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 – GameStop Corp. (NYSE:GME) Puts
Tuesday, November 22, 2016
**OPTION TRADE: Buy the GME DEC 16 2016 23.000 put at approximately $1.05. Sell price is left to your own judgment.
GameStop Corp. (NYSE:GME), operating as an omnichannel video game retailer, will post its quarterly earnings results on Tuesday, November 22nd. GameStop Corp. has set its Q3 guidance at $0.53-0.58 EPS and its FY17 guidance at $3.90-4.05 EPS.
GameStop Corp. last posted its earnings results on Thursday, August 25th. The business earned $1.63 billion during the quarter, compared to analysts’ expectations of $1.73 billion. During the same period in the previous year, the business earned $0.31 earnings per share. The firm’s revenue was down 7.4% on a year-over-year basis. On average, analysts expect GameStop Corp. to post $3.71 EPS for the current fiscal year and $3.88 EPS for the next fiscal year.
At the surface you’d think that gaming is a great place to be. However, there’s a growing problem with this video game retailer. Developers have been cutting out the middle man of retail. Microsoft’s Xbox, Sony’s Playstation, and certainly PC have portals where gamers can download new games without leaving the comfort of their own homes. Further, as gamers shift away from console gaming to computer gaming, it puts further strain on Gamestop.
Also, downloading removes the secondary market for games, a big part of Gamestop’s business.
The stock is also receiving plenty of bearish analyst activity over the last sixty days. Seven analysts have dropped their earnings estimates for the current quarter while eight have done so for the current year.
Two equities research analysts have rated the stock with a sell rating, eight have given a hold rating and ten have assigned a buy rating to the stock. GameStop Corp. presently has a consensus rating of “Hold” and a consensus price target of $32.90.
GameStop Corp. has a 52-week low of $20.10 and a 52-week high of $39.77. The company’s 50-day moving average price is $24.89 and its 200 day moving average price is $27.93. The stock has a market capitalization of $2.44 billion, a PE ratio of 6.19 and a beta of 1.16.
Option Trade – Godaddy Inc (NYSE:GDDY) Calls
Tuesday, November 22, 2016
**OPTION TRADE: Buy the GDDY DEC 16 2016 35.000 call at approximately $1.25. Sell price is left to your own judgment.
Godaddy Inc (NYSE:GDDY), the world's largest cloud platform dedicated to small, independent ventures, reported financial results for the third quarter ended September 30, 2016, on November 2nd.
GoDaddy reported a continued strong growth in the third quarter with results above the high end of the guidance ranges -- Q3 Revenue was up 15% on growing customers and ARPU – and saw a swing to Net Income from Year Ago Net Loss.
"GoDaddy turned in another strong quarter, with results again exceeding the top-end of our guidance. I'm particularly pleased with the advancements we've made in both new product introductions, and how we serve our global markets. We've proven our ability to successfully scale the business, delivering compelling products and experiences that will continue to grow our business over the long term," said Blake Irving, GoDaddy Chief Executive Officer.
GoDaddy Inc. is set to release its next quarterly earnings report on February 22, 2017. Analysts, on average, forecast GoDaddy Inc. to earn $0.02 per share (EPS) on revenue of $494.35M. The EPS consensus range is $-0.04-$0.09 on revenue between $502M and $489.2M.
Now, GoDaddy has been given a $50.00 price objective by research analysts at Piper Jaffray Cos. in a research report issued to clients and investors on Monday. The brokerage presently has a “buy” rating on the stock. Piper Jaffray Cos.’s price objective points to a potential upside of 45.39% from the stocks previous close.
Also, a number of other analysts recently weighed in on the company…..
Cantor Fitzgerald started coverage on GoDaddy in a research note on Tuesday, October 18th. They issued a “buy” rating and a $42.00 price target on the stock.
Deutsche Bank AG lifted their price target on GoDaddy from $39.00 to $42.00 and gave the company a “buy” rating in a research note on Tuesday, October 18th.
Zacks Investment Research upgraded GoDaddy from a “hold” rating to a “buy” rating and set a $39.00 price target on the stock in a research note on Wednesday, October 5th.
Finally, Summit Redstone started coverage on GoDaddy in a research note on Monday, October 3rd. They issued a “buy” rating and a $41.00 price target on the stock.
One analyst has rated the stock with a sell rating, five have assigned a hold rating and eleven have assigned a buy rating to the stock. The stock currently has a consensus rating of “Buy” and a consensus price target of $39.18.
GoDaddy traded up 1.69% on Monday, reaching $34.97. The company had a trading volume of 1,094,441 shares. The company’s market capitalization is $3.06 billion. GoDaddy has a 52-week low of $23.88 and a 52-week high of $36.96. The company’s 50-day moving average is $34.83 and its 200-day moving average is $32.52.
Option Trade – Urban Outfitters, Inc. (NASDAQ:URBN) Calls
Tuesday, November 22, 2016
**OPTION TRADE: Buy the URBN DEC 16 2016 40.000 call at approximately $0.90. Sell price is left to your own judgment.
Urban Outfitters, Inc. (NASDAQ:URBN), a lifestyle retail company, is scheduled to release third-quarter fiscal 2017 results on Nov. 22. In the preceding quarter, this Philadelphia, Pennsylvania-based company reported earnings beat of 17.9%.
Wunderlich expects Urban Outfitters, Inc. to report earnings and sales above Street, as the company is a key winner of back-to-school season.
The Street expects third-quarter EPS of $0.44 and revenue of $870 million (comp of +1.9 percent).
The brokerage says Urban Outfitters benefited by early adaption of the '80s retro trend and denim, coupled with aggressive inventory reduction and cutting back on discounting.
“When we throw in easy comparisons and the debacle last year at the company's new warehouse, we are upbeat for upside in the quarter,” analyst Eric Beder wrote in a note.
Further, Wunderlich’s analysis shows Google Trends data boding well for third-quarter top-line upside, driven by strong online traffic and demand.
In addition, the analyst expects positive fourth-quarter guidance from the company on easy comparisons and low Street expectations. If weather turns cold, the entire specialty retail sector could be poised for margin expansion.
Consequently, Beder maintains his Buy rating and $40 price target, as Urban Outfitters has been able to take share from lost players such as Abercrombie & Fitch Co. and the shares are trading below 16x his FY 2018 EPS projection.
“As such, we believe URBN has the potential for further margin (and stock multiple) expansion and we continue to recommend the stock in front of earnings,” Beder added.
Urban Outfitters remains committed toward improving comps, investing in direct-to-consumer business, enhancing productivity in existing channels as well as adding new brands and optimizing the inventory level. UBRN intends to increase wholesale operations and augment eCommerce activities.
One research analyst has rated the stock with a sell rating, nineteen have given a hold rating, fourteen have given a buy rating and one has assigned a strong buy rating to the company’s stock. Urban Outfitters currently has an average rating of “Hold” and an average target price of $36.18.
Urban Outfitters has a 50 day moving average of $35.01 and a 200-day moving average of $31.71. Urban Outfitters has a one year low of $20.06 and a one year high of $40.80. The stock has a market capitalization of $4.37 billion, a price-to-earnings ratio of 19.20 and a beta of 0.69.
Option Trade – Tech Data Corp (NASDAQ:TECD) Calls
Monday, November 21, 2016
**OPTION TRADE: Buy the TECD DEC 16 2016 90.000 call at approximately $1.20.
Sell price is left to your own judgment.
Tech Data Corp (NASDAQ:TECD), a wholesale distributor of technology products,) will release its earnings data on Tuesday, November 22nd. Tech Data Corp. has set its Q3 guidance at $1.20-1.30 EPS. For the third quarter of fiscal 2017, management expects revenues in a range of $6.25 billion to $6.45 billion (on a constant currency basis).
For the fiscal year, capex is expected to be $44 million.
Tech Data is well positioned to achieve strong growth based on increasing demand for data center systems, cloud and mobility offerings in the long run. The higher level of spending in these areas is expected to drive revenue growth for Tech Data as the company consolidates its position in the fast-growing domain of data center, mobile technology, software and integrated supply chain.
Why Tech Data?
Tech Data has a diversified customer base in both North America and Europe. In addition, the company continues to strengthen its position in the small and medium-business (SMB) customer segment in several countries, both organically and through acquisitions.
Acquisitions have been an integral part of the company’s growth strategy. Recently, the company announced the acquisition of the Technology Solutions unit from Avnet, Inc (AVT) in a cash and stock deal worth $2.6 billion. The major benefit of this transaction will be Tech Data’s access to newer markets, i.e. in the Asia-Pacific region. The deal will expand Tech Data’s reach to 35 countries from the existing 21 countries. The buyout will also strengthen Tech Data distribution capabilities in Europe and the Americas.
Brean Capital reiterated a “buy” rating and issued a $105.00 price objective (up previously from $82.00) on shares of Tech Data Corp. in a research report on Thursday, September 22nd.
Credit Agricole SA upgraded Tech Data Corp. from an “underperform” rating to a “buy” rating and lifted their price objective for the company from $76.00 to $102.00 in a research report on Tuesday, September 20th.
Two investment analysts have rated the stock with a sell rating, three have issued a hold rating and four have issued a buy rating to the company’s stock. Tech Data Corp. currently has a consensus rating of “Hold” and a consensus price target of $101.
Tech Data Corp. has a 50-day moving average price of $80.14 and a 200-day moving average price of $76.56. Tech Data Corp. has a one year low of $57.99 and a one year high of $88.70. The firm has a market cap of $2.93 billion, a P/E ratio of 13.53 and a beta of 0.87.
Option Trade – Analog Devices, Inc. (NASDAQ:ADI) Calls
Monday, November 21, 2016
**OPTION TRADE: Buy the ADI DEC 16 2016 70.000 call at approximately $1.00.
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, will report fourth quarter fiscal 2016 results on Nov 22. Analysts expect Analog Devices to post earnings of $0.89 per share and revenue of $941.92 million for the quarter.
For the fourth quarter of fiscal 2016, management expects revenues in a range of $910 million to $970 million. On a non-GAAP basis, the company estimates gross margin of approximately 65.5%, operating expenses to be slightly up sequentially, interest and other expense of about $20 million, tax rate of approximately 12% and earnings per share in a range of 84-94 cents.
On a GAAP basis, the company estimates earnings per share in a range of 78-88 cents.
Analog Devices delivered better-than-expected results for the third quarter, surpassing the Consensus Estimate on both counts. These strong results were driven by a strong consumer market, which offset relatively weak industrial, auto and communication markets.
In 2015, the company successfully incorporated Hittite and expanded the available opportunities. It expects to deliver strong revenue synergies starting 2017.
Analog Devices will acquire Linear Technology in a cash and stock deal worth $14.8 billion. The acquisition is expected to be completed in the first half of 2017. It will make Analog Devices an industry leader across a huge range of products, customer breadth and scale. The deal will help it to grow significantly in industrial, automotive and communications infrastructure markets.
The transaction is anticipated to be immediately accretive to the company's bottom line results. In addition, the company expects annualized cost synergies of $150 million within the first 18 months following the completion of the transaction.
While its investments are aimed at strengthening the product line and countering increasing competition, the policy of returning cash through dividends and share buybacks will ensure investor loyalty.
Why Analog Devices?
Despite the shares already soaring some 23% year to date, including 10% over the past month, Morgan Stanley analysts still think Analog Devices, Inc. can climb higher.
Morgan Stanley's Craig Hettenbach said that Analog Devices has room for its estimates to climb in the next couple of quarters, owing to its position with Apple, Inc.'s (AAPL) iPhones, among other catalysts.
Citing the company's expected deal with Linear Technology Corporation (LLTC), Hettenbach said that Analog Devices was among Morgan Stanley's "top picks" heading into 2017. This is because Linear Technology is expected to add 20% to 25% in earnings growth accretion to Analog Devices' estimates and "should create one of the best business models in the S&P 500," Hettenbach argues.
Eleven analysts have rated the stock with a hold rating and twenty have given a buy rating to the company’s stock. The company currently has a consensus rating of “Buy” and a consensus price target of $77.83.
From an organic perspective, Hettenbach explained that, even before the deal, there is "an upward bias to EPS," thanks to a combination of Analog Devices' healthy business conditions and its strict attention to operating expenses.
Analog Devices Inc. has a market cap of $20.97 billion, a PE ratio of 32.22 and a beta of 1.18. Analog Devices Inc. has a 1-year low of $47.24 and a 1-year high of $68.50. The stock has a 50 day moving average price of $63.99 and a 200 day moving average price of $60.84.