October 17th, 2022 Watch List

Futures are pointing to a higher open to start the week, with S&P futures up 1% as I write this. Asia markets closed mixed overnight while Europe indexes are in the green this morning after the new UK chancellor rolled back his tax/budget plans. The US dollar, Yields, and Oil are lower while Gold is higher.

Markets are trying to find some footing this morning, after the S&P finished lower last week, making it 4 of the past 5 weeks in the red. This morning the new U.K. Chancellor rolled back nearly all of his new tax plan, which was a catalyst for market volatility 2 weeks back and a huge drop in the Pound. The news helped put a bid in futures. This week there is not much in the way of data, but a big week for earnings, as the Q3 season picks up steam. NFLX, TSLA, IBM, ISRG, SNAP, GS, LMT and many others will be reporting. Here are some of the implies moves:

NFLX will likely be the most watched, as the company posted back to back subscriber declines last quarter, and should a great proxy on how far folks are cutting back on non-essentials. Some analysts are out this morning with somewhat positive commentary heading into the report Tuesday after the close. The company guided for 1 million sub adds. If they post a positive number and positive sub guidance for Q4, it could see a move to $285+. Any miss and the stock is back under $200... a true binary event. I may actually look to add some calls today for premium build into the report and look to close most/all before the close:

GWW is a name I am putting on the watchlist. It is a great growth story that is operating well even in the current environment, posting 20% growth last quarter while also raising their guidance. The stock has filled its gap from last earnings and think it can find a bid into their next report on Oct 28th. Will be watching for some calls to play for a move to $570 or so into next week:

U is also back on watch. The stock closed at its May lows on Friday. If it can find support, think it can bounce into the mid-$30s in the coming days:

I tried to add some speculative calls on ROKU Friday for a bounce, but the stock found sellers and closed at levels not seen since 2019. Could be a nice sympathy play into NFLX"s report so may look to nibble some more speculative calls today for a possible move to $55+:

Still have my eyes on revisiting TWLO for a move north of $68:

And SPOT for a move to $90:

Here are the analyst changes of note for today:

Netflix set-up into Q3 appears 'modestly favorable,' says Credit Suisse
Ahead of Netflix quarterly results, Credit Suisse analyst Douglas Mitchelson says App downloads were inconclusive again this quarter, though investors he has talked to tend to expect a modest Q3 miss versus the 1M Credit Suisse and Street estimate. For Q4, the launch of the ad tier in early November at $6.99 in the U.S. and 11 other countries suggests his and the Street's 4M global net add estimate could prove too conservative, Mitchelson adds. Further, the analyst believes Netflix's new lower price point for a service with only 4-5 minutes per hour of advertisements should broaden its appeal and entice rejoiners. He also sees a healthy Q4 content slate with The Crown S5, Manifest S4, 1899 and others being released in the quarter. Overall, the set-up into Q3 appears modestly favorable, Mitchelson argues. The analyst has a Neutral rating on the shares.
Wells Fargo has neutral stance on Netflix setup for Q3 results 
Wells Fargo analyst Steven Cahall leaves his Q3 net adds unchanged at +1.2M, though data suggests engagement did improve for Netflix in Q3, while the Q4 slate looks promising. Still, consensus at +4.5M for Q4 is "punchy" given the recent past, hence his neutral stance on the setup for Q3 results. Cahall thinks AVOD will be big for Netflix long-term, and a big subject of the print, but 2023 will largely be about testing success with ad customers versus raking in the revenue. The analyst has an Equal Weight rating and a price target of $300 on the shares
UnitedHealth price target raised to $592 from $588 at RBC Capital
RBC Capital analyst Ben Hendrix raised the firm's price target on UnitedHealth to $592 from $588 and keeps an Outperform rating on the shares. The company's Q3 results were "strong" as favorable inpatient utilization trends continue, the analyst tells investors in a research note. Hendrix adds that the early indications on UnitedHealth's 2023 suggest a "characteristically conservative guide" that also allows room for normalizing inpatient trends, inflationary costs, and other unknowns like the coming flu season
ormFactor price target lowered to $40 from $45 at DA Davidson
DA Davidson analyst Thomas Diffely lowered the firm's price target on FormFactor to $40 from $45 and keeps a Buy rating on the shares ahead of its Q3 results next week. The analyst anticipates a weaker outlook given the multiple crosscurrents in semiconductor market, stating that while he expects IC design activities to remain robust, the number of probe cards per design could decrease with lower unit projections. Diffely adds that he still views FormFactor as a relative outperformer over the next year given the design-driven model and new technology ramps
Grainger assumed with a Buy at Jefferies
Jefferies analyst Stephen Volkmann assumed coverage of Grainger with a Buy rating with a price target of $600, down from $642, as he took over coverage of four industrial distributors. The company's growth strategy is bearing fruit and its valuation "seems reasonable," said Volkmann, who adds that he believe the company's scale and digital strategy can drive continued share gains and help it maintain revenue growth through the cycle.
Regeneron downgraded to In Line at Evercore ISI with stock near $760 target
As previously reported, Evercore ISI analyst Joshua Schimmer downgraded Regeneron to In Line from Outperform with an unchanged price target of $760, which the stock has approached. After a closer look at the high dose Eylea data, as well as surveys of investors and retina specialists, he does not see a "compelling rationale" to raise his price target or maintain an Outperform rating until he has a clearer sense of how the landscape for Eylea, Vabysmo and biosimilars will evolve, Schimmer tells investors

And here is what I am watching today: GWW, GNRC, U, TWLO, SPOT, NFLX, ROKU, CMG, and WIX.

Let's have a great day!


JimmyBob (Scott)has been trading equities for over 15 years, a majority of which were OTC micro-cap stocks. He started trading high risk stock options over the past 7 years, and has proven winning trades in excess of 15,000%.

As one of the Co-Founders of optionmillionaires.com, Scott enjoys sharing his knowledge with other investors through timely blog posts, daily watch lists in the forum, weekly webinars, and helpful advice within the chatroom.

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