Wednesday’s Vital Data: Apple Inc. (AAPL), Twitter Inc (TWTR) and Gilead Sciences, Inc. (GILD)

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U.S. stock futures are headed higher this morning, as better-than-expected earnings from Apple Inc. (NASDAQ:AAPL) bolstered sentiment ahead of the Federal Reserve’s monetary policy statement.

Wednesday’s Vital Data: Apple Inc. (AAPL), Twitter Inc (TWTR) and Gilead Sciences, Inc. (GILD)

AAPL stock is up more than 7% premarket despite posting revenue that fell 15% year-over-year, with analysts claiming the worse is now behind the company. The Federal Reserve, meanwhile, is expected to hold pat on rates, but rhetoric will lay the groundwork for a hike later this year.

Against this backdrop, futures on the Dow Jones Industrial Average are up 0.27%, S&P 500 futures have added 15% and Nasdaq-100 futures have rallied 0.73%.

Options activity returned to normal levels on Tuesday, with 13.5 million calls and 11.8 million puts changing hands on the session. Put volume crept higher relative to call volume on the CBOE, however, as the single-session equity put/call volume ratio rose to 0.76, its second straight three-week high. The 10-day moving average continued higher as well, hitting a one-week high of 0.62.

In equity option news, options traders were uncertain ahead of quarterly reports from Apple and Twitter Inc (NYSE:TWTR), though volume on the pair hit near-term highs. Meanwhile, Gilead Sciences, Inc. (NASDAQ:GILD) attracted a wealth of call volume despite the stock’s roughly 8.5% plunge following weaker-than-expected quarterly earnings.

Wednesday’s Vital Options Data: Apple Inc. (AAPL), Twitter Inc (TWTR) and Gilead Sciences, Inc. (GILD)

Apple Inc. (AAPL)

It doesn’t take much to impress AAPL stockholders. After the close last night, Apple posted a profit of $1.42 per share on revenue of $42.09 billion. Compared to the year-ago quarter, Apple’s sales fell 15% from $49.6 billion with earnings down from $1.85 per share. Still, the results bested analyst expectations for earnings of $1.38 per share on $42.1 billion in revenue.

iPhone sales, meanwhile, were also down 15% at 40.4 million units, but the figure still bested the Street’s low-end target for 40 million units sold. Looking ahead, Apple sees yet another quarter of year-over-year declines, with fourth-quarter revenue of $45.5 billion to $47.5 billion, compared to $51.5 billion last year and a consensus estimate of $45.5 billion.

AAPL options traders expected some concern heading into the report, with calls only accounting for about 53% of the more than 2.1 million contracts that crossed the tape.

That said, if this morning’s premarket action carries over into the open, AAPL is set to vault above peak weekly July 29 series call open interest, which totals 47,500 contracts at the $100 strike. The $100 strike is also home to roughly 70,000 calls in the August series, though peak OI there totals about 75,000 contacts at the $105 strike.

Twitter Inc (TWTR)

While AAPL stock is up, TWTR stock is crashing. The stock is off more than 11% premarket, as Wall Street punished the shares for weak third-quarter guidance. For the second quarter, Twitter saw earnings rise 92% to 13 cents per share, on revenue that rose nearly 20% to $602 million. Analysts were expecting 10 cents per share on sales of $608 million.

Average monthly users rose to 313 million in the quarter, beating Wall Street’s expectations. However, third-quarter sales guidance of $590 million to $610 million was well below analysts’ target of $682 million.

TWTR stock has been blasted for the weak guidance all morning, with target price cuts from RBC Capital (cut to $17 from $20), J.P. Morgan (cut to $16 from $18), Stifel (cut to $9 from $10) and Wedbush Morgan (cut to $14 from $20).

Heading into the report, options traders slightly favored calls over puts, with the former snapping up 53% of the 545,000 contracts traded on TWTR stock. Still, TWTR remains above peak put OI in the weekly July 29 series, which totals about 9,200 contracts at the $16 strike. This strike is also home to roughly 14,000 puts in the August series, and could emerge as a key support level for TWTR going forward.

Gilead Sciences, Inc. (GILD)

All in all, Gilead Sciences’ quarterly report wasn’t that bad. The company beat earnings expectations and missed slightly on revenue, but full-year guidance was a killer. Gilead lowered full-year revenue guidance from a range of $30 billion to $31 billion to a range of $29.5 billion to $30.5 billion due to a slowdown in sales growth for its hepatitis C drug portfolio — leading many analysts to wonder if Gilead could survive if the trend continues.

Options traders appear to be hoping for a rebound. Despite yesterday’s nearly 8.5% plunge in GILD stock, the shares saw calls account for 61% of the more than 431,000 contracts traded. GILD’s decline stopped short of peak August put OI, which totals 15,100 contracts at the $80 strike.

Look for this level to provide support as GILD traders adjust going forward.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/07/wednesdays-vital-data-apple-inc-aapl-twitter-inc-twtr-gilead-sciences-inc-gild/.

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