International Paper (IP) – Bearish
|International Paper Company (NYSE: IP) reports earnings on Wednesday before the open, and analysts are expecting a lot from the company — a 113% gain in profits from a year ago. But given that the company did nearly that exact thing last quarter, maybe the expectations aren’t as high as one might think. What’s more, IP hasn’t missed an estimate in the past nine quarters. That’s a good thing, right? Well, maybe and maybe not. Take the last two quarters, for example. Both earnings reports came near peaks in the shares that were followed by declines of around 20%.The main problem for IP is a combination of overhead resistance on the charts and some optimism that seems misplaced. A month-long uptrend has been stopped in its tracks by both the $24 level and the 200-day moving average. Heavy call open interest at the $24 strike is probably also a factor.
As for sentiment, short interest is negligible, while 10 of 13 analysts rate the stock a “buy.” Not much room for upgrades there. That means IP will have to rely solely on a strong earnings report and outlook to plow through technical resistance. The odds are against that happening, so consider IP puts.
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