“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, May 07, 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 - - Baozun Inc (ADR) (NASDAQ:BZUN) Calls

Tuesday, May 09, 2018

** OPTION TRADE: Buy BZUN MAY 18 2018 50.000 CALL at approximately $2.00. Sell price is left to your own judgment.

(or alternatively : Place a pre-determined sell at $4.00.

Also include a protective stop loss of $0.80.)

** ALTERNATIVE OPTION TRADE: Buy BZUN JUNE 15 2018 50.000 CALL at approximately $3.80 TO $4.20 each. Sell price is left to your own judgment.

(or alternatively : Place a pre-determined sell at $8.00.

Also include a protective stop loss of $1.60.)

Classed as the Chinese of Shopify, Baozun Inc. (ADR) (NASDAQ:BZUN), offering digital and e-commerce services primarily in China, is expected to report earnings on Tuesday, May 15, 2018.

While Shopify primarily sells subscriptions for its cloud-based e-commerce platform service to small and medium-sized businesses that want an online presence, Baozun offers that and more, taking care of everything e-commerce related for its brand partners, from IT to marketing to fulfillment and customer service. Among the clients it has attracted are multinationals like Philips, Nike, and Microsoft.

Baozun is only valued at $2.5 billion, and is chasing a huge growth opportunity in China, where the middle class is rapidly expanding -- and so is online shopping. China's e-commerce market is now the worlds biggest, and it's forecast to nearly double to close to $1 trillion by 2022. And Baozun isn't just riding that growth wave, it's also gaining market share. The company now has 25% of the e-commerce services market; nearly triple the share of its closest competitor.

Unlike many e-commerce companies, Baozun is profitable, and profits are growing quickly as the company pivots from a direct-sales model to a higher-margin services model. In the most recent quarter, revenue increased 23% to $240.6 million, but profits more than doubled. The stock's value has nearly tripled in the past 12 months, but given the company's relatively small market cap, and the growth opportunities ahead, it should have plenty of room to run.

Analysts and Hedge Funds Opinions

ValuEngine upgraded shares of Baozun from a hold rating to a buy rating in a research note released last Wednesday morning.

Also, Baozun was upgraded by BidaskClub from a “buy” rating to a “strong-buy” rating in a research report issued to clients and investors last Thursday.

As well, Baozun was upgraded by research analysts at Vetr from a “hold” rating to a “buy” rating in a research report issued on Tuesday, April 17th. The brokerage currently has a $48.41 price target on the technology company’s stock. Vetr‘s price target would suggest a potential upside of 4.67% from the company’s previous close.

One analyst has rated the stock with a hold rating, four have assigned a buy rating and two have issued a strong buy rating to the company.

Summary

Baozun has a market capitalization of $2,561.09, a P/E ratio of 84.09 and a beta of 3.86. Baozun has a 1-year low of $15.76 and a 1-year high of $52.33.


Option Trade - - Pure Storage Inc (NYSE: PSTG) Calls

Tuesday, May 08, 2018

** OPTION TRADE: Buy PSTG JUNE 15 2018 22.500 CALL at approximately $1.20 TO $1.40 each. Sell price is left to your own judgment.

(or alternatively : Place a pre-determined sell at $2.80.

Also include a protective stop loss of $0.55.)

Pure Storage Inc (NYSE: PSTG), engaging in building a data platform that enables businesses to enhance performance and reduce complexity and costs worldwide, has almost doubled over the past 12 months, recently bouncing from familiar support at the 80-day moving average. And more of the same is expected.

Pure Storage is rapidly gaining traction in the flash storage market. Shares of this stock have gained 96.0% in the past year, substantially outperforming the industry 's rally of 25.5%.

The momentum can be attributed to rapid adoption of its robust product portfolio and strong fundamentals.

Pure Storage is scheduled to issue its next earnings results after the market closes on Monday, May 21st.

Wall Street brokerages forecast that Pure Storage will post earnings per share of ($0.12) for the current fiscal quarter. Six analysts have made estimates for Pure Storage’s earnings, with the highest EPS estimate coming in at ($0.08) and the lowest estimate coming in at ($0.15). Pure Storage reported earnings per share of ($0.14) in the same quarter last year, which would indicate a positive year over year growth rate of 14.3%.

Also, brokerages expect Pure Storage to announce $251.52 million in sales for the current fiscal quarter, Zacks Investment Research reports. Six analysts have made estimates for Pure Storage’s earnings. The lowest sales estimate is $250.00 million and the highest is $254.10 million. Pure Storage reported sales of $182.63 million in the same quarter last year, which indicates a positive year-over-year growth rate of 37.7%.

Pure Storage has an impressive earnings surprise history. The company outpaced the Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 53.24%. As well, the company has a long-term expected EPS growth rate of 15%.

Influencing Factors

Expanding customer base bodes well for Pure Storage's top-line. In the fourth quarter, the company added more than 500 customers, bringing the total base to 4,500 organizations and reflecting an increase of 50% from the year-ago quarter.

Notably, the provider of efficient cloud-capable flash solutions continues to focus on three major aspects, namely increasing cloud customer base, solidifying the position of its next generation workload related core data infrastructure and tapping large enterprises as they "cloudify" their on-premise IT infrastructure.

The company's strong product portfolio with the likes of FlashArray and FlashBlade business segments remains the key catalyst. Additionally, its data platform for cloud is gaining traction.

Management is optimistic about scalable storage solutions in an era when the world is typically being driven by big-data, artificial intelligence (AI) and data analytics-based information.

Pure Storage strengthened its partnership with NVIDIA; a dominant player in AI related computation, to expand product offerings. The company recently released AIRI in collaboration with NVIDIA.

Analysts and Hedge Funds Opinions

Wells Fargo boosted their price target on Pure Storage from $23.00 to $30.00 and gave the company an “outperform” rating in a report on Friday, March 2nd.

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

  • Deutsche Bank began coverage on shares of Pure Storage in a research note on Monday, April 16th. They set a “buy” rating and a $24.00 target price for the company.
  • Vetr upgraded Pure Storage from a “buy” rating to a “strong-buy” rating and set a $24.02 target price on the stock in a report on Tuesday, February 20th.
  • William Blair reaffirmed a “buy” rating on shares of Pure Storage in a research note on Thursday, March 8th.
  • TheStreet raised shares of Pure Storage from a “d” rating to a “c-” rating in a research note on Thursday, March 1st.
  • Finally, Bank of America lifted their price objective on shares of Pure Storage from $22.00 to $26.00 and gave the company a “buy” rating in a research note on Friday, March 2nd.

One research analyst has rated the stock with a sell rating, eight have issued a hold rating and sixteen have given a buy rating to the company’s stock. The company currently has a consensus rating of “Buy”.

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

  • Engineers Gate Manager LP increased its holdings in shares of Pure Storage by 16.2% during the 1st quarter. Engineers Gate Manager LP now owns 268,537 shares of the technology company’s stock worth $5,357,000 after purchasing an additional 37,386 shares during the period.
  • Schwab Charles Investment Management Inc. increased its holdings in shares of Pure Storage by 20.7% during the 1st quarter. Schwab Charles Investment Management Inc. now owns 664,874 shares of the technology company’s stock worth $13,265,000 after purchasing an additional 113,826 shares during the period.
Summary

Pure Storage reported stellar fourth-quarter fiscal 2018 results. It was the first profitable quarter for the company since it went public. The company reported its first ever non-GAAP operating income of $27.9 million and margin of 8.3%. Positive free cash flow for the full-year ended Jan 31, 2018 was reported for the first time in the company's history at $7.7 million, compared with ($61.2 million) in fiscal 2017.

Pure Storage has a 1-year low of $9.81 and a 1-year high of $22.84.


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

Monday, May 07, 2018

** OPTION TRADE: Buy ETSY JUNE 15 2018 35.000 CALL at approximately $0.70 TO $0.90 each. Sell price is left to your own judgment.

(or alternatively : Place a pre-determined sell at $1.50.

Also include a protective stop loss of $0.30.)

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 earnings tomorrow, Tuesday May 08, after the market closes. Based on 8 analysts' forecasts, the consensus EPS forecast for the quarter is $0.05. The reported EPS for the same quarter last year was $0. The lowest EPS estimate is $0.01 and the highest is $0.09.

Equities research analysts expect that Etsy will announce sales of $119.18 million for the current fiscal quarter. Five analysts have provided estimates for Etsy’s earnings, with the lowest sales estimate coming in at $115.14 million and the highest estimate coming in at $121.78 million. Etsy posted sales of $96.89 million in the same quarter last year, which suggests a positive year-over-year growth rate of 23%.

On average, analysts expect that Etsy will report full-year earnings of $0.36 per share for the current fiscal year, with EPS estimates ranging from $0.27 to $0.42. For the next financial year, analysts anticipate that the company will report earnings of $0.50 per share, with EPS estimates ranging from $0.36 to $0.61.

Etsy has been on a tear lately: The stock is up 40% so far this year. In fact, share prices have nearly tripled over the past 12 months as the company, under new CEO Josh Silverman, seems to finally be unleashing the power of its unique platform and marketplace model. Silverman, who was ushered in by activist investors last May, has laid off employees, shut down underperforming or tangential business units, and focused on driving gross merchandise sales, or the total sales of its merchants.

In the key fourth quarter, the craft-centric marketplace saw gross merchandise sales growth accelerate to 17.8%, which led to strong growth in revenue and gross profit that pushed its bottom-line result from a loss of $0.19 per share a year prior to a profit of $0.36 per share.

For most companies, direct selling in e-commerce hasn't been very profitable, in part due to aggressive competition from Amazon, with its low prices and fast delivery. However, the marketplace model has generated significant margins for companies like eBay and Amazon, which also has thousands of third-party sellers on its platform. Etsy, which operates like an online flea market, doesn't need to worry about things like shipping costs and price matching, and should be able to leverage its platform as it grows. It has demonstrated it can withstand pressure from Amazon (which launched its own Handmade division to better compete with the smaller company). It is expected that Etsy's profits should begin to ramp up, propelled by its unique brand, product selection and marketplace model.

Influencing Factors

Etsy's got the first-to-market advantage. The site's been around for nearly 13 years and it's at the point where it's so thoroughly associated with a specific type of online market, it's in danger of sliding from trademarked name to verb.

Etsy focuses on both ends of the sale. While critics have dismissed Etsy's platform as appealing only to niche customers -- people who are really into vintage Hmong throw pillow covers, for example -- CEO Silverman has steered the company so it deftly threads the needle between Etsy's two big customer constituencies: those buyers looking for something specific and special and the thousands upon thousands of small-scale vendors hoping to reach out to them.

Analysts and Hedge Funds Opinions

Etsy had its price target increased by DA Davidson from $33.00 to $35.00 in a research report released last Tuesday morning. They currently have a buy rating on the specialty retailer’s stock. DA Davidson also issued estimates for Etsy’s Q1 2018 earnings at $0.06 EPS, FY2018 earnings at $0.50 EPS, FY2019 earnings at $0.75 EPS, FY2020 earnings at $1.06 EPS, FY2021 earnings at $1.24 EPS and FY2022 earnings at $1.53 EPS.

Etsy was upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating in a research note issued on Tuesday, April 17th. The brokerage presently has a $33.00 target price on the specialty retailer’s stock. Zacks Investment Research‘s price objective indicates a potential upside of 6.97% from the stock’s current price.

TheStreet raised shares of Etsy from a “c+” rating to a “b-” rating in a report on Monday, April 16th.

One research analyst has rated the stock with a sell rating, four have assigned a hold rating, eight have given a buy rating and one has assigned a strong buy rating to the company. 

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

  • Renaissance Technologies LLC lifted its position in shares of Etsy by 66.8% during the fourth quarter. Renaissance Technologies LLC now owns 5,631,800 shares of the specialty retailer’s stock worth $115,170,000 after acquiring an additional 2,255,391 shares in the last quarter.
  • Two Sigma Advisers LP increased its holdings in shares of Etsy by 3,196.9% in the fourth quarter. Two Sigma Advisers LP now owns 1,635,244 shares of the specialty retailer’s stock worth $33,441,000 after purchasing an additional 1,585,644 shares during the period.
  • Gilder Gagnon Howe & Co. LLC increased its holdings in shares of Etsy by 9,134.0% in the fourth quarter. Gilder Gagnon Howe & Co. LLC now owns 1,459,522 shares of the specialty retailer’s stock worth $29,847,000 after purchasing an additional 1,443,716 shares during the period.
  • Two Sigma Investments LP increased its holdings in shares of Etsy by 221.4% in the fourth quarter. Two Sigma Investments LP now owns 1,927,194 shares of the specialty retailer’s stock worth $39,411,000 after purchasing an additional 1,327,537 shares during the period.
  • Finally, Maverick Capital Ltd. bought a new position in shares of Etsy in the fourth quarter worth $21,709,000.
Summary

ETSY has a market capitalization of $3,667.99, a P/E ratio of 80.50, a PEG ratio of 4.55 and a beta of 0.18. The company has a current ratio of 4.29, a quick ratio of 4.29 and a debt-to-equity ratio of 0.16. Etsy has a 52 week low of $10.50 and a 52 week high of $31.27.






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