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.
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ALSO "Trading Capital Management"
Option Trade – AbbVie Inc (NYSE:ABBV) Calls
Friday, August 14, 2020
** OPTION TRADE: Buy ABBV SEP 18 2020 95.000 CALLS at approximately $2.80. (Max. $3.20)
(for those members requiring further guidance.....
Place a pre-determined sell at $5.60.
Include a protective stop loss of $1.10.)
The economic impact of the coronavirus pandemic on the large drug sector has been relatively softer when compared to retail, restaurants, gaming, transportation, and travel industries. In fact, all eyes are on this sector to find a cure/vaccine for the deadly COVID-19 disease and bring an end to the global economic catastrophe. A key company in the Large Cap Pharmaceuticals industry is AbbVie Inc (NYSE:ABBV), which has outperformed the industry this year so far.
AbbVie’s stock has risen 7.8% this year so far against a decrease of 0.6% for the industry.
The North Chicago, IL-based company AbbVie, a research-based biopharmaceutical company, has provided impressive results in the first two quarters of 2020. It beat estimates for both earnings and sales in both the first and second quarters of the year. Though AbbVie’s sales declined 5.3% on a comparable operational basis in the second quarter, it was because of a substantial decline in sales of legacy Allergan brands. AbbVie acquired Allergan for almost $63 billion in May this year. The impact of COVID-19 related business disruption on legacy AbbVie drugs was less severe than expected in the second quarter. Its legacy AbbVie sales were above expectations due to continued robust performance in both hematology/oncology and immunology franchises.
With regard to the Allergan side of the business, AbbVie said that though second-quarter sales of Botox (both Cosmetic and Therapeutic) and the aesthetics business were significantly hurt by COVID-19, the business had recovered to more than 90% of pre-COVID levels by end of June. In fact, the company said that recovery trends from COVID-19 were faster than expected with further recovery expected in the second half of 2020.
AbbVie made its debut on the stock market in 2013 when it split from its former parent company, Abbott Laboratories.
AbbVie Inc discovers, develops, manufactures, and sells pharmaceutical products in the United States, Japan, Germany, Canada, Italy, Spain, the Netherlands, the United Kingdom, Brazil, and internationally.
The company offers HUMIRA, a therapy administered as an injection for autoimmune and intestinal Behçet's diseases; IMBRUVICA to treat adult patients with chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma, waldenström's macroglobulinemia, marginal zone lymphoma, and chronic graft versus host disease; VENCLEXTA, a BCL-2 inhibitor used to treat adults with CLL or SLL; VIEKIRA PAK, an interferon-free therapy to treat adults with genotype 1 chronic hepatitis C virus (HCV); TECHNIVIE to treat adults with genotype 4 HCV infection; and MAVYRET to treat patients with chronic HCV genotype 1-6 infection.
AbbVie’s acquisition of Allergan significantly expanded and diversified its revenue base with new therapeutic areas, enhancing its long-term growth potential. The acquisition strengthened AbbVie’s existing leadership positions in immunology and hematological oncology while providing additional growth franchises in aesthetics and neuroscience.
AbbVie’s rationale behind the Allergan deal was to add a new blockbuster product to its portfolio, Allergan’s Botox, ahead of generic competition for Humira.
Other Influencing Factors.....
AbbVie had a rather fruitful year as far as striking collaboration deals and pipeline development is concerned.
Importantly, its two new immunology drugs, Skyrizi and Rinvoq, approved in 2019, were off to strong starts and have witnessed strong sales uptake in 2020. AbbVie expects combined revenues of these two drugs to be approximately $2.0 billion in 2020. AbbVie gained FDA approval for another new drug — Oriahnn/elagolix — in 2020 for reducing heavy menstrual bleeding (HMB) in premenopausal women with uterine fibroids. It also gained FDA approval for Imbruvica in combination with Roche’s RHHBY Rituxan for first-line chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL) and EU approval for Venclyxto and Roche’s Gazyva for first-line CLL this year.
It announced successful data from late-stage studies on migraine prevention candidate, atogepant, four studies on Rinvoq in atopic dermatitis, head-to-head plaque psoriasis study on Skyrizi versus Novartis’ NVS Cosentyx, among others.
Important collaboration deals included an oncology collaboration deal with Denmark’s pharma company, Genmab GMAB and collaboration with Harbour BioMed (HBM), Utrecht University (UU) and Erasmus Medical Center (EMC) to make a monoclonal antibody therapy to prevent and treat COVID-19.
The Earnings Report…..
AbbVie last released its quarterly earnings data on Friday, July 31st.
The company reported $2.34 earnings per share (EPS) for the quarter, beating the consensus estimate of $2.20 by $0.14. AbbVie had a negative return on equity of 628.57% and a net margin of 19.20%.
The business had revenue of $10.43 billion during the quarter, compared to analyst estimates of $10.14 billion.
During the same quarter in the previous year, the firm posted $2.26 EPS. The business’s revenue for the quarter was up 26.3% compared to the same quarter last year.
On average, equities research analysts forecast that AbbVie Inc will post 10.46 earnings per share for the current fiscal year.
AbbVie had its price target upped by Royal Bank of Canada from $125.00 to $127.00 in a research report released earlier this month. Royal Bank of Canada currently has an outperform rating on the stock.
Several other analysts also recently issued research reports about the stock.....
One investment analyst has rated the stock with a sell rating, three have assigned a hold rating and fourteen have given a buy rating to the company. AbbVie currently has an average rating of “Buy” and a consensus price target of $107.00.
Strong demand trends for Humira in the United States, a strong portfolio of new drugs and continued strong sales performance of Imbruvica and Venclexta keep AbbVie pushing higher.
AbbVie Inc has a twelve month low of $62.55 and a twelve month high of $101.28. The firm has a market capitalization of $163.04 billion, a price-to-earnings ratio of 20.16, and a price-to-earnings-growth ratio of 1.48 and a beta of 0.83. The company has a debt-to-equity ratio of 5.57, a current ratio of 0.86 and a quick ratio of 0.70. The company has a fifty day moving average price of $96.98 and a 200 day moving average price of $88.72.
Option Trade – Pan American Silver Corp. (NASDAQ: PAAS) Calls
Thursday, August 13, 2020
** OPTION TRADE: Buy PAAS OCT 16 2020 35.000 CALLS at approximately $2.70. (Max. $3.20)
(for those members requiring further guidance.....
Place a pre-determined sell at $5.40.
Include a protective stop loss of $1.10.)
Silver is considered a precious metal, as it's regarded as rare and carries a high economic value. It can be found in jewelry, coins, and also electronics, because it has the highest electrical conductivity of any metal. Like other precious metals, such as gold, silver is often purchased by investors as a safe haven in times of economic turmoil.
The metals producer Pan American Silver Corp. (NASDAQ: PAAS) is up about 250% since hitting its corrective bottom alongside the broader market. Its year-to-date return of 55% is nothing to sneeze at either.
The bullishness in the miner looks even more determined when considering PAAS’ riskier stochastics and the positioning of shares outside the monthly Bollinger Band. But overbought conditions will bring more of the same.
Technically, shares of PAAS are consolidating around its prior all-time high set back in 2008. It’s a second challenge at moving into higher ground following an outright failure back in late 2011. In my estimation, it sets up an attractive second-attempt base breakout. What’s more, this overbought stock to buy is also a lower-correlation mid-cap which makes it a solid candidate for portfolio diversification.
About Pan American Silver Corp…..
Pan American Silver is a Canada-based primary silver producer that's engaged in the exploration, development, extraction, processing, refining, and reclamation of mineral properties. The company owns and operates silver mines located in Peru, Mexico, Argentina, and Bolivia, and has several development projects in the U.S., Mexico, Peru, and Argentina.
Pull-back Provides Further Opportunities…..
On Tuesday PAAS fell as much as 12% based on an update from Deutsche Bank.
CEO Michael Steinmann started Pan American Silver's Aug. 6 second-quarter earnings conference call by explaining that "the global COVID-19 pandemic had a significant impact on our operations over the second quarter." Higher precious metals prices helped soften the blow, allowing the company to earn $0.10 per share in the quarter, up from $0.09 in the second quarter of 2019. However, the impact of mine closures resulted in Pan American Silver trimming its full year 2020 silver production guidance by around 40% with gold production pegged to be lower by 15%. With precious metals prices high today, that's not a great outcome.
It was the production guidance update that prompted Deutsche Bank to shift the precious metals miner from the buy list to the hold list. That said, the move came with an increase in the stock's target price to $34 per share, from the previous level of $28. The stock's swift drop took the shares a couple of dollars below the updated target.
The Earnings Report…..
Pan American Silver reported earnings on August 05, 2020.
The basic materials company reported $0.28 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.05 by $0.23. Pan American Silver had a net margin of 2.19% and a return on equity of 5.95%. On average, equities research analysts predict that Pan American Silver will post 0.6 EPS for the current year.
National Bank Financial boosted their price objective on shares of Pan American Silver from C$43.00 to C$54.00 and gave the stock a “sector perform” rating in a report on Wednesday, July 22nd.
Pi Financial reaffirmed a “neutral” rating and issued a C$48.00 target price on shares of Pan American Silver in a research note on Thursday, August 6th.
Pan American Silver has a market cap of $10.91 billion and a PE ratio of 307.38. The company has a current ratio of 2.95, a quick ratio of 1.55 and a debt-to-equity ratio of 13.43. Pan American Silver has a 52 week low of C$14.22 and a 52 week high of C$53.30. The company’s fifty day moving average price is C$45.21 and its two-hundred day moving average price is C$33.64.
Option Trade – Square Inc (NYSE:SQ) Calls
Tuesday, August 11, 2020
** OPTION TRADE: Buy SQ SEP 18 2020 160.000 CALLS at approximately $4.00. (Max. $4.50)
(for those members requiring further guidance.....
Place a pre-determined sell at $8.00.
Include a protective stop loss of $1.60.)
Shares of payment processing and point-of-sale upstart Square Inc. (NYSE:SQ) fell yesterday, and are declining slightly pre-market; probably due to profit taking more than being overbought.
Square Inc. posted a double earnings surprise last Wednesday as the payments company delivered an unexpected surge in revenue for the second quarter in a release that came out a day early due to “early external access” of its financials. Square shares, at the time, were up nearly 11% in after-hours trading.....see our profits below.
Analysts expected Square’s revenue to decline in the period as the COVID-19 crisis pressured the company’s small-merchant customer base, but instead Square saw revenue jump 64% to $1.9 billion, above the $1.1 billion that analysts had been expecting, driven by a large spike in bitcoin-related revenue and increased usage of the Cash App mobile wallet.
After its disappointing initial public offering in November 2015, Square stock meandered. In June 2016, SQ stock still traded just above its IPO price of 9.
That soon changed. From July 1, 2016, through a high of 101.50 set last Oct. 1, Square stock exploded nearly 995%. Its big run led one analyst to call Square the next FANG stock, joining the likes of Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Alphabet's (GOOGL) Google in stature.
Following its big run, Square stock fell more than 50% in late 2018 as many technology companies also crashed. SQ stock clawed back a bit the first seven months of 2019. After Square issued weaker-than-expected September quarter guidance on Aug. 1, shares plunged 15% in a day and then gradually rose until February of this year, when it plunged again.
It's not uncommon for big winners like SQ stock to correct more than 50% after scoring a huge run. However, not many stocks roar back after such a run and steep correction. It takes time for them to digest those gains and set up for another extended surge into new highs. Many never deliver a repeat performance.
Winning Options Trades on Square This Year.....
1. Armchair Traders executed a trade on Square on January 08, quickly made 100%; and for those traders that held for more gains – reached a maximum of 300%.....CLICK HERE for more information.
2. Armchair Traders executed a trade on Square on May 22 and made Potential Profits of 680%......entered at $9.00 then hit $70.20 after the report.....CLICK HERE for more information.
3. Here Is a Look At The Earnings Recommendation For Square Last Week for Earnings Predictions Members..... Bought at $9.25 and after reporting hit $29.50..... 219% Potential Profit.....
Option trade LAST WEEK: Buy the SQ AUG 21 2020 130.000 CALL at approximately $8.85. (up to $9.50)
"Payment processing and point-of-sale upstart Square Inc. (NYSE:SQ) will report earnings after the market closes. The consensus estimate is for a loss of $0.05 per share on revenue of $1.01 billion; but the Whisper number is a little better at ($0.01) per share.
Consensus estimates are for earnings to decline year-over-year by 126.32% with revenue decreasing by 13.99%.
For the last reported quarter, it was expected that Square would post earnings of $0.13 per share when it actually produced a loss of $0.02, delivering a surprise of -115.38%.
Over the last four quarters, the company has beaten consensus EPS estimates three times.
Square is closing in on an all-time high. Considering SQ stock traded as low as $32.33 during the mid-March correction, the 280% recovery from its March lows is something to behold.
Short interest has decreased by 20.5% and overall earnings estimates have been revised higher since the company's last earnings release.
company’s comprehensive commerce ecosystem helps to attract new sellers and
retain existing ones which has strengthened seller base.
Square has a robust product portfolio.
Integrations among the company’s product lines, which deliver enhanced user experience, contribute to the seller base growth.
Also, Square’s omni-channel offerings, which help sellers in creating differentiated customer experience on the back of customer insights by managing orders from the point of sale and eliminating manual aggregation of online and in-person orders, should have driven seller base."
The Earnings Report…..
Wednesday its second-quarter 2020 adjusted earnings of 18 cents per share,
against the Consensus Estimate of a loss of 5 cents per share. The company had
reported earnings of 21 cents in the year-ago quarter and a loss of 2 cents in
the prior quarter.
Net revenues of $1.92 billion surpassed the Consensus Estimate of $1.01 billion. Further, the figure improved 63.8% from the year-ago quarter and 39.3% sequentially.
Shares of Square rose sharply following the fintech star's strong second quarter results. By the close of trading, Square's stock was up 7.1% after rising as much as 15.8% earlier in the day.
Square's revenue soared 64% year over year, to $1.9 billion, though much of the gains were driven by a surge in the company's low-margin bitcoin trading revenue. However, even if we exclude bitcoin revenue, Square's Cash App revenue was still up a stunning 140%, to $325 million. The popular peer-to-peer payments app ended the quarter with more than 30 million active customers.
Additionally, Square's merchant customers demonstrated an impressive ability to adapt to shifting retail trends during the COVID-19 crisis. Square's gross payment volume (GPV) from online channels surged 50% year over year -- and comprised more than 25% of its total GPV -- in the second quarter. (GPV is, essentially, the total dollar amount of all card payments processed by Square's merchant customers on its platform.)
Square has an opportunity to disrupt a large swath of the traditional banking industry. Cash App could help Square wrestle away market share from banks, particularly if more users deposit funds into the app rather than their checking accounts. In time, Square will likely use these funds to issue loans, which could allow it to build a significant presence in the mortgage and personal loan markets.
Combined with its core seller ecosystem and booming cryptocurrency business, Cash App gives Square tremendous optionality.
Investment banker BMO Capital raised its price target on point-of-sale payments processor Square on August 07, 2020. Having previously valued the stock at $116 a share, BMO Capital now thinks Square is worth nearly every dollar of the $154 the stock's share price closed at last night. (BMO's new target price: $153).
According to the analyst, Square's Q2 performance, reported earlier this week, was plenty strong, with sales soaring 64% and beating analyst predictions soundly. Square is employing its Seller and Cash App ecosystems to build the foundations for long-term earnings growth, says BMO. And with business booming, the analyst thinks the stock is worth more now than it was worth before earnings -- and that Square might well earn twice as much this year ($0.54 per share) as BMO had previously predicted ($0.23 per share).
Rosenblatt analyst Kenneth Hill reiterated a Buy following the earnings results; the 5-star analyst raised the price target significantly - Hill’s new target is $181, up from the previous $136 - a 23% gain should the analyst’s thesis play out.
While Square’s Q2 display was impressive, Hill argues the future looks even brighter: “We liked the strength displayed in 2Q as gross profit performance came in much better than we expected. That said, we liked the upgrade to the forward outlook even more. While the better-than-expected July metrics were a clear positive, the biggest takeaways for us were the Cash App engagement metrics and the emphasis on new investment in the business… We see the surge in investment activity as a way to supercharge the long-term growth trends already in place, given healthy payback and ROI metrics historically.”
Also, Square had its price target lifted by research analysts at Canaccord Genuity from $80.00 to $180.00 in a research report issued to clients and investors last Thursday. The firm presently has a “buy” rating on the technology company’s stock. Canaccord Genuity’s target price points to a potential upside of 19.28% from the stock’s current price.
Square has a twelve month low of $32.33 and a twelve month high of $158.43. The company has a quick ratio of 2.19, a current ratio of 2.19 and a debt-to-equity ratio of 1.17. The firm has a market cap of $61.22 billion, a P/E ratio of 224.74 and a beta of 2.72. The company has a 50-day moving average price of $119.52 and a 200-day moving average price of $82.92.