by Ian Harvey
October 27, 2019
EARNINGS PREDICTIONS RESULTS FOR WEEK BEGINNING OCTOBER 21, 2019
|DATE||TRADE||EXITING BEFORE EARNINGS||GAIN/LOSS AFTER EARNINGS|
|October 22, 2019||UTX NOV 15 2019 140.000 CALL||32.5% P.P.||160% P.P.|
|October 22, 2019||SNAP NOV 15 2019 14.000 CALL||60% P.P||-36%|
|October 23, 2019||WM NOV 15 2019 120.000 CALL||56% P.P||142% P.P|
|October 23, 2019||BA NOV 15 2019 320.000 PUT||109% P.P.||-47%|
|October 24, 2019||TWTR NOV 15 2019 40.000 CALL||28% P.P||-96%|
P.P. - POTENTIAL PROFIT
Options Trades to Consider Based on Expected Earnings Reports:
Monday, October 28, 2019
The "meatless" meat company Beyond Meat Inc (NASDAQ: BYND) will report earnings after the market closes. The consensus earnings estimate is $0.05 per share on revenue of $77.10 million; and the Whisper number is much the same at $0.06 per share.
Beyond Meat missed the consensus earnings forecast in the last quarter, reporting wider-than-expected losses of 24 cents per share.
Shares of the imitation meat maker regained some ground last Thursday after falling more than 10% for the week and even more over the month.
And analysts see more downside for Beyond Meat. Credit Suisse analyst Robert Moskow lowered the price target on the stock and said increased liquidity and competition are likely to keep the slide going. He maintained a Neutral rating on Beyond Meat and lowered the target price from $174 to $135.
to lower the price target and other recent negativity around Beyond Meat runs
contrary to the short-term run of news for the company, Moskow said in a
For now, Beyond Meat management is expecting a positive bump and is likely to raise its sales guidance upward by about $20 million to reflect strong sales trends and the decision by Dunkin Brands Group Inc (NASDAQ: DNKN)’s Dunkin’ Donuts to accelerate its national launch of breakfast sandwiches using Beyond Meat, the analyst said.
But while the Dunkin’ decision will likely offset a reported move by another breakfast-focused chain, Restaurant Brands International Inc (NYSE: QSR)’s Tim Hortons, to take Beyond Meat off the menu in part of Canada, other issues could push the shares lower, he said.
Increased liquidity in the stock following the expiration of the six-month lock-up period Oct. 29 and more competition from new entries in the plant-based “meat” category present a downside, and likely will push the stock down, Moskow said.
Jefferies analysts note that not every restaurant operator that runs a Beyond Meat pilot puts it on the menu longer term.
“McDonald’s participation with Beyond Meat has the potential to significantly boost Beyond Meat sales if it is rolled out beyond the test phase,” Jefferies said. “That said, it is worth noting that quick-service restaurants have not always adopted Beyond Meat product following the testing phase, with Tim Hortons having recently allowed its ‘limited-time offer’ of Beyond products to lapse in restaurants outside of British Columbia and Ontario.”
As Beyond Meat and its plant-based brethren become bigger sales drivers, other companies are jumping into the space. This prompted the sell initiation at CFRA.
“While Beyond Meat is well-positioned to benefit from this movement, investor expectations seem overly optimistic, evidenced by a more than 400% share-price appreciation since the company’s $25 IPO in late May,” wrote Arum Sundaram in the CFRA note.
“Over the recent months, several large packaged food companies have entered this space and introduced competing plant-based products. Also, Impossible Foods, Beyond Meat’s food tech rival, recently entered the $95 billion U.S. meat retail market to compete head on with Beyond Meat.”
Of the 12 analysts, only two call BYND a “buy.” Eight of the remaining analysts are cautious on the stock, recommending “holds.”
Beyond Meat shares have been hit with a couple of negative items in the news in recent days, including a report that competitor Impossible Foods will begin selling its plant-based burgers in Europe, and a report in German publication Handelsblatt that mineral oil constituents were found in a test of Beyond Meat burgers there.
BYND stock lost 14.7% in August and 11.3% in September. The fall has accelerated in October. Until Friday, the stock had lost 31.6% this month so far.
Option trade to consider: Buy the BYND NOV 15 2019 90.000 PUT at approximately $5.00.
Tuesday, October 29, 2019
(NYSE: MA) will report earnings
before the market opens.The
consensus earnings estimate is $2.01 per share on revenue of $4.42 billion; but
the Whisper number is higher at $2.06 per share.
Consensus estimates are for year-over-year earnings growth of 12.92% with revenue increasing by 13.39%.
In the last reported quarter, the company surpassed estimates by 3.9% driven by higher switched transactions, increase in cross-border volume and gross dollar volume, and gains from acquisitions.
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters with an average beat of 4.59%.
Why MA Should Beat Earnings.....
Mastercard's performance for the to-be-reported quarter is expected to have benefited from increase in retail spending, driven by favorable retail sales. This is likely to have driven the company's gross dollar value (GDV), which measures dollar value of total transactions processed. The Zacks Consensus Estimate for GDV is pegged at $1.64 trillion, indicating an 11.6% increase year over year. This growth in GDV is likely to have been driven by credit and debit growth of 13.3% and 13%, respectively.
The company is likely to report healthy double-digit volume and transaction growth across most of its markets due to a strong shift to electronic forms of payment.
Revenues are likely to have improved due to service offerings, partially offset by higher rebates and incentives.
analyst Glenn Greene has a bullish outlook on MA. In Greene’s words, “MA maintains a sizeable global market opportunity
and continues to emphasize its broad B2B opportunity (particularly around
accounts payable), Services business and real-time ACH capabilities.
Encouragingly, MA's intra-quarter volumes through August remained directionally
stable with both July and 2Q19 levels. We remain quite encouraged by MA’s
strategic direction and that its long-term growth trajectory remains intact.”
Wall Street’s analysts have been nothing but bullish on MA over the past three months. Out of 16 analysts, all 16 are bullish on the stock. With a return potential of 17%, the stock's consensus target price stands at $317.31.
Option trade to consider: Buy the MA NOV 15 2019 275.000 CALL at
Advanced Micro Devices, Inc. (NASDAQ:AMD), a global semiconductor company, will report earnings after the market closes. The consensus earnings estimate is $0.18 per share on revenue of $1.80 billion; and the Whisper number is the same at $0.18 per share.
Consensus estimates are for year-over-year earnings growth of 80.00% with revenue increasing by 8.89%.
AMD has surpassed the Consensus Estimate in one of the trailing four quarters, the average beat being 2.2%.
Despite a volatile year for chipmaker stocks like Advanced Micro Devices, AMD stock, and the AMD stock price, has made substantial gains this year. The company’s shares are up 34% year-to-date.
Chip stocks have been doing well, and Wall Street seems optimistic when it comes to AMD stock.
AMD’s stock has returned 79.9% in the past one year, outperforming the industry’s rally of 33.3%.
AMD has been making every effort to strengthen its GPU portfolio with new capabilities in a bid to provide gamers with superior graphic performance and high-quality visual experiences. These initiatives are likely to reflect on the third-quarter performance.
The company stated that Ryzen and EPYC processors and data center GPU revenues more than doubled on a year-over-year basis in the last reported quarter, a trend that is likely to have continued in the third quarter.
Also, Advanced Micro Devices Inc. will have a chance showcase how its new smaller-architecture chip impacted its business this week, hot on the heels of a positive earnings report from rival Intel Corp.
The company’s recent stock gains are largely thanks to its impressive chip lineup. Last July, AMD launched the Radeon VII, a 7-nanometer graphics card.
This card allows for a faster gaming experience, and users can create content faster, all without increasing their power consumption. This product launch gave investors more reasons to be optimistic about AMD’s growth prospects.
The Radeon VII is also very competitively priced, so it presents an attractive alternative to anything other companies are offering. Nvidia is set to launch its own 7-nanometer GPU in early 2020, so this gives AMD a head start on the company.
The company introduced its first 7-nanometer Navi gaming GPUs.
AMD had entered into a strategic partnership with Samsung Electronics Co., Ltd. with an aim to bring immersive graphics experience to smartphone users. Per the terms of the multi-year agreement, AMD’s high performance Radeon graphics solutions and technologies will be integrated with Samsung’s SoCs to enhance mobile applications.
AMD also rolled out the latest Xbox Game Pass to PC gamers, by which the players will be able to access more than 100 PC games for three-months with the purchases of selected products of AMD. We believe the extension of Xbox Game Pass to PCs will enable AMD to strengthen competitive position against Microsoft.
Cowen analyst Matthew Ramsay, who has an outperform rating and a $40 price target, said there’s been a lot of “noise” since AMD’s last earnings report with the company’s Aug. 7 release of its “Rome” chip, which got picked up by Alphabet Inc.’s Google Cloud Platform.
“Combined with announced partners Amazon, Microsoft, Baidu and Tencent, we believe this has the potential to allow AMD to quickly capture x86 server share against Intel’s roadmap that may need Sapphire Rapids in 2021 to get fully back on track,” Ramsay said. “Sapphire Rapids” is the code name for either Intel’s new refinement of its 10-nanometer process or its new 7-nanometer process.
“We believe 7nm Rome has the technical merits to offer a superior TCO in many server workloads,” Ramsay said. “Along with socket compatibility with Naples, a consistent roadmap, and deep customer engagements, we believe this has renewed AMD as a viable second source to Intel in a market that has been starved for competition.”
Also, Wells Fargo analyst Aaron Rakers, who has an outperform rating and a $40 price target, said he’s bullish on the stock ahead of earnings, most notably to the company’s thoughts on Intel’s chip price cuts.
Given Intel’s “competitive reaction” to AMD’s Rome release, Rakers asked “Why would AMD not have to react to the 50%+ list price reductions by Intel?”
“While AMD’s EPYC Rome deployments at hyperscale / cloud customers are a key focus, we continue to think the company’s expanding list of supercomputing / HPC wins should be considered a very positive competitive validation,” Rakers said.
Of the 38 analysts who cover AMD, 14 have buy or overweight ratings, 21 have hold ratings and three have sell or underweight ratings, with an average price target of $33.01, nearly 1% above Friday’s close.
Option trade to consider: Buy the AMD NOV 15 2019 34.000 CALL at
Wednesday, October 30, 2019
Inc. (NYSE:TWLO), offering a Cloud Communications Platform, which
enables developers to build, scale and operate real-time communications within
software applications, will report third-quarter 2019 results after the market closes.
For the quarter, the company expects revenues in the range of $286-$289
million. The Consensus Estimate is $287.6 million, indicating a 70.3% rise from
the prior-year reported figure.
TWLO expects non-GAAP earnings per share to be 1-2 cents. The consensus estimate for earnings stands at a penny per share, suggesting 85.7% decline from the year-ago reported number.
The company’s earnings beat the Consensus Estimate in three of the trailing four quarters and matched it once, the average positive surprise being 175%.
In the last reported quarter, Twilio’s non-GAAP earnings came in at 3 cents per share, which surpassed the Consensus Estimate of 2 cents, but remained flat year over year.
TWLO generated revenues of $275 million, surging 86% from the year-earlier quarter. It also outpaced the consensus estimate of $260 million, driven by growth in its core products. As well, the acquisition of SendGrid, completed in February, was also a key driver.
third-quarter earnings are likely to have been driven by strong customer growth
and expansion rates. The company’s core voice and messaging products as well as
the recent addition of email are also expected to have been tailwinds.
Also, growing number of Twilio Flex deals are anticipated to have provided an added impetus to the company’s third-quarter revenues.
Twilio’s focus and investments to meet the requirements of global enterprises continue to reap benefits. The company’s commendable efforts toward expanding its global footprint is expected to be reflected in its third-quarter results.
The company is making strategic alliances and employing more employees outside the U.S. office to enhance international operations.
the third quarter, the company announced new partnerships with seven local
consulting firms in Japan to widen its presence in the country.
As well, the SendGrid buyout, which had a favorable impact on the top and the bottom line in the last reported quarter, is expected to have remained accretive in the third quarter as well.
Further, with new products gaining traction, dollar-based net expansion rate, which was 140% in the last reported quarter, might have continued to be a major revenue driver in the to-be-reported quarter.
Twilio stock is trading at $103, which is 32% below its record high of $151. The stock has gained 52.5% in the last 12 months, and it’s been a top performer among tech stocks despite the recent weakness.
the June quarter, Twilio crossed $1 billion in annualized run rate. Analysts
expect Twilio sales to rise from $650 million in 2018 to $1.12 billion in 2019
and $1.48 billion in 2020.
Twilio stock is valued at $14 billion or 12.5x forward sales. The stock is trading at a forward price-to-earnings multiple of 320x. Analysts expect Twilio earnings to grow 54.5% to $0.17 in 2019 and reach $0.32 in 2020. Wall Street also remains bullish on TWLO stock. Analysts have a 12-month average target price of $150, and that’s 46% higher than the current price.
Option trade to consider: Buy the TWLO NOV 15 2019 110.000 CALL at approximately $5.00.
Tech heavyweight Apple Inc. (NASDAQ: AAPL), a company that designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications, will report earnings after the market closes. The consensus earnings estimate is $2.84 per share on revenue of $62.57 billion; but the Whisper number is higher at $2.93 per share.
The company's guidance was for earnings of $2.59 to $2.93 per share. Consensus estimates are for earnings to decline year-over-year by 2.41% with revenue decreasing by 0.52%.
Fourth-quarter iPhone sales are projected to slip around 13% to $32.196 billion. This would roughly match last quarter’s 12% drop and mark an improvement from Q2’s 17% decline in smartphone sales. Like its overall Q4 sales estimates, Apple’s quarterly iPhone revenue is going up against a year-ago period where iPhone sales skyrocketed 29%.
Apple’s services revenue is expected to hit $12.300 billion, for a climb of 23% from Q4 2018’s $9.98 billion. Investors should be pleased to note that this would easily top the year-ago quarter’s 17% services expansion and crush last quarter’s 13% growth.
Apple shares have surged over 12% in the last month and hit a new high on Friday; and the stock has now climbed over 55% in 2019.
The company boasts a $1 trillion market cap at the moment, thanks to its ability to cultivate its brand around the globe through its slick-looking devices and solid advertising.
Apple continues to roll out new iPhones, Macs, iPads, and smartwatches, though many tech aficionados argue that it hasn’t introduced anything game-changing in years. Nonetheless, AAPL stock has climbed as consumers seem happy enough to buy the latest devices that feature a small number of upgrades.
Apple’s services unit features the likes of its app store and Spotify SPOT challenger Apple Music. More recently, Apple has introduced an Apple credit card, with the help of Mastercard MA and Goldman Sachs Group GS, and a new Apple Arcade video game service.
AAPL launched its new line-up of iPhones in September and analysts have since been bullish as supply chain indicators have been positive. Analysts expect the upgrade cycle in China to drive the iPhone demand higher. The new devices are attractively priced to get customers from emerging economies.
Also, AAPL released its new subscription services. It launched the Apple Arcade last month. Soon, the company will launch the Apple TV+, which is in direct competition with Netflix, Hulu, Amazon Prime Video, and other streaming platforms.
The iPhone is still Apple’s primary business segment. It made up 48% of sales in the June quarter. Services is Apple’s fastest-growing segment and has been the second-largest business segment for a while.
Overall earnings estimates have been revised higher since the company's last earnings release.
Over the last few days, analysts revised Apple’s price target, and also
upgraded the stock. Wedbush analyst Daniel Ives guesses China’s demand for the
iPhone 11 to be 15% to 20% above expectations. He guesses iPhone shipments to
reach 185 million for 2020.
Ives has an “outperform” rating and a price target of $265. Below are
some of the analysts’ revised price targets and outlook for Apple stock.
Option trade to consider: Buy the AAPL NOV 15 2019 250.000 CALL at approximately $4.50.
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?”
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……
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Options traders are not successful because they win.
Options traders win because they are successful.
Best of Trading,
Director of Stock Options Made Easy