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, 22nd September, 2016
Finish Line Inc (NASDAQ:FINL) Calls
**OPTION TRADE: Buy the FINL OCT 21 2016 25.000 call at approximately $0.95. Sell price is left to your own judgment.
Finish Line Inc (NASDAQ: FINL), a specialty retailer of athletic shoes, apparel and accessories, is expected to report its second-quarter numbers tomorrow, September 23. The company will post its quarterly numbers before the market open, with the consensus calling for earnings of $0.53 per share. During the same period last year the company earned $0.57 per share, and the stock is up 29.0% on the year.
Last quarter, the company had delivered a positive earnings surprise of 4.6%, which marked its second consecutive beat.
The athleisure fashion trend has been good to athletic goods manufacturers and retailers, and is a main reason why shares of FINL have appreciated 29.0% on the year. FINL has a trailing P/E of 58, and a forward P/E of just 13.1, so there is a lot of upside for the stock moving forward as long as the company is able to hit, or surpass, analyst estimates. Analysts forecast earnings to rise by 27.3% this year, and by 14.3% next year, and with such strong growth estimates, and low forward valuation expect to see plenty of upside in the stock ahead.
Why Finish Line?
Management remained impressed with its performance in the last quarter – wherein despite a tough retail scenario, the company managed to top earnings and sales estimates, following which it retained its fiscal 2017 earnings and comparable store sales (comps) guidance.
Coming to the second quarter, some analysts anticipate comps to witness a sequential improvement, gaining from the improved trends witnessed in the sneaker industry, backed by various product launches.
Moreover, Finish Line’s second-quarter performance is expected to benefit from the Rio Summer Olympics that took place during the quarter.
These factors, along with the company’s progress with regard to supply-chain optimization and overall business execution bode well, thus making us reasonably confident about the upcoming results.
Canaccord Genuity Inc. analyst Camilo Lyon said he remains positive on Finish Line’s stock headed into the Sept. 23 report as he believes a beat could be in the cards.
“We believe there is upside to our 2 percent comp and 51 cents EPS estimate,” Lyon wrote on Sept. 21. “While Q2’s [profit and loss] dynamics will likely look similar to Q1’s, Finish Line should show modest sequential improvement in comps, which we believe can be in the 3 percent to 4 percent range — implying a 1 cent to 2 cents beat relative to consensus estimates.”
Likely experiencing a similar train of thought, Cowen and Co. analyst John Kernan raised his comp estimate to 4 percent on Aug. 24. Kernan is also placing his EPS bets above consensus, at 55 cents per share.
“We continue to view the stock favorably given our expectations for a strong second half comp and margin recovery supported by an increasing mix of Adidas, improved supply chain processes, a clean inventory position, and trends indicating a resurgence in running,” Lyon wrote.
Analysts believe that strong athletic trends helped Finish Line in Q2.
“By category, we believe footwear was the key growth driver as soft goods (10 percent of sales) likely remained challenged,” Lyon wrote of Finish Line’s Q2.
Also, The Finish Line Inc.‘s stock had its “buy” rating restated by analysts at Canaccord Genuity in a note issued to investors on Wednesday. They currently have a $25.00 target price on the stock. Canaccord Genuity’s price target would indicate a potential upside of 6.07% from the stock’s previous close.
The Finish Line Inc. has a market capitalization of $989.32 million, a P/E ratio of 60.13 and a beta of 0.90. The Finish Line Inc. has a 52-week low of $15.37 and a 52-week high of $25.29. The stock’s 50 day moving average is $23.24 and its 200-day moving average is $20.48.
Wednesday, 21st September, 2016
Red Hat Inc (NYSE:RHT) Calls
**OPTION TRADE: Buy the RHT OCT 21 2016 80.000 call at approximately $1.00. Sell price is left to your own judgment.
Red Hat Inc (NYSE: RHT), a global provider of open source software solutions, using a community-powered approach to develop and offer operating system, middleware, virtualization, storage and cloud technologies, is set to post its Q217 quarterly earnings results today, Wednesday, September 21st, after the market closes. Analysts expect Red Hat to post earnings of $0.54 per share and revenue of $593.34 million for the quarter.
In the last quarter, the company delivered a positive earnings surprise of 6.06%. On an average, Red Hat has delivered a positive earnings surprise of 9.08% over the past four quarters.
For the second quarter, Red Hat projects revenues of $587 million to $593 million and non-GAAP earnings per share of 54 cents including 1 cent impact from the 3scale acquisition. Non-GAAP operating margin is expected to be 22.8%.
Why Red Hat?
Red Hat has been gaining market share and its Linux servers are well positioned to drive topline growth. It is believed that the company also has significant growth potential in the public cloud segment over the long term. In addition, the increasing demand for its offerings like OpenShift and OpenStack is a positive.
Additionally, Red Hat's strong product pipeline, continuing investments to expand product portfolio and key partnerships with the likes of IBM Corp., Dell and Intel will drive overall growth.
Also, extensive share repurchase program is an added positive. At its last earnings call, management announced a new $1 billion share repurchase program to replace the $500 million plan that ended on Jun 30, 2016.
The company also announced the acquisition of 3scale, an application programming interface (API) management technology firm.
Two research analysts have rated the stock with a sell rating, five have assigned a hold rating, twenty-three have issued a buy rating and one has assigned a strong buy rating to the company. The stock has a consensus rating of “Buy” and an average price target of $87.69.
Red Hat Inc. was upgraded by investment analysts at Vetr from a “buy” rating to a “strong-buy” rating in a report released last Wednesday. The brokerage currently has a $81.54 target price on the open-source software company’s stock. Vetr‘s target price indicates a potential upside of 10.49% from the stock’s previous close.
Red Hat Inc. has a market capitalization of $13.75 billion, a price-to-earnings ratio of 66.61 and a beta of 1.32. Red Hat Inc. has a one year low of $59.59 and a one year high of $84.44. The stock’s 50 day moving average price is $73.93 and its 200-day moving average price is $74.03.
Tuesday, 20th September, 2016
Adobe Systems Incorporated (NASDAQ:ADBE) Calls
**OPTION TRADE: Buy the ADBE OCT 21 2016 105.000 call at approximately $1.10. Sell price is left to your own judgment.
Adobe Systems Incorporated (NASDAQ: ADBE), a San Jose, Calif.-based software products and services provider for professionals, marketers, application developers, enterprises and consumers, is expected to continue its run of strong sales and earnings growth when it reports fiscal Q3 results today, after the market closes.
Photoshop maker Adobe Systems has touched up its image with a successful transition to cloud computing services. And investors have rewarded the company by pushing its stock to record levels.
The media and marketing software company is expected to continue its run of strong sales and earnings growth when it reports fiscal third-quarter results after the market close on Tuesday.
Analysts expect the San Jose, Calif.-based firm to earn 72 cents a share excluding items, up 33% year over year, on sales of $1.45 billion, up 19%.
It would be the eighth straight quarter of double-digit EPS growth and fifth quarter in a row of double-digit sales gains.
For Adobe's fiscal Q4, Wall Street is modeling for the company to earn 78 cents a share excluding items, up 26%, on sales of $1.57 billion, up 20%.
Why Adobe Systems?
Adobe is being driven by continuous innovation in the Creative Cloud and Marketing Cloud businesses.
The Creative business under the Digital Media Solutions segment is seeing acceleration in Creative Cloud subscriptions. Also, the conversion of enterprise customers to Enterprise Term License Agreements (ETLAs) is resulting in higher adoption of its enterprise Creative Cloud offering.
Increased subscription as well as ETLA and digital publishing suite adoption should drive Creative's annualized recurring revenues.
Also, there is a great deal of positive feeling in regard to Adobe's market position, compelling product lines and balance sheet strength. In addition, it is believed that continued adoption of the Adobe marketing cloud could serve as a catalyst in the to-be-reported quarter.
Adobe posted strong fiscal second-quarter results with both earnings and revenues beating the Consensus Estimate. Revenues were up 1.1% sequentially and 20.4% year over year on the back of strong adoption of Creative Cloud.
Eight investment analysts have rated the stock with a hold rating and twenty-two have assigned a buy rating to the company’s stock. Adobe Systems presently has a consensus rating of “Buy” and an average price target of $105.20.
Adobe Systems Inc.’s stock had its “outperform” rating reissued by stock analysts at Cowen and Company in a note issued to investors last Friday. They currently have a $115.00 price target on the software company’s stock. Cowen and Company’s price objective points to a potential upside of 16.24% from the stock’s current price.
Also, UBS analyst Brent Thill on Tuesday reiterated his buy rating on Adobe stock with a 12-month price target of 122.
Adobe Systems Inc. has a 50-day moving average of $100.22 and a 200-day moving average of $96.05. Adobe Systems Inc. has a 52 week low of $71.27 and a 52 week high of $104.16. The stock has a market cap of $49.30 billion, a P/E ratio of 55.89 and a beta of 1.24.
Monday, 19th September, 2016
Applied Materials, Inc. (NASDAQ:AMAT) Calls
**OPTION TRADE: Buy the AMAT OCT 21 2016 30.000 call at approximately $1.10. Sell price is left to your own judgment.
Applied Materials, Inc. (NASDAQ: AMAT), a provider of manufacturing equipment, services and software to the semiconductor, display, solar photovoltaic (PV) and related industries across the world, continues to appear undervalued despite earnings growth accelerating faster than recent share price gains.
Applied Materials delivered a second consecutive strong quarterly performance, with third-quarter revenue increasing 13 percent and non-GAAP EPS rising 51 percent year-over-year and $0.02 above consensus. New orders surged 26 percent, reflecting across-the-board demand strength, while backlog rose 60 percent.
Current-quarter guidance was particularly strong and handily surpassed pre-reporting expectations. The company expects fiscal fourth-quarter revenue in the $3.2 billion–$3.4 billion range, which would be up in mid- to high-teens year-over-year. With gross margins expanding and costs well-contained, the company sees non-GAAP EPS in the mid-$0.60 range, compared to pre-reporting expectations of $0.48.
Year to date, Applied Materials, Inc. stock has yielded positive results for investors. So far this year the stock has jumped 63.09% as investors are hopeful that the trend can continue into the 2nd half of 2016. Breaking that down further, it has performed 4.12% for the week, 10.49% for the month, 28.70% over the last quarter, 47.81% for the past half-year and 91.15% for the last year.
Why Applied Materials?
Applied Materials (AMAT) is based in Santa Clara, CA. They are the Large Cap in this industry. In 2015, the company had sales of $9.7 billion, did R&D worth $1.5 billion and held 1341 patents. It has received Intel’s Preferred Quality Supplier Award for the last 5 consecutive years.
Their website says,
“We are the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible the technology shaping the future.”
The $31 billion market cap company shares price just below $30. The forward PE is 16.81 and PEG ratio is 1.07. Its estimated 2016 EPS is $1.75 a share.
Six investment analysts have rated the stock with a hold rating, twenty have issued a buy rating and one has assigned a strong buy rating to the stock. The stock has a consensus rating of “Buy” and an average price target of $33.00.
Analyst Jim Kelleher of Argus said that "amid widespread demand growth, foundry orders from Taiwan and display orders driven by OLED upgrade were particularly noteworthy.”
Kelleher raised his FY16 non-GAAP earnings forecast to $1.76 a share from $1.57 and FY17 forecast to $2.16 from $1.91.
"We believe the company's ability to address significant technology transformations bode well for AMAT going forward. Simultaneously, AMAT's increasingly efficient operations are helping it to expand margins and boost profits in a tight top-line environment," Kelleher added.
As such, the analyst reiterated his Buy rating on the stock and raised his target price by $5 to $34.
Shares of Applied Materials gained 18 percent in 2016, compared to a 35 percent gain for Argus-covered semiconductor stocks. This represents a huge turnaround, given that shares were down more than 25 percent in February.
Also, Applied Materials Inc.’s stock had its “buy” rating reiterated by investment analysts at Stifel Nicolaus in a research note issued recently. They now have a USD 36 price target on the stock.
Applied Materials has a one year low of $14.29 and a one year high of $30.44. The company has a market cap of $32.59 billion, a PE ratio of 23.78 and a beta of 1.79. The stock has a 50 day moving average price of $28.39 and a 200 day moving average price of $23.76.