Among the stocks featured in the July 27 edition of Schaeffer's Market Blog are Akamai Technologies (NASDAQ:AKAM), Aetna (NYSE:AET), Symantec (NASDAQ:SYMC), Pfizer (NYSE:PFE), and Chipotle Mexican Grill (NYSE:CMG). Schaeffer's Market Blog is just one of the many free market commentaries written every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. The Market Blog is written throughout every trading day by Schaeffer's financial analysts and traders. They are quick insights to the day's most notable market activity from an options perspective. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB12M&PAGE=1
Schaeffer's Market Blog for Thursday, July 27, 2006:
Below are just a few of today's Market Blog entries. Click here to read all of today's Market Blog. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1
10:32 AM Free Stock Picks in our Podcast Interviews
Don't forget that many of our observations are available as audio presentations that you can hear on your computer or download from Apple's iTunes Music Store to play on a portable device such as an iPod. To see the full menu of observations, please visit http://www.schaeffersresearch.com/commentary/podcasts/.
Earlier this week, Jon Lewis interviewed Joe Sunderman, one of our most senior traders, who is looking at an interesting opportunity in Genesis Microchip (GNSS).
11:49 Akamai Reports
After the closing bell yesterday, Akamai Technologies (NASDAQ:AKAM) reported second-quarter net income of $11.3 million, or seven cents per share. Revenue came in at $100.6 million, a 56-percent increase over second quarter 2005 revenue of $64.6 million. The press release carrying the report described AKAM as "the leading global service provider for accelerating content and business processes online"
This morning, the company received some upgrades. Piper Jaffray upped the stock to "outperform," while Prudential raised it to "overweight" from "neutral weight." Merriman Curhan moved it to "buy" from "neutral" while Morgan Joseph reiterated AKAM at "buy."
Earlier this month, AKAM traded at the highest levels we have seen since January 2001, and this morning it gapped higher, just failing to set a new record. It leaped above its 10-day, 10-week, and 20-week trendlines, which we see as an encouraging sign.
Further encouragement can be found in the sentiment picture for AKAM. The Schaeffer's put/call open interest ratio (SOIR) for the stock is higher than 83 percent of those taken during the past year, so sentiment in the options pits lies toward the negative end of the spectrum. From our contrarian perspective, this is a good thing, suggesting that sideline money might be abundant. More than five percent of the stock's float is sold short, and short interest surged more than 56 higher in July, offering up some fuel for a short-covering rally if AKAM continues to move higher.
With a score of 7.0 out of 10 on our Schaeffer's Equity Scorecard, this could be worth watching as a potential bullish play.
12:11 PM Aetna Hits New Low Following Earnings Release
Aetna (NYSE:AET) said Wednesday that its second-quarter net income dropped one percent to $389.5 million, or 67 cents per share, while revenue rose 14 percent to $6.25 billion on a year-over-year basis. Earnings from continuing operations rose to 65 cents per share, while profit margins expanded as expenses relative to revenue declined. Wall Street's consensus view called for per-share results of 64 cents on $6.22 billion in revenue.
Looking out to the future, officials at the insurer projected 2006 earnings in a range of $2.77 to $2.99 per share, above its prior estimate of $2.74 to $2.76 per share, and higher than First Call's consensus estimate of $2.75 per share. For 2007, AET expects earnings to grow by an additional 15 percent or more.
On the other hand, the company noted that its Stop-Loss product has been negatively impacted by large claims in the second quarter, while its small-group unit has suffered at the hands of increased competition. The Street is keeping its eye on these negative factors today, sending the shares almost 20 percent lower to a new annual low. The stock is now coming up on its 40-month moving average, below which AET has not traded since December 2001. Look for this trendline to possibly offer support.
1:05 PM Symantec Surges on Earnings News
Wednesday evening, Symantec (NASDAQ:SYMC) announced first-quarter profits of nine cents per share, or 24 cents after the exclusion of unique items. Revenue, meanwhile, edged to $1.28 billion from $1.26 billion in the year-ago period. Analysts were expecting per-share results of 21 cents on $1.24 billion in sales. Looking ahead to the second quarter, SYMC expects a net profit of 11 to 12 cents per share on $1.27 billion to $1.3 billion in revenue. Profit before items is pegged at between 26 and 27 cents per share, on adjusted revenue of $1.28 billion to $1.31 billion. On Wall Street, analysts are currently targeting earnings of 26 cents per share on revenue of $1.29 billion.
In midday action, the shares are trading more than 11 percent higher, gapping above its 20-week moving average on heavy volume. Options players have moved into action, trading more than 9,000 contracts on the now in-the-money August 17.50 call (SYQ HW) and moving nearly 10,500 contracts at the October 15 call strike (SYQ JC). The January 2007 17.50 call (SYQ AW) is also active, with almost 7,000 contracts crossing the tape.
1:12 PM Pfizer Continues to Move Higher
Pfizer (NYSE:PFE) has been strong along with the rest of the pharmaceutical sector over the past several trading sessions and options players are catching on. Call option activity on PFE has become quite heavy. Yesterday there were more than five calls traded for every one put, and today there have been four calls traded to each put. This makes sense because the stock has been so strong, but too much optimism can stall a rally. PFE has a potential resistance zone coming into play in the $26-26.50 region.
2:00 PM Chipotle Earnings on Monday
For those of you who follow Chipotle Mexican Grill (NYSE:CMG) I can finally give you what is now considered a firm earnings release date. The restaurant chain is expected to release second-quarter earnings on Monday, July 31 after the closing bell. I talked about the stock is this space a couple of weeks ago and was incorrect about the earnings date, which was mere speculation at the time. The shares have struggled over the past couple of weeks, and I'm viewing this as a bullish sign for the shares, provided that their earnings report is strong. Pessimism toward the stock seems to be quite high, and I feel confident in the company's ability to deliver.
For more information on these stocks or any stock in your portfolio, feel free to visit our Schaeffer's Equity Scorecard feature. Click here to read all of today's Market Blog: http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1
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Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com, is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method.