Earnings Predictions
for the
Week
Beginning June 04, 2018
Comparing Exiting Options Trades BEFORE and AFTER Earnings Reports!
by Ian Harvey
June 03, 2018
“EARNINGS PREDICTIONS for LAST WEEK” - TAKING PROFITS BEFORE EARNINGS REPORTS! | |||||||
|---|---|---|---|---|---|---|---|
| DATE | TRADE | GAIN | |||||
| May 29, 2018 | CRM JUNE 15 2018 130.000 CALL | P.P: 55% | |||||
| May 30, 2018 | BOX JUNE 15 2018 28.000 CALL | P.P: 44% | |||||
| May 31, 2018 | COST JUNE 15 2018 200.000 CALL | P.P: 34% | |||||
| May 31, 2018 | ADI JUNE 15 2018 97.500 CALL | P.P: 25% | |||||
| JUNE 01, 2018 | ANF JUNE 15 2018 25.000 CALL | P.P: 10% | |||||
“EARNINGS PREDICTIONS for LAST WEEK” - TAKING PROFITS AFTER EARNINGS REPORTS! | |||||||
|---|---|---|---|---|---|---|---|
| DATE | TRADE | GAIN | |||||
| May 29, 2018 | CRM JUNE 15 2018 130.000 CALL | P.P: 55% | |||||
| May 30, 2018 | BOX JUNE 15 2018 28.000 CALL | -80% | |||||
| May 31, 2018 | COST JUNE 15 2018 200.000 CALL | -43% | |||||
| May 31, 2018 | ADI JUNE 15 2018 97.500 CALL | P.P: 25% | |||||
| JUNE 01, 2018 | ANF JUNE 15 2018 25.000 CALL | -74% | |||||
NOTE: P.P: – Potential Profit
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. GREED can be the undoing of a nice profit!
Options Trades to Consider Based on Expected Earnings Reports:
Monday, June 04
Coupa Software Inc (NASDAQ: COUP), a cloud-based management
system that helps clients control spending, will report after the market
closes. For its current quarter, the
company is calling for a loss of 12 cents per share, which is in line with expectations.
Coupa Software predicts revenue of about $51 million, $2 million above
analysts' guidance.
Oppenheimer analyst Koji Ikeda assigned a Buy rating to Coupa last week and set a price target of $62. The company’s shares closed yesterday at $52.87, close to its 52-week high of $55.10.
Ikeda said, “We expect good business performance from Coupa in its F1Q:2018, and results should support a higher price target. The overall tone from our recent checks on Coupa’s business was positive, which supports our thesis that the business is well- positioned to disrupt and take share of a large spend management category. Positive 1Q results from most software vendors suggest the backdrop for software spend has strengthened in CY2018 thus far, which is a positive for Coupa’s booking trends. Bottom line: We would stay the course with COUP, since the story is working. We believe the growth drivers are healthy, and the setup is good for the business to continue its record of consistently good execution in future quarterly reported results. Reiterate Outperform; raise PT to $62 from $55.”
Also, Joseph
Foresi from Cantor Fitzgerald maintained a Buy rating on Coupa, with a price
target of $58.
Coupa's
platform manages more than $680 billion worth of spending across all of its
clients. The company has helped businesses save some $23 billion.
Shares of Coupa have gained over 87 percent since April 2017, and rallying 16 percent since early May 2018.
Coupa's
is disrupting the way businesses handle their finances and faces a huge market
opportunity in the largely un-digitized world of expense management.
Option trade to consider: Buy the COUP JULY 20 2018 55.000 CALL at approximately $3.00.
Tuesday, June 05
China’s
leading social live-streaming platform YY Inc. (ADR) (NASDAQ:YY) will
report after the market closes. The consensus earnings estimate is $1.52 per
share on revenue of $491.32 million; but the Whisper number calls for $1.56 per
share. The company's guidance was for revenue of $473.00 million to $496.00
million. Consensus estimates are for year-over-year earnings growth of 8.57%
with revenue increasing by 49.18%.
Over the last 5 days, YY Inc.’s shares returned 8.94% and in
the past one month the figure appeared at 19.74%. Furthermore, over the last
three months, the stock was able to yield -10.76%. The stock price is up +83.8%
over the last year.
Analysts set a 12-month price target of $153.84 a share. The
target implies a 33.29% spike from where the shares are currently trading.
Also, the current price highlights a discount of 62.88% to analysts’ high
consensus price target.
Short interest has increased by 103.5% since the company's
last earnings release while the stock has drifted lower by 16.5% from its open
following the earnings release to be 12.4% above its 200 day moving average of
$104.20. Overall earnings estimates have been revised lower since the company's
last earnings release. On Friday, June 1, 2018 there was some notable buying of
1,553 contracts of the $125.00 call expiring on Friday, June 15, 2018. Option
traders are pricing in a 9.4% move on earnings and the stock has averaged a
7.3% move in recent quarters.
Option trade to consider: Buy the YY
JUNE 15 2018 130.000 CALL at approximately $2.80.
Wednesday, June 06
Signet Jewelers Ltd (NYSE:SIG), a retailer of jewelry, watches and associated
services in the United States, Canada and the United Kingdom, will report
before the market opens. The consensus estimate is for a loss of $0.11
per share on revenue of $1.43 billion; however, the Whisper number calls for
($0.08) per share. Consensus estimates are for earnings to decline
year-over-year by 110.68% with revenue increasing by 1.90%.
SIG has struggled in 2018, falling 23.6% year to date. Overall
technical indicators for SIG are bearish. The stock has recent support above
$37.50, and recent resistance below $47.50. All 10 analysts who cover the stock
rate it a “hold”. Analysts have an average price target of $39.00 on the stock.
The company has a mixed earnings track record, but results
did top estimates on both the top and bottom line last quarter. The positive
beats did nothing for the stock, with the company issuing bearish guidance that
spooked the market and drove shares sharply lower. Now, overall earnings
estimates have been revised lower since the company's last earnings release. Over
the last 60 days, one analyst has increased the earnings estimates for the
current quarter, while three have dropped their estimates.
Option trade to consider: Buy the SIG JULY 20 2018 40.000 PUT at approximately $2.20.
Five Below Inc. (NASDAQ:FIVE), a specialty retailer offering a range of merchandise for teen and pre-teen customers, reports earnings after the market closes. The consensus earnings estimate is calling for $0.32 per share on revenue of $292.29 million; but the Whisper number is higher at $0.34 per share. The company's guidance was for earnings of $0.31 to $0.34 per share on revenue of $290.00 million to $294.00 million. Consensus estimates are for year-over-year earnings growth of 113.33% with revenue increasing by 25.51%.
Overall earnings estimates have been revised higher since the company's last earnings release.
Shares of this discount retailer have climbed 36% this year.
Wall Street Still has maintained a bullish stance on Five Below ahead of earnings, with the majority of analysts covering Five Below maintaining a “buy” rating on the stock. As of May 29, of the 17 analysts covering the stock, 65% recommended a “buy” while the remaining recommended a “hold.” On May 25, Deutsche Bank also revised the target price to $84.00 from $85.00. On April 18, Credit Suisse initiated coverage on Five Below with an “outperform” rating and a price target of $88.00. Currently, analysts’ 12-month average target price for Five Below stock is $78.69, which reflects 11.3% upside to the stock price as of May 29.
Sales are likely to sustain their momentum, given the new store openings. Five Below is one of the retailers bucking the industry trend of store closures. Instead, the company is on a rapid store opening spree. The company has raised its store openings goal to 2,500 locations by 2020 from the 2,000 projected earlier.
Five Below expects to open 125 stores this fiscal year in both new and existing markets. The company expects new store openings to be the biggest catalyst, helping the company achieve sales growth of 20% by 2020. The company operated 625 stores as of February 3.
Five Below is also remodeling stores to provide customers with a better shopping experience. The company is also extensively investing in the training of personnel to better assist customers. The company’s focus on specific demographic groups (teens and pre-teens) and compelling price points are its other growth catalysts.
Option trade to
consider: Buy the FIVE JUNE 15 2018 75.000 CALL at approximately $1.45.
Thursday, June 07
Broadcom Inc (NASDAQ:AVGO), the combined entity that was formerly known as Avago and Broadcom, which is a leading designer, developer and global supplier of a broad range of analog and digital semiconductor connectivity solutions, is set to release earnings report after the market closes. The consensus earnings estimate is for a $4.75 per share on revenue of $5.00 billion; but the Whisper number is higher at $4.86 per share. Consensus estimates are for year-over-year earnings growth of 25.33% with revenue increasing by 19.33%.
The stock has had an up-and-down year, but shares have popped nearly 10% in the past year and are entering the earnings week with solid momentum.
Analysts are very optimistic on AVGO and believe the company
may be seeking another acquisition target. Broadcom is known for growing
through acquisitions rather than organically. Of the 37 analysts covering
Broadcom, 34 recommend “buy,” and three recommend “hold.” Currently, the
analyst consensus on Broadcom is Strong Buy and the average price target is
$311.72, representing a 23.7% upside.
Last week Rick Schafer from Oppenheimer assigned a Buy
rating to Broadcom (NASDAQ: AVGO), with a price target of $315. The company’s
shares closed yesterday at $252.07.
Schafer said, “Broadcom reports F2Q (Apr) earnings Thurs, June 7. We see results in line with mgmt’s Apr 30 pre-announcement ($5.0B/$4.76) and upside to the Street’s F3Q (Jul) $5.1B/$4.58 led by core Wired and Wireless. The latter should benefit in F3Q from the fall iPhone refresh, where we expect more content gains. F2Q results reflects full contribution from Brocade’s Fibre Channel switch business, helping grow enterprise storage DD(%) Q/Q. Broadcom redomiciled April 4 and expects cash tax rate of 10% beginning F3Q. Mgmt remains committed to returning at least 50% of FCF and we expect accelerated stock repurchases following the $12B authorization announced in April. AVGO should continue its strategy of strategic/accretive M&A and we remain buyers of our top large-cap pick with a $315 target.”
Cowen analyst Matthew Ramsay had reduced his price target on Broadcom from $315 to $300. However, even this lower price target is bullish, as he expects application-specific programming computing and AI to drive AVGO’s revenue in the next 12 months.
He reduced his price target because he believes that the
failed Qualcomm bid and Broadcom’s lack of effort to acquire Toshiba’s (TOSBF)
chip business signal an end to AVGO’s pursuit for large acquisitions. He
expects that AVGO might only look at acquisitions under $10 billion, and
provide returns to shareholders through dividends and buybacks.
Option trade to
consider: Buy the AVGO JUNE 15 2018 260.000 CALL at approximately $4.40.
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.
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.
”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
Options traders are not successful because they win.
Options traders win because they are successful.
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