earnings reactions -- closing higher the next day in six of the past eight quarters, averaging a gain of 2.2%.

SU stock had a rough start to 2018, but since bouncing from the $31.50-$32.00 region in early March -- a 38.2% Fibonacci retracement to its rally in the second half of 2017 -- it has gained 22.3% to trade at $38.48.

Influencing Factors

The Canadian oil company has a unique focus in the oil industry, with roughly 82% of its 2017 production coming from oil sands. Oil sands are mined, not drilled, and is a somewhat misunderstood asset.

Most investors view oil sands as expensive, which is only half true. It is expensive to build an oil sands mine, but once up and running, these assets tend to have relatively low operating costs. And they have incredibly long reserve lives. To put some numbers on that, Suncor estimates that its Canadian oil sands assets have a reserve life of 40 years and operating costs of $34.50 per barrel (cash cost plus sustaining capital expenditures).

Now Suncor has a new oil sands asset, called Fort Hills, that's starting to come online this year. It also has a major offshore drilling project (Hebron) that's ramping up, too. Over the next few years, Suncor is set to increase production at an annualized rate of 9%. But the costs for this growth are largely in the past.

Suncor looks set to reward investors with solid dividend increases (rising at roughly the pace of its sustainable funds flow growth) and notable share repurchases. This should translate into a higher stock price. With a current yield of 3.3% and strong growth prospects now that the big development costs of recent years are over, Suncor is worth a stab at with this options trade.

Analysts and Hedge Funds Opinions

Analysts expect that Suncor Energy Inc. will announce $0.40 earnings per share (EPS) for the current quarter with sales of $6.99 billion.

Analysts expect that Suncor Energy will report full-year earnings of $1.70 per share for the current year, with EPS estimates ranging from $1.09 to $1.99. For the next financial year, analysts expect that the business will post earnings of $1.97 per share, with EPS estimates ranging from $1.61 to $2.50.

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

  • UBS initiated coverage on Suncor Energy in a report on Wednesday, March 7th. They issued a “buy” rating for the company.
  • Piper Jaffray Companies restated a “buy” rating and issued a $44.00 price objective on shares of Suncor Energy in a report on Friday, February 23rd.
  • ValuEngine raised shares of Suncor Energy from a “hold” rating to a “buy” rating in a report on Friday.
  • Bank of America assumed coverage on shares of Suncor Energy in a report on Thursday. They issued a “buy” rating and a $41.00 price target for the company.
  • AltaCorp Capital raised shares of Suncor Energy from a “sector perform” rating to an “outperform” rating in a report on Thursday, March 22nd.
  • Zacks Investment Research lowered shares of Suncor Energy from a “buy” rating to a “hold” rating in a report on Thursday, March 8th.
  • Finally, UBS assumed coverage on shares of Suncor Energy in a report on Wednesday, March 7th. They issued a “buy” rating for the company.
  • One equities research analyst has rated the stock with a sell rating, two have assigned a hold rating and fifteen have assigned a buy rating to the company. The stock currently has an average rating of “Buy” and an average target price of $46.44.

Institutional investors that have recently made a change to their positions in the stock….

  • Chemical Bank boosted its position in shares of Suncor Energy by 152.2% during the 4th quarter. Chemical Bank now owns 30,398 shares of the oil and gas producer’s stock worth $1,116,000 after purchasing an additional 18,346 shares in the last quarter.
  • Letko Brosseau & Associates Inc. boosted its position in shares of Suncor Energy by 7.7% during the 4th quarter. Letko Brosseau & Associates Inc. now owns 14,415,591 shares of the oil and gas producer’s stock worth $530,970,000 after purchasing an additional 1,030,634 shares in the last quarter.
  • Finally, OLD Mutual Customised Solutions Proprietary Ltd. boosted its position in shares of Suncor Energy by 41.6% during the 4th quarter. OLD Mutual Customised Solutions Proprietary Ltd. now owns 104,899 shares of the oil and gas producer’s stock worth $3,864,000 after purchasing an additional 30,800 shares in the last quarter.

Insider News……

Director Dominic D’alessandro purchased 30,000 shares of Suncor Energy stock in a transaction dated Wednesday, February 14th. The stock was bought at an average cost of C$42.20 per share, for a total transaction of C$1,266,000.00.

Summary

SU has a market capitalization of $52,740.74, a P/E ratio of 16.24, a price-to-earnings-growth ratio of 2.15 and a beta of 0.87. Suncor Energy has a 1-year low of $27.96 and a 1-year high of $38.39. The company has a quick ratio of 0.64, a current ratio of 1.00 and a debt-to-equity ratio of 0.29.


Option Trade - - AbbVie Inc (NYSE:ABBV) Calls

Wednesday, April 18, 2018

** OPTION TRADE: Buy ABBV MAY 18 2018 95.000 CALL at approximately $2.80 each. Sell price is left to your own judgment.

The North Chicago, IL-based company AbbVie Inc (NYSE:ABBV), a research-based biopharmaceutical company, has long been a market leader but recently experienced a sharp selloff. That steep selloff late last month -- a 13% decline in one day -- came after the company abandoned plans to seek accelerated approval for a lung cancer drug that performed poorly in a mid-stage trial.

However, the market reaction seemed excessive. If approved, Rova-T is expected to generate sales of about $200 million to $400 million a year -- not nearly enough to affect the bottom line of a company that reported more than $28 billion in sales over the past 12 months.

Most of those sales came from Humira, which produced more than $18 billion in sales last year in the rheumatoid arthritis (RA), Crohn's disease, and eczema markets -- including $12.4 billion in the United States alone.

And as investors would hope, AbbVie is taking shrewd steps to protect this market. This should also relieve some of the short-term selling pressure in the stock.

Influencing Factors

Since topping over $120 a share three distinct times since February, shares of AbbVie are still down around 25 percent. Whether the stock was perfectly priced or investors wanted an excuse to lock in profits, ABBV stock still has tremendous value and growth ahead. The pause in the stock's rally should just be temporary.

AbbVie has pulled back to the 200-day moving average. Increasing volumes and accumulation were part of the bullish move in 2017, suggesting further upside potential

So, technical areas to success are……

  • Recent pullback to the 200-day moving average
  • High institutional ownership rate (72.15%)
  • High bullish unusual institutional activity in 2017

The fundamental picture also has great support….. AbbVie has solid earnings, sales and dividend growth rates:

  • Three-year dividend growth rate (+15.5%)
  • Three-year EPS growth rate (+63.81%)
  • Three-year sales growth rate (+12.25%)

AbbVie's stock rose in January when the company reported earnings and revenue that beat consensus estimates. Revenue grew 13.8% year-on-year to $7.74 billion. The adjusted earnings per share of $1.48 represented year-on-year growth of over 23 percent. The latest disappointment in the Rova-T study will have a small impact on the business should it fail. Considering AbbVie has not one, but three major drivers for growth - Humira, Imbruvica, and Mavyret - expect steady upside in the company for 2018.

AbbVie has a solid history of outperformance behind it. The latest quarterly earnings report once again confirmed how healthy its business is since earnings and sales grew at a double-digit rate. For the year, sales of Imbruvica grew 41 percent. Mavyret ended the year with 32-percent market share.

AbbVie declared that its board has initiated a stock repurchase program on Thursday, February 15th that permits the company to buyback $10.00 billion in shares. This buyback authorization permits the company to reacquire shares of its stock through open market purchases. Stock buyback programs are generally an indication that the company’s board believes its shares are undervalued.

Analysts and Hedge Funds Opinions

Morgan Stanley rated the AbbVie Inc.’s stock as an Equal-Weight in a research note published on Tuesday, January 30th, 2018 and posted a $131 price target on the common stock of AbbVie Inc.

Also, Credit Suisse Group set a $135.00 price objective on shares of AbbVie and gave the stock a “hold” rating in a research note on Monday, January 29th.

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

  • Jefferies Group set a $145.00 price target on shares of AbbVie and gave the company a “buy” rating in a research note on Monday, February 26th.
  • Finally, ValuEngine cut AbbVie from a “strong-buy” rating to a “buy” rating in a research report on Wednesday, March 28th.

One research analyst has rated the stock with a sell rating, nine have given a hold rating, eight have given a buy rating and two have issued a strong buy rating to the company’s stock. AbbVie presently has an average rating of “Buy” and a consensus price target of $121.85.

Institutional investors that have recently made a change to their positions in the stock….

  • Capital Research Global Investors grew its stake in AbbVie by 1.2% during the second quarter. Capital Research Global Investors now owns 178,274,835 shares of the company’s stock worth $12,926,708,000 after buying an additional 2,130,919 shares in the last quarter.
  • Vanguard Group Inc. grew its stake in AbbVie by 3.3% during the second quarter. Vanguard Group Inc. now owns 115,920,673 shares of the company’s stock worth $8,405,409,000 after buying an additional 3,706,941 shares in the last quarter.
  • BlackRock Inc. grew its stake in AbbVie by 2.0% during the second quarter. BlackRock Inc. now owns 94,074,962 shares of the company’s stock worth $6,821,375,000 after buying an additional 1,864,418 shares in the last quarter.

Summary

The pullback in AbbVie stock to the 200-day moving average bodes well for is options trade. AbbVie stock was a monster performer in 2017, with growing counts of accumulation signals accompanying the move. All of this points to further bullish action for the stock.

ABBV traded up $0.99 during mid-day trading on Tuesday, hitting $93.59. 4,474,721 shares of the company’s stock were exchanged, compared to its average volume of 7,305,822. The company has a debt-to-equity ratio of 6.07, a current ratio of 1.28 and a quick ratio of 1.18. AbbVie Inc. has a fifty-two week low of $63.12 and a fifty-two week high of $125.86. The company has a market cap of $145,823.56, a PE ratio of 16.71, a P/E/G ratio of 0.87 and a beta of 1.61.


Option Trade - - Atlassian Corporation PLC (NASDAQ: TEAM) Calls

Monday, April 16, 2018

** OPTION TRADE: Buy TEAM MAY 18 2018 65.000 CALL at approximately $2.00 each. Sell price is left to your own judgment.

Cloud software company Atlassian Corporation PLC (NASDAQ: TEAM) will report its third-quarter results after market close on Thursday, April 19. The consensus analyst estimate for Atlassian's third-quarter revenue and EPS is $218 million and $0.08, respectively -- this compares to $160 million and $0.08 in the year-ago quarter.

Atlassian's second quarter of fiscal 2018, which ended on Dec. 31, 2017, was exceptional for the collaboration and productivity software provider. Revenue and adjusted EPS share surged 43% and 44% year over year.

This growth story has benefited from surging subscription revenue. In Q2, subscription revenue was up 70% year over year. Thanks to the segment's more rapid ascent there than revenue in its maintenance segment during the same period, subscription growth is now Atlassian's largest segment; in the year-ago quarter, maintenance revenue exceeded subscription revenue by nearly $9 million.

Momentum from subscription revenue should persist in Q3. This catalyst should continue driving strong growth for the company for years to come. Expect year-over-year growth in subscription revenue of 60% or more.

Shares of the cloud software company Atlassian have climbed to new heights recently, rising over 30% in 2018 alone.

Influencing Factors

A young company like Atlassian can capture new customers, onboard them rapidly, and cross-sell other products to them; in much the same fashion that a $10 billion cloud company such as Salesforce does. Barriers to entry are low, and it's much simpler to scale a product that lives in the cloud than a physical one.

As a result, Atlassian's sales continue to impress the market, growing at a 42.8% year-over-year clip for its second quarter of 2018. This builds on Atlassian's three-year average revenue growth of 42.3%, a rate that would see the company doubling in size every 1.7 years.

The company is devoid of a sales force. This is unique among cloud companies -- or just about any other company, for that matter.

For Atlassian, the sources are search, organic discovery, and good old-fashioned word of mouth and the company largely depends on self-onboarding to bring customers into the fold.

Atlassian management claims that……

(a) it is so product-focused that it attracts a new audience based on the merits of its software, and

(b) it avoids deploying a traditional sales force because its entry-level products are affordable enough to escape budgetary approvals within its customers' IT departments.

Rising expectations have propelled the industry higher. The average year-to-date return across 52 cloud companies is 19.5%, compared to the Nasdaq’s 10% return over the same stretch.

There are many reasons for this, including generally strong earnings that enabled this niche industry to shrug off the market's downturn in February.

Analysts and Hedge Funds Opinions

Robert W. Baird reiterated their buy rating on shares of Atlassian  in a research note released on Friday, March 16th. They currently have a $65.00 target price on the technology company’s stock.

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

  • Jefferies Group upped their target price on Atlassian to $64.00 and gave the stock a buy rating in a report on Friday, January 19th.
  • Morgan Stanley set a $63.00 target price on shares of Atlassian and gave the company a “buy” rating in a research note on Friday, January 19th.
  • BMO Capital Markets restated a market perform rating and set a $56.00 target price (up previously from $51.00) on shares of Atlassian in a report on Friday, January 19th. They noted that the move was a valuation call.
  • Canaccord Genuity restated a buy rating and set a $60.00 target price (up previously from $52.00) on shares of Atlassian in a report on Wednesday, January 17th.
  • Finally, BidaskClub upgraded Atlassian from a buy rating to a strong-buy rating in a report on Thursday, January 18th.

One analyst has rated the stock with a sell rating, five have issued a hold rating and nine have given a buy rating to the company’s stock.

Institutional investors that have recently made a change to their positions in the stock….

  • Vanguard Group Inc. raised its holdings in shares of Atlassian by 138.3% during the second quarter. Vanguard Group Inc. now owns 90,073 shares of the technology company’s stock valued at $3,168,000 after acquiring an additional 52,282 shares during the period.
  • BNP Paribas Arbitrage SA increased its stake in Atlassian by 653.4% in the 3rd quarter. BNP Paribas Arbitrage SA now owns 9,629 shares of the technology company’s stock valued at $338,000 after buying an additional 8,351 shares during the period.
  • Bank of New York Mellon Corp increased its stake in Atlassian by 13.6% in the 3rd quarter. Bank of New York Mellon Corp now owns 173,624 shares of the technology company’s stock valued at $6,103,000 after buying an additional 20,819 shares during the period.
Summary

Atlassian has a 1 year low of $30.91 and a 1 year high of $62.25. The company has a market capitalization of $6,039.69, a PE ratio of -2,008.33 and a beta of 2.29.





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