Earnings Predictions 
for the
Week Beginning August 03, 2020

Profiting From Trading Options!

Compare Exiting Before and After Earnings!

by Ian Harvey

Sunday, July 26, 2020


Options Trades to Consider Based on Expected Earnings Reports:

Monday, August 03, 2020


The Santa Clara, California-headquartered education technology company Chegg Inc (NYSE:CHGG) will report earnings after the market closes. The consensus earnings estimate is for $0.32 per share on revenue of $136.52 million; but the Whisper number is a bit higher at $0.35 per share.

The company's guidance was for revenue of $135.00 million to $137.00 million. Consensus estimates are for year-over-year earnings growth of 100.00% with revenue increasing by 45.45%.

For the last reported quarter, it was expected that Chegg would post earnings of $0.17 per share when it actually produced earnings of $0.22, delivering a surprise of +29.41%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Over the last 52-week period, shares are up 85.53%.

Influencing Factors.....

Short interest has decreased by 21.9% and overall earnings estimates have been revised higher since the company's last earnings release.

Coronavirus has impacted the overall economy including school industry. However, the same has created opportunities for the online educations like Chegg.

As coronavirus hit the industry in mid-March, Chegg witnessed substantial increase in new subscribers throughout the globe. Also, it saw increase in engagement from existing subscribers. During the first quarter conference call, the company noted that subscribers increased 33% in the first two months of the quarter.

The company is banking on its early adaptability of technology and infrastructure to provide education remotely. To improve efforts and serve students better, the company has been expanding offerings through the acquisition of companies like Mathway, Thinkful, WriteLab, StudyBlue, Cogeon, the developer of the math application Math 42, Imagine Easy Solutions, and internships.com.

Also, it has been integrating its efficiencies with supplemental materials including Chegg Study, Chegg Writing, Chegg Tutors, and Chegg Math Solver. Rising popularity of online courses at various levels, especially in this challenging period, is a positive.

Apart from these initiatives, the company is expanding its curriculum, scholarships, and currently working toward reducing prices to help students who lost their jobs.

Analysts Thoughts.....

The online learning environment has been a tailwind for Chegg, and the current trend is likely to extend through the entire upcoming academic school year, according to Morgan Stanley analyst Josh Baer.

Baer maintained an Overweight rating for Chegg, raising the price target from $56 to $83.

The education technology company is likely to generate higher growth in average revenue per user (ARPU) than was earlier anticipated, driven by its new offerings, significant international expansions and progress with monetizing shared accounts, Baer said in the note.

He expects these trends could continue in the near- and medium-term, resulting in accelerating and durable growth. The analyst added that an increased mix of Services revenue will boost Chegg’s margins and cash flow.

Baer enumerated the key drivers of Services revenue as:

  • Accelerated adoption of Chegg’s new study pack bundle, which could result in 5% compounded annual growth in ARPUs over the next five years.
  • Solid momentum in Canada, the UK and Australia, which could lead to the international market becoming double the size of the domestic addressable market.
  • Monetizing opportunities in shared accounts, with engaged users of the platform representing a source of subscriber growth.

The analyst raised the revenue estimates for fiscal 2020 and 2021 from $547 million to $557 million and from $676 million to $701 million, respectively.

Option trade to consider: Buy the CHGG AUG 21 2020 90.000 CALL at approximately $4.30 (up to $4.80).

(for those members requiring further guidance.....

STOP-LOSS – $1.75

SELL – $8.60)


Tuesday, August 04, 2020


Santa Monica, California-based video game stock Activision Blizzard, Inc. (NASDAQ:ATVI) will report earnings after the market closes. The consensus earnings estimate is for $0.63 per share on revenue of $1.70 billion; but the Whisper number is higher at $0.73 per share.

The company's guidance was for earnings of approximately $0.64 per share. Consensus estimates are for year-over-year earnings growth of 57.50% with revenue increasing by 21.78%.

Long before the world moved indoors, Activision had begun to shift its model towards digital downloads. This has made the company a cash flow machine, which is something that investors reward. As a result, ATVI stock has climbed over 50% in the last 18 months.

In addition to its attractive business model, Activision also has two of the most popular gaming franchises with multiplayer online games (MMO) including Call of Duty (which is an Activision title) and World of Warcraft (which is a Blizzard title). Through its merger with Vivendi Games, the company also owns the game maker King the company behind the Candy Crush Saga. This makes Activision a significant player in mobile gaming.

Activision is also a growing player in the esports market. The company has competitive leagues for its Overwatch and Call of Duty game franchises.

COVID-19 Era.....

ATVI has been witnessing a spike in demand for its video game titles since the outbreak. In spite of a spate of new launches, the company’s Call of Duty: Modern Warfare continued to enjoy the top selling spot both in April through May.

With more people at home since March, Activision Blizzard has reported high engagement levels across most of its games. The Call of Duty title has helped the company to more than double its monthly active users to 102 million following three releases in the last two quarters: Call of Duty: MobileCall of Duty: Modern Warfare and Call of Duty: Warzone. That last entry debuted at a perfect time with more than 60 million people downloading the game after its Mar 10 release just as shelter-in-place orders were going into effect. 

Influencing Factors.....

Short interest has decreased by 32.3% and overall earnings estimates have been revised higher since the company's last earnings release.

The video games industry is a”hits" based business. A hot new game can catapult revenue overnight. Activision Blizzard routinely releases new titles, but is built on a stable of dependable franchises. Its current business rests on a triad of games, including:

  • Call of Duty --A military shooting game known for its gritty story and lifelike graphics. Call of Duty debuted in 2003, but no less than a dozen sequels followed. Activision Blizzard has sold more than 300 million copies of the game. The latest installment is "Call of Duty Modern Warfare."
  • Candy Crush --A Tetris-like puzzle game played mostly on mobile devices. Activision picked up the hit game, a rare lasting franchise in the ever-fickle mobile gaming world, following its acquisition of King Digital for $5.8 billion in 2016. More than 500 million people have played this game in its seven years of existence.
  • World of Warcraft --A fantasy role-playing game played by large numbers of people simultaneously online. The game, first released in 2004, is a favorite with gamers around the world, including in esports competitions. World of Warcraft has more than 100 million accounts. These three games accounted for 58% of Activision Blizzard's total revenue in 2018. No other games accounted for 10% or more of revenue.

Moody’s.....

Moody's Investors Service ("Moody's") affirmed Activision Blizzard Baa1 senior unsecured debt ratings. The affirmation is supported by an effective pivot and rebound against strong competition over the past few years, improved credit metrics following significant debt reduction, and a sizeable cash balance.

The affirmation also reflects the favorable evolution of industry fundamentals for publishers like Activision, solid revenue and cash flow growth opportunities, a strong commitment to conservative metrics and its Baa1 rating credit profile, and its ability to continuously develop quality content to keep its competitive edge in the evolving video game industry.

Option trade to consider: Buy the ATVI AUG 21 2020 85.000 CALL at approximately $3.00 (up to $3.50).

(for those members requiring further guidance.....

STOP-LOSS – $1.20

SELL – $6.00)


Wednesday, August 05, 2020


CVS Health Corp (NYSE:CVS), formerly CVS Caremark Corporation, a pharmacy healthcare provider in the United States, will report earnings before the market opens. The consensus earnings estimate is $1.91 per share on revenue of $64.49 billion; but the Whisper number is a bit higher at $1.96 per share.

Consensus estimates are for year-over-year earnings growth of 1.06% with revenue increasing by 1.67%.

For the last reported quarter, it was expected that CVS Health would post earnings of $1.63 per share when it actually produced earnings of $1.91, delivering a surprise of +17.18%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

CVS Health is a top name in healthcare, and although the company's known for its near-10,000 locations across the country, it's proving to be much more than just a pharmacy retailer. With the acquisition of health insurance provider Aetna in 2018, CVS has been expanding its services at many locations, turning them into HealthHubs that offer greater healthcare services for customers, including giving them access to in-store dietitians and helping patients manage chronic conditions.

The healthcare stock hasn't completely bounced back from its low levels in March following the coronavirus-fueled stock market meltdown. The good news, however, is that CVS Health's valuation remains attractive. The stock's currently priced at a price-to-earnings (P/E) ratio of less than 12 and a price-to-book (P/B) multiple of about 1.3.

Influencing Factors…..

CVS Health should benefit from aging demographic trends over the long run, which should drive higher demand for prescription drugs. The company also has opportunities to leverage its unique position as a pharmacy retailer, PBM, and health insurer to offer innovative new products that help control healthcare costs. 

During the second quarter, the company took several PBM business initiatives together with its clients to balance the burgeoning interest in off-label use of certain medicines to treat COVID-19 pneumonia with the ongoing needs of members who use these drugs for chronic conditions. These medicines include hydroxychloroquine, azithromycin, one protease inhibitor and albuterol inhalers, which are approved for treatment of lupus, bacterial infections, HIV, rheumatoid arthritis and asthma.

As well, in this period, CVS Health’s consumer centric digital strategy became even more relevant as people used this technology more while staying at home. So far in this period, the company achieved higher levels of engagement across its digital assets. In this regard, utilization of telemedicine for virtual visits through MinuteClinic was up about 600% in the first quarter from the year-ago period. Expect to see a similar trend when the company reports second-quarter results.

Again, the company’s retail pharmacy services business is likely to have gained amid the pandemic as this segment has put in a lot of effort to meet the crisis. Realizing a huge ramp up in demand for the company’s services, since late March, the company hired a large number of store associates, home delivery drivers, distribution center employees and member/customer service professionals.

As per the company’s April and May update, its Front Store sales comps seem to have improved. While in April, it declined 10.7% year over year, in May, it declined just 3.2%. According to the company this improvement is due to the gradual increase in store traffic on partial lock-down liberalization in May.

During the first quarter, the company had talked about providing COVID-19 diagnostic testing and telemedicine visits through the company’s outlets. The company’s Aetna health insurance arm within Health Care Benefits business offered zero co-pay telemedicine visits for any reason to all Individual and Group Medicare Advantage members. CVS Health waived off of cost sharing for all Teladoc virtual visits. It is believed that these initiatives have worked in favor of CVS Health and added more Medicare Advantage members for Aetna.

Also, on the first-quarter earnings call, the company had noted that through its Aetna Health app, it engaged more households in first quarter than it did in the first three quarters of 2019.

Programs…..

CVS Caremark launched its point solutions management program with a sleep service from Big Health nearly a year ago, and now it's adding another of the digital mental healthcare startup's products to its suite of managed point solutions.

The Daylight product, which is designed to help people alleviate worry and anxiety, will join an expanding list of digital therapeutics that CVS Caremark offers to manage for employer-directed healthcare plans.

Other services in the CVS Caremark portfolio of offerings include Sleepio, a personalized digital sleep program from Big Health; Hello Heart, which helps members understand and improve their heart health; Hinge Health, which provides an app-based coaching and wearable sensor for chronic back and joint pain management; Livongo, which provides coaching, monitoring devices and digital treatments for conditions including diabetes, hypertension, weight management and diabetes prevention solutions; Torchlight, a caregiver support solution; and Whil, a digital training platform for mindfulness, stress resilience, mental well-being and performance.

"Plan sponsors increasingly see the value in health care point solutions for improving workforce productivity, satisfaction and overall well-being, however with so many options on the market, it can be challenging to identify trusted solutions that best meet the needs of their members," said Sree Chaguturu, MD, chief medical officer, CVS Caremark, the pharmacy benefit management business of CVS Health, in a statement earlier this year. "We have analyzed pharmacy and medical claims to identify where these benefits can make a difference and employ a rigorous and transparent evaluation process to assure that any vendor included in Point Solutions Management meets high standards for safety, quality and user experience at the vendor's lowest price in the marketplace."

Option trade to consider: Buy the CVS AUG 21 2020 65.000 CALL at approximately $1.15 (UP TO $1.50).

(for those members requiring further guidance.....

STOP-LOSS – $0.45

SELL – $2.30)


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.

Influencing Factors.....

Short interest has decreased by 20.5% and overall earnings estimates have been revised higher since the company's last earnings release.

The 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.

Option trade to consider: Buy the SQ AUG 21 2020 130.000 CALL at approximately $8.85 (UP TO $9.50).

(for those members requiring further guidance.....

STOP-LOSS - $3.55

SELL – $17.70)


Fastly Inc (NYSE: FSLY), headquartered in San Francisco, operating an edge cloud platform for processing, serving, and securing its customer's applications, will report earnings after the market closes. The consensus estimate is for a loss of $0.01 per share on revenue of $60.42 million; but the Whisper number is a little better at $0.01 per share.

The company's guidance was for revenue of $70.00 million to $72.00 million. Consensus estimates are for year-over-year earnings growth of 93.75% with revenue increasing by 30.86%.

For the last reported quarter, it was expected that Fastly would post a loss of $0.13 per share when it actually produced a loss of $0.06, delivering a surprise of +53.85%.

Over the last four quarters, the company has beaten consensus EPS estimates three times.

Fastly is a high-growth tech stock. The aptly named company uses a state-of-the-art content delivery network (CDN) to help clients achieve speedier response times and rapid loading of websites, photos, videos, apps, and more. This is accomplished with the help of its strategically placed data centers, which form a lightning-fast edge cloud platform.

With in-person transactions largely at a standstill, a company's digital presence is more important than ever before, and nothing will send potential customers running to a competitor faster than slow digital access or lagging content-delivery speeds. Streaming video, e-commerce, and online gaming providers were already experiencing robust adoption pre-pandemic and have all gotten a boost this year, largely the result of stay-at-home orders. These providers use Fastly to ensure their offerings don't suffer from extensive loading times.

Fastly's first quarter results help highlight the opportunity. Revenue grew 38% year over year, while its non-GAAP losses declined by about 80%. At the same time, its base of enterprise customers grew 22% year over year, while existing customers spent 33% more than the same period last year.

The need for fast, secure, and scalable content delivery isn't going anywhere and will only increase as the complexity of the connections grows. Fastly's platform has already demonstrated the ability to handle hundreds of billions of internet requests a day.

Fastly generated $200 million in revenue last year and estimated its addressable market in the neighborhood of $36 billion. This shows that Fastly has only just begun to tap a large and growing opportunity, giving it plenty of room to run in the months and years ahead.

Overall earnings estimates have been revised higher since the company's last earnings release.

In the age of the novel coronavirus, secure internet and quality video and streaming services are a must. More people are working from home and they require secure networks so they can do their jobs despite the restrictions of remote employment.

Fortune, in fact, calls Fastly the best-performing work-from-home stock during the Covid-19 pandemic.

Companies that use Fastly’s platform include Slack (NYSE:WORK), Airbnb, Spotify (NYSE:SPOT), Stripe, Pinterest (NYSE:PINS), Vimeo and Github, which is owned by Microsoft (NASDAQ:MSFT).

Fastly says that it’s capable of handling more than 800 billion requests per day, and that the company’s network achieved connected edge capacity of 100 terabits per second.

First-quarter earnings were a signal of things to come for Fastly. The company reported revenue of $62.92 million, which beat analysts’ estimates of $59.38 million. Earnings per share came in at a loss of $0.06, which was better than the -$0.12 EPS that analysts had projected.

CEO Joshua Bixby told analysts that Fastly will play an important role for businesses during the pandemic.

“Fastly is the platform of choice for innovators. We are partnering with the most technologically advanced and creative companies, who we believe will not only weather the storm, but will continue to thrive in this environment. Companies are increasingly recognizing the importance of digital transformation not only to survive during these uncertain times, but also for long-term success. As we are seeing this trend accelerate and evolve, we believe we are best positioned to partner and grow with these companies as they look for a trustworthy and modern platform.”

Fastly continues to have strong sales growth and should continue to exceed analysts’ earnings expectations as the Covid-19 pandemic continues to force companies to telework.

Option trade to consider: Buy the FSLY AUG 21 2020 110.000 CALL at approximately $6.70 (UP TO $7.50).

(for those members requiring further guidance.....

STOP-LOSS - $2.70

SELL – $13.40)



An Important Note: That these suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.

It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented.

If you wish to receive more options trading recommendations similar to this, which will help boost your portfolio strategy, check out the other  memberships available at Stock Options Made Easy.

When To Exit A Trade Based On Earnings?.....

It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?” 

As most traders realize, there is a 50/50 chance that the company stock price could go either way after reporting earnings – even if the report is good, the stock price could reverse – and if you hold a call option, means depletion of an already good profit if it exists. A similar situation can be found if you hold a put option, and a report is not that sound (and you expect a profit from this) but the stock price can, at times move upwards due to traders bias or other external conditions......READ MORE.....

The Decision Is Yours!

Before You Trade Consider This Strategy……

"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.

……continue reading this article……


”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!

Options traders are not successful because they win.

Options traders win because they are successful.


Best of Trading,
Ian Harvey
Director of Stock Options Made Easy

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