“Cut-to-the-Chase” Recommendations
- Week Beginning 26th October, 2015 -

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.

Monday, October 26, 2015
Corning Incorporated (NYSE:GLW) Puts

**OPTION TRADE: Buy the GLW Nov 2015 17.000 put (GLW151120P00017000) at approximately $0.55. Sell price is left to your own judgment.

Corning Incorporated (NYSE: GLW), which is engaged in the manufacture of specialty glass and ceramics, is expected to report third-quarter profit and revenue below analysts' expectations before the market opens tomorrow. Analysts expect demand for its glass displays to be hurt by weak sales of personal computers and lower TV sales, mainly in China.

Analysts expect $0.35 EPS, down 12.50% or $0.05 from last year’s $0.4 per share. GLW’s profit will be $429.39M for 12.56 P/E if the $0.35 EPS becomes reality. After $0.38 actual EPS reported by Corning Incorporated for the previous quarter, Wall Street now forecasts -7.89% negative EPS growth.

Corning Incorporated has declined 25.01% since March 23, 2015 and is downtrending. It has underperformed by 23.62% the S&P500.

Out of 7 analysts covering Corning Incorporated, 3 rate it “Buy”, 0 “Sell”, while 4 “Hold”.

Monday, October 26, 2015
Coach Inc (NYSE:COH) Calls

**OPTION TRADE: Buy the COH Nov 2015 34.000 call (COH151120C00034000) at approximately $0.30. Sell price is left to your own judgment.

Coach Inc (NYSE: COH), is a business in transition, and the company will report earnings for the first quarter of fiscal year 2016 on Tuesday, October 27, before official market hours.

Coach Inc has seen a 6.11 percent increase in its share price over the past month, from a low of $27.49 on September 28.

Susquehanna’s Thomas A. Filandro has initiated coverage of the company with a Positive rating and price target of $40. Filandro believes that the company’s brand relevance is on an uptrend, which would drive topline stabilization in the near term, along with sales and profit acceleration in the medium to long term.

Analyst Thomas Filandro believes that Coach’s “share performance will hinge on the success of brand revitalization in NA, which we believe has reached a tipping point.”

With the share price more than 30 percent off its 52-week high, as well as a robust 4.5 percent dividend yield, it is a belief that COH is an attractive opportunity to own a highly recognizable and evolving brand, with a compelling risk-reward profile.

Coach offers a re-platformed product with clear creative direction that is design led, comprising innovative lifestyle offerings with deliberate investments in quality and unique details igniting brand resurgence and design credibility.

The company’s integrated marketing strategy comprises disruptive and innovative campaigns, which elevate the brand to a modern luxury positioning, fueling elevated emotional and aspirational relevance.

The new and improved store design is a crucial transformational element for the company, with the 40 percent rollout of the modern luxury concept expected by end-FY16. Coach also intends to close its underperforming stores in North America, while elevating the positioning of 12 of its key North American markets, with an emphasis on its flagships.

Monday, October 26, 2015
T-Mobile US Inc (NYSE:TMUS) Calls

**OPTION TRADE: Buy the TMUS Nov 2015 42.000 call (TMUS151120C00042000) at approximately $1.00. Sell price is left to your own judgment.

T-Mobile US Inc (NYSE: TMUS), a provider of mobile communications services in the United States, Puerto Rico, and the U.S. Virgin Islands, is expected to report third-quarter profit before trading opens tomorrow morning. The No. 4 U.S. wireless carrier's efforts to lure customers from bigger rivals seem to be paying off as the company raised its 2015 subscriber forecast for the second time this year.

Analysts are very bullish on TMUS. Out of 10 analysts covering T-Mobile US, 7 rate it “Buy”, 0 “Sell”, while 3 “Hold”. This means 70% are positive. Also, the institutional sentiment increased to 1.43 in Q2 2015. Its up 0.30, from 1.13 in 2015Q1.

Analysts expect $0.32 EPS, up 366.67% or $0.44 from last year’s $-0.12 per share. TMUS’s profit will be $255.49M for 32.24 P/E if the $0.32 EPS becomes reality. After $0.42 actual EPS reported by T-Mobile US Inc for the previous quarter, Wall Street now forecasts -23.81% negative EPS growth.

T-Mobile has risen 24.49% since March 23, 2015 and is uptrending. It has outperformed by 25.89% the S&P 500.

Monday, October 26, 2015
Alibaba Group Holding Ltd (NYSE:BABA) Puts

**OPTION TRADE: Buy the BABA Nov 2015 67.500 put (BABA151120P00067500) at approximately $1.00. Sell price is left to your own judgment.

Alibaba Group Holding Ltd (NYSE: BABA), an online and mobile commerce company, is set to release its second quarter earnings report for fiscal year 2016 tomorrow, before the opening bell. Earnings should be impacted as China woes continue to weigh on market sentiment. Consequently, Alibaba stock is expected to display considerable sensitivity to the quarterly earnings release.

Given that consensus fears of China’s economic slowdown are as crucial and significant as initially anticipated, Alibaba’s second quarter (2Q) performance would be substantially weak. China’s economy is expected to slow down and grow at its slowest in almost twenty five years, as per estimations. Hence consumer spending is feared to contract to significantly low levels.

Given Alibaba's dominance in China’s e-commerce space, investors are worried about the impact of a slowdown on the company’s transaction value, specifically, its gross merchandise value (GMV). China is the most important region for the e-commerce giant.

Earlier in September, the e-commerce giant warned that it was anticipating near term headwinds which could potentially dent the sales generating capacity of the company. As a result, original sales forecast figures for 2Q stand null and void. This is specific for the 3-month period ended in September.

Apart from financial performance, China’s troubles have inflicted significant damage to Alibaba’s market cap. Although the downward trajectory in Alibaba stock began at the turn of the year, the stock was pulled into a steeper dive on the back of weakness in its most important market. The China theme first picked up momentum during the month of June, and since then, Alibaba shares have eroded more than 15% of their market value. As of Friday’s close, Alibaba stock trades at $75.66, following a rise of more than 6%. The company’s market cap is $189.99 billion.

The magnitude of negative sentiment spurring from China woes can be witnessed via Alibaba stock’s latest short interest data. Short interest in Alibaba stock peaked to a 52-week high at more than 78 million during the month of September.

Monday, October 26, 2015
Pfizer Inc. (NYSE:PFE) Puts

**OPTION TRADE: Buy the PFE Nov 2015 34.000 put (PFE151120P00034000) at approximately $0.85. Sell price is left to your own judgment.

Pfizer Inc. (NYSE: PFE), a leading global drug company, is strapped by declining sales of generic drugs and a strong dollar that has crimped sales. Pfizer is expected to report lower third-quarter sales and earnings before the market opens tomorrow morning.

Pfizer Inc. has suffered from revenue declines since 2010. This year, S&P Capital IQ Equity Research forecasts sales will fall another 7.3% to $46 billion, including a $2.9 billion loss due to foreign exchange and a $3.5 billion loss resulting from drugs coming off patent.

In February, Pfizer agreed to acquire Hospira for $17 billion. Capital IQ is of the opinion that Pfizer significantly overpaid for the generic injectable drug maker, with the acquisition price valuing the stock at 38.5 times its 2015 earnings estimates compared with the stock’s five-year range of 7 to 25 times earnings.

Analysts’ consensus estimate is for full-year earnings to fall 7.5% to $2.09 per share.

PFE stock has traded in a flat line for most of 2015. However, after hitting a new high above $36 in late July, shares plunged below $29 on August 24th.

A rebound from that low appears to have stalled above the 200-day moving average at $33.89, and Tuesday’s outside reversal may have signaled the demise of the recovery. High-volume selling, a bearish horn formation and a death cross all point to lower prices.

Monday, October 26, 2015
Merck & Co., Inc. (NYSE:MRK) Calls

**OPTION TRADE: Buy the MRK Nov 2015 53.500 call (MRK151120C00053500) at approximately $0.85. Sell price is left to your own judgment.

Merck & Co., Inc. (NYSE: MRK), a global health care company, whose shares have lagged most of its big pharma peers this year, can be expected to do some cheerleading and point to potential sources of revenue growth within its drug pipeline.

Merck is slated to report its third-quarter earnings results on tomorrow morning, Tuesday, October 27th, 2015. For the upcoming quarter Wall Street is forecasting $10.1 billion in revenue, a dip from the $10.6 billion reported in the year-ago period, and EPS of $0.92, up modestly from the $0.90 it reported in Q3 2014. Whereas Merck's top line has been mostly hit-or-miss when it comes to Wall Street's forecasts, it's surpassed the Street's EPS estimates in 10 of the past 11 quarters.

Shares of Merck rose by 2.72% in the past week and 6.61% for the last 4 weeks. The shares have outperformed the S&P 500 by 0.64% in the past week but underperformed the index by 0.78% in the last 4 weeks. However, the company shares have dropped 6.32% in the past 52 Weeks, which leaves plenty of room to grow.

There are 7 analysts that have assigned a hold rating, and 7 have assigned a strong buy rating to the company. And according to 11 Analysts, the short term target price has been estimated at $63.91, and may be as high as $72.00.