“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, November 20, 2017

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 - salesforce.com, inc. (NYSE:CRM) Calls

Tuesday, November 21, 2017

** OPTION TRADE: Buy the CRM DEC 15 2017 110.000 CALL at approximately $2.10.

Sell price is left to your own judgment.

The San Francisco-based cloud software provider, salesforce.com, inc. (NYSE:CRM), will report Q3 earnings after the market closes today, Tuesday, November 21. The consensus earnings estimate is unadjusted EPS of 37 cents, up 54%, with revenue rising 23.5% to $2.65 billion. The Earnings Whisper number is $0.38 per share.

At its annual Dreamforce customer conference earlier this month, Salesforce forecast 20%-plus organic revenue growth through 2022. The company's cloud software helps businesses organize and handle sales operations and customer relationships.

Salesforce has never missed the Consensus Estimate for earnings, and shares of the company are up over 56% so far this year, and rising 15% just since the beginning of October. And it's earned those gains, with impressive sales growth and operating leverage starting to show through.

Influencing Factors

The cloud company has been delivering outstanding top-line performance in the recent past, with growth across geographies and deferred revenues expanding at a solid double-digit pace.

Helping to strengthen the company's case from a profitability perspective is a decline in recurring opex (i.e. marketing, R&D and G&A) as a percentage of revenues observed in the past three years. This metric had reached 83% in fiscal 2014, but is now flirting with 70% levels as the company continues to gain scale. Contrary to how growth investors tend to assess a company, it is important to see salesforce.com increasingly boost GAAP net profits, considering the company is expected to generate a whopping $21 billion in sales in less than five years.

Analysts and Hedge Funds Opinions

Morgan Stanley reiterated their overweight rating on shares of Salesforce.com in a research note issued to investors on Thursday morning. They currently have a $127.00 price target on the CRM provider’s stock, up from their previous price target of $107.00.

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

  • Drexel Hamilton restated a buy rating and issued a $111.00 price objective on shares of Salesforce.com in a research report on Wednesday, August 23rd.
  • Piper Jaffray Companies restated a buy rating and issued a $115.00 price objective on shares of Salesforce.com in a research report on Wednesday, November 1st.
  • Societe Generale set a $130.00 price objective on Salesforce.com, inc. and gave the company a “buy” rating in a research note on Wednesday.
  • Mizuho reiterated a “buy” rating and issued a $120.00 price objective (up previously from $110.00) on shares of Salesforce.com, inc. in a research note on Monday.
  • Royal Bank Of Canada restated a “buy” rating on shares of Salesforce.com, inc. in a research note on Thursday, November 9th
  • UBS AG began coverage on Salesforce.com, inc. in a research note on Thursday, November 9th. They set a “buy” rating for the company.
  • Finally, Canaccord Genuity restated a buy rating on shares of Salesforce.com in a research report on Monday, September 11th.

Two equities research analysts have rated the stock with a sell rating, six have issued a hold rating and forty-six have issued a buy rating to the company’s stock. The company has a consensus rating of Buy and a consensus price target of $114.49.

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

  • Vanguard Group Inc. increased its stake in Salesforce.com by 5.2% in the second quarter. Vanguard Group Inc. now owns 46,149,530 shares of the CRM provider’s stock valued at $3,996,548,000 after purchasing an additional 2,268,623 shares in the last quarter.
  •  Jennison Associates LLC increased its stake in Salesforce.com by 17.0% in the second quarter. Jennison Associates LLC now owns 18,819,812 shares of the CRM provider’s stock valued at $1,629,796,000 after purchasing an additional 2,740,329 shares in the last quarter.
  • Janus Henderson Group PLC increased its stake in Salesforce.com by 5.3% in the third quarter. Janus Henderson Group PLC now owns 13,435,212 shares of the CRM provider’s stock valued at $1,255,082,000 after purchasing an additional 675,471 shares in the last quarter.

Summary                                                                                

Salesforce.com is expected to deliver anything short of solid top-line growth and improving margins this quarter.

Salesforce.com has a market cap of $77,320.00, a price-to-earnings ratio of 537.90, a price-to-earnings-growth ratio of 10.67 and a beta of 1.23. Salesforce.com has a 1 year low of $66.43 and a 1 year high of $107.87. The company has a current ratio of 0.77, a quick ratio of 0.77 and a debt-to-equity ratio of 0.08.


Option Trade - Analog Devices, Inc. (NASDAQ:ADI) Calls

Monday, November 20, 2017

** OPTION TRADE: Buy the ADI DEC 15 2017 95.000 CALL at approximately $1.20.

Sell price is left to your own judgment.

Analog Devices, Inc. (NASDAQ:ADI), one of the world leaders in the design, manufacture and marketing of high-performance analog, mixed-signal and digital signal processing integrated circuits, is scheduled to report fiscal Q4 results before the market opens tomorrow, Tuesday, November 21, 2017. Analysts expect the Norwood, Mass.-based company to earn $1.37 a share, up 31% year over year, on sales of $1.5 billion, up 50%. Revenue of $1.50 billion is also expected but the Earnings Whisper number is $1.42 per share.

Consensus estimates are for year-over-year earnings growth of 30.48% with revenue increasing by 49.46%. Short interest has decreased by 17.9% since the company's last earnings release.  Overall earnings estimates have been revised higher since the company's last earnings release.

In the quarter, it is expected that strength across all end markets - consumer, communications, automotive and industrial to contribute significantly to the company's top line.

Influencing Factors

The Consumer segment is likely to improve both sequentially and year over year in the to-be-reported quarter driven by strength across prosumer and portable consumer applications.  

For the Communications segment, it is also expected to perform well both sequentially as well as year over year as Analog Devices continues to see strength in wireline. The Consensus Estimate for communications revenues is pegged at $256 million. This segment's fiscal third-quarter revenues were up 20% sequentially and 45% year over year.

Carrying on the momentum of the fiscal third quarter (up 25% sequentially and a massive 69% year over year), the Automotive segment is expected to record further improvement in the soon-to-be reported quarter. Growth will be driven by emerging super trends like autonomous driving and the electrification of the powertrain. 

The Industrial segment was up a massive 87% year over year in the fiscal third quarter and it is expected that the momentum will continue to be driven by broad-based strength in this highly diverse market. The Consensus Estimate for this segment's revenues stands at $696 million.

Analysts and Hedge Funds Opinions

Last month, analysts at Jefferies raised price targets on Analog Devices, citing a profit boost from industry consolidation and long-term demand drivers such as the Internet of Things.

Investment analysts at B. Riley issued their Q2 2019 EPS estimates for shares of Analog Devices in a report issued on Thursday. B. Riley analyst C. Ellis anticipates that the semiconductor company will post earnings of $1.40 per share for the quarter. B. Riley has a “Buy” rating and a $110.00 price target on the stock.

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

  • Stifel Nicolaus lifted their target price on Analog Devices from $97.00 to $98.00 and gave the company a “buy” rating in a research note on Thursday.
  • Drexel Hamilton reiterated a “buy” rating and issued a $105.00 target price on shares of Analog Devices in a research note on Wednesday, August 30th.
  • Jefferies Group LLC reiterated a “buy” rating and issued a $100.00 target price on shares of Analog Devices in a research note on Thursday, October 19th.
  • Finally, Zacks Investment Research upgraded Analog Devices from a “hold” rating to a “buy” rating and set a $98.00 price target on the stock in a research note on Tuesday, October 10th.

Twelve equities research analysts have rated the stock with a hold rating, eighteen have assigned a buy rating and one has given a strong buy rating to the stock. The company currently has an average rating of “Buy” and a consensus price target of $99.69.

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

  • Mn Services Vermogensbeheer B.V. raised its stake in shares of Analog Devices by 521.6% during the 2nd quarter. Mn Services Vermogensbeheer B.V. now owns 60,337 shares of the semiconductor company’s stock worth $4,694,000 after buying an additional 50,631 shares during the period.
  • James Investment Research Inc. acquired a new position in shares of Analog Devices during the 2nd quarter worth approximately $1,202,000.
  • Bartlett & Co. LLC raised its stake in shares of Analog Devices by 564.2% during the 2nd quarter. Bartlett & Co. LLC now owns 193,635 shares of the semiconductor company’s stock worth $15,065,000 after buying an additional 164,480 shares during the period.

Summary                                                                                

Analog Devices has a 52 week low of $67.62 and a 52 week high of $92.96. The company has a quick ratio of 1.52, a current ratio of 1.99 and a debt-to-equity ratio of 0.83. The stock has a market capitalization of $33,244.54, a PE ratio of 21.13, a price-to-earnings-growth ratio of 1.76 and a beta of 1.32.


Option Trade - Burlington Stores Inc. (NYSE:BURL) Calls

Monday, November 20, 2017

** OPTION TRADE: Buy the BURL DEC 15 2017 110.000 CALL at approximately $1.90.

Sell price is left to your own judgment.

Burlington Stores Inc. (NYSE:BURL), a retailer of branded apparel products, is slated to report third-quarter fiscal 2017 results on Tuesday, November 21, 2017, before the market opens. The consensus earnings estimate is $0.65 per share on revenue of $1.44 billion and the Earnings Whisper number is $0.66 per share.

According to Zacks, “Burlington Stores, Inc. operates as an off-price apparel and home product retailer. It provides its customers with a selection of fashionable branded product in women’s ready-to-wear apparel, menswear, youth apparel, baby products, footwear, accessories, home goods and coats. The Company operates within the United States and Puerto Rico. Burlington Stores, Inc. is headquartered in Burlington, New Jersey. “

The company's guidance was for earnings of $0.58 to $0.61 per share. Consensus estimates are for year-over-year earnings growth of 30.00% with revenue increasing by 7.25%. Last quarter, the company's earnings surpassed the Consensus Estimate by a margin of 44%. Notably, the company's earnings beat estimates in three of the last four quarters by an average of 17.7%.

Short interest has decreased by 4.0% since the company's last earnings release while the stock has drifted higher by 14.6% from its open following the earnings release to be 14.1% above its 200 day moving average of $91.81. Overall earnings estimates have been revised higher since the company's last earnings release.

Influencing Factors

Burlington Stores has made multiple changes to its business model to adapt to the ongoing changes in the industry. The company that started business as a coat-focused off-price retailer is now focusing on open to buy off-price model. The current model is helping customers purchase nationally branded, high quality and fashionable products at affordable prices.

Further, over the years, the company has increased vendor counts, made technological advancements, initiated better marketing approach and focused on localized assortments. These along with effective inventory management and cost containment efforts have helped elevate the company's gross margin. In the first and second quarters of fiscal 2017, gross margin expanded 80 and 110 basis points to 40.9% and 40.7%, respectively.

Analysts and Hedge Funds Opinions

Cowen and Company reaffirmed a “buy” rating and set a $110.00 price target on shares of Burlington Stores in a report on Friday, November 10th.

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

  • TheStreet upgraded Burlington Stores from a “c+” rating to a “b-” rating in a report on Monday, November 13th.
  • Deutsche Bank AG initiated coverage on Burlington Stores in a report on Thursday, September 14th. They issued a “buy” rating and a $108.00 price target on the stock.
  • BMO Capital Markets reiterated a “buy” rating and issued a $115.00 price target on shares of Burlington Stores in a report on Wednesday, September 13th.
  • Finally, Buckingham Research reiterated a “buy” rating and issued a $107.00 price target on shares of Burlington Stores in a report on Thursday, October 19th.

Ten equities research analysts have rated the stock with a buy rating to the company. The stock presently has a consensus rating of “Buy” and an average price target of $109.96.

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

  • Cipher Capital LP raised its position in shares of Burlington Stores, Inc. by 176.9% in the third quarter. The institutional investor owned 39,762 shares of the company’s stock after purchasing an additional 25,400 shares during the quarter. Cipher Capital LP owned 0.06% of Burlington Stores worth $3,796,000 at the end of the most recent quarter.
  • Bank of Montreal Can boosted its holdings in shares of Burlington Stores by 35.3% during the 2nd quarter. Bank of Montreal Can now own 122,422 shares of the company’s stock valued at $11,263,000 after acquiring an additional 31,916 shares during the last quarter.

Summary                                                                                

Burlington Stores, Inc. has a debt-to-equity ratio of -13.31, a quick ratio of 0.24 and a current ratio of 1.03. The stock has a market capitalization of $7,223.44, a P/E ratio of 28.08, a price-to-earnings-growth ratio of 1.42 and a beta of 0.51. Burlington Stores, Inc. has a one year low of $74.01 and a one year high of $104.84.

 




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