Futures are pointing to a near 2% drop at the open, with S&P futures down 1.9% as I write this. Asia stocks closed mixed overnight while Europe markets are lower this morning. The US Dollar is higher, while Yields, Oil, and Gold are all lower - Oil is off over 30% this morning, another record drop.
And this is what UPB is reading this morning : https://www.optionmillionaires.com/monday-morning-reads-130/
Earnings season kicks into high gear with NFLX, CMG, INTC, LMT, and others reporting. Here is the calendar:
#earnings for the week https://t.co/lObOE0dgsr $NFLX $DAL $KO $INFY $HAL $LMT $ALLY $SNAP $T $DPZ $IBM $PM $INTC $LUV $CMG $BIIB $HCA $VZ $BOH $MTB $ONB $SAP $BMRC $CMA $PHG $AXP $ERIC $CBU $KMB $TFC $PLD $SYF $NEE $LII $NDAQ $LLY $SNA $LVS $TRV $LRCX $KALU $EMR $CIT $FITB pic.twitter.com/mY2qrxWN3X
— Earnings Whispers (@eWhispers) April 18, 2020
And some of the implied moves:
Some implied moves for #earnings next week:$NFLX 12.5%$IBM 7.5%⁰$CMG 10.1%⁰$SNAP 16.6%⁰$LVS 10.3%$LMT 4.8%$PM 6.9%⁰$XLNX 10.3%⁰$DFS 12.3%⁰$DPZ 8.6%⁰$INTC 7.8%⁰$COF 11.0%⁰$AXP 7.4%⁰$VZ 4.0%$DAL 11.8%⁰$KO 5.5%⁰$ALLY 23.9%⁰$T 5.4%⁰$BIIB 9.1%$LUV 11.6%$KMB 4.1%
— Option Millionaires (@OMillionaires) April 18, 2020
NFLX reports after the close tomorrow. Expectations are high for subscriber growth. Everyone is at home with nothing to do but watch Tiger King and Ozark. Bears have been attacking NFLX for years over their original content spend, turns out it was genius. Their original content has made them the content provider of choice as of late. Would expect a huge beat and rosy guidance. Unfortunately the calls are extremely expensive with the $500s going for $5.50. Not my type of risk/reward. Will likely wait till after earnings to trade:
IBM reports after the close today. Last time I traded IBM it was on the CEO departure news when the stock soared for nearly a week. It is now down nearly $40 from that level. All eyes will be on the Redhat numbers. If they can give any positive update, think the stock trades north of $130, so may look for some speculative calls into the report:
I wanted to add some BLK weekly calls on Friday after their nice earnings report on Thursday. Unfortunately it gapped higher at the open. BLK can be one of those stocks in the financial space that should outperform just like CME. Will be watching today for possible entry opportunities for a move to the $500s in the coming weeks as long as it holds that 50/200 day moving average:
CATS was one of my back half of 2019 stocks. It has come back to life recently after reporting solid results and benefitting from the pandemic. It is starting to get on some radars and think it can really squeeze past $30 in the next few weeks. The stock has a 37% short interest as well which should add fuel to the fire. May look for some $30/$35 calls today to play for that move - the stock also received an upgrade today:.
Biotechs have been on fire as of late and will likely continue to perform well in the current environment. A nice read on Barron's from over the weekend: https://www.barrons.com/articles/big-pharma-sees-its-strengths-surface-in-the-pandemic-51587165651?refsec=coronavirus
As such, will continue to look for calls in names like BLUE, MDGL, ICPT, ZYME, and EDIT.
Don't think this market is out of the woods by any means, but do like that there are names that outperform - meaning the indiscriminate selling has abated. Will use my SRS calls a a hedge and may add some FAZ calls as well if we break $280 or so on the SPY:
Here are the analyst changes of note for today:
| Tandem Diabetes price target lowered to $102 from $108 at Craig-Hallum | |
| Craig-Hallum analyst Alexander Nowak lowered the firm's price target on Tandem Diabetes to $102 from $108 to account for COVID-19. The analyst keeps a Buy rating on the shares | |
| Royal Caribbean price target lowered to $55 from $155 at JPMorgan | |
| JPMorgan analyst Brandt Montour lowered the firm's price target on Royal Caribbean to $55 from $155 and keeps an Overweight rating on the shares. The analyst cut price targets after taking a first cut at post-COVID-19 estimates for the cruise lines. Montour positioned 2020 estimates assuming a complete suspension of operations through the end of June. The analyst's new 2021 estimates imply Carnival can generate EBITDA at 50%-65% of 2019 levels, and 90%-105% of 2019 levels in 2022. Cruise stocks will likely continue to trade together in the near term, and are unlikely to return to fundamentals until a resumption of operations becomes more imminent, contends Montour | |
| Seattle Genetics price target raised to $157 from $144 at Needham | |
| Needham analyst Chad Messer raised the firm's price target on Seattle Genetics to $157 from $144 and keeps a Buy rating on the shares. The analyst notes that following last week's FDA approval of TUKYSA for metastatic HER2 positive breast cancer patients - ahead of the August 20th PDUFA date - the company now has 3 commercial products. Messer adds that TUKYSA's rapid approval is "impressive", especially given the challenges of the COVID pandemic, and is "testament to the unmet need in this patient population | |
| DocuSign downgraded to In Line from Outperform at Evercore ISI | |
| Evercore ISI analyst Kirk Materne downgraded DocuSign to In Line from Outperform | |
| Catasys price target raised to $35 from $26 at Canaccord | |
| Canaccord analyst Richard Close raised the firm's price target on Catasys to $35 from $26 and keeps a Buy rating on the shares. The analyst raised his target following management's upbeat outlook and the ability of the company to implement its strategic initiatives | |
| Stephens suggests owning McDonald's and Wendy's as stimulus boosts QSRs | |
| Stephens analyst James Rutherford believes quick-service restaurant, or QSR, operators received some relief last week as the first wave of consumers received their federal stimulus payments and "headed straight for the drive-thru." He recommends both Wendy's and McDonald's, on which he has Overweight ratings, as Rutherford doesn't believe most newly-revised sell-side estimates incorporate any comp improvement in Q2. He also said last week's events solidify his view that quick-service restaurants may be able to see comps recover fairly quickly when the country re-opens. He forecasts a 7% decline in U.S. Wendy's comp sales in Q2, which is well above the consensus call for a drop of 18%, and now predicts a 15% U.S. comp decline for McDonald's in Q2, which is better than the consensus call for a 21% decline. Rutherford also raised his price target for McDonald's shares to $200 from $165 as he adjusted his Q2 and FY20 estimates based on his latest view of the COVID-19 impacts | |
And here is what I am watching: IBM, BLK, FVRR, BLUE, EDIT, ICPT, FAZ, and CATS.
Let's have a Great DAY!
-JB