Earnings Previews

1. BIDU Earnings Preview- 2,273 Apr. 25 weekly $172.50 calls were bought for $0.85 each today. The call to put ratio was 2:1. The stock has moved higher after earnings on the last three reports. Shares of (BIDU) retested the 200-day SMA this morning and have since moved off of the lows by $5. EPS is expected to grow 7.7% in 2014 and 40.8% in 2015 with revenue growth of 47.6% and 35.6%, respectively. They were upgraded to Buy at Stifel on 2/27 with a price target of $238. Morgan Stanley downgraded them on the same day to equal-weight with a $179.60 price target. Goldman Sachs has a buy rating on (BIDU) too. The options market is pricing in a $9.65 move through Friday’s close. Bullish options trade idea: Buy the Apr. 25 weekly $160/$170 call spread for a $3.60 debit or better.
2. EMN Earnings Preview- The May $87.50/$87.50 bull risk reversal was put on 1k times for a $0.05 credit today. The stock has moved higher after earnings on five out of the last seven reports. The long-term uptrend from 2012 remains intact. (EMN) trades at a P/E ratio of 11.41x (2015 estimates), 4.8% revenue growth over the next two years, and has an average analyst price target of $92. On 12/17, UBS initiated coverage on (EMN) with a Buy rating and a $92 price target. The options market is pricing in a $4.30 move through May options expiration. Bullish options trade idea: Buy the May $82.50/$87.50 bull risk reversal for a $1.40 debit.
3. HBI Earnings Preview- 1,200 May $70 puts were sold for $0.85 each and 1,200 June $80 calls were purchased for $1.50 each, resulting in a bull risk reversal. Options activity was 13x the average daily volume. The stock has moved higher after earnings on six out of the last seven reports. The long-term uptrend remains intact and the stock is finding buyers after a test of the 50-day EMA today. (HBI) trades at a P/E ratio of 15.96x (2014 estimates), PEG ratio of 0.76x (2014 estimates), P/S ratio of 1.60x, 9.8% revenue growth, and has an average analyst price target of $81.50. On 2/24, Stifel downgraded (HBI) to Hold and D A Davidson kept a neutral rating and a $79 price target on the same day. The options market is pricing in a $5.35 move through May options expiration. Bullish options trade idea: Buy the May $75/$80 call spread for a $2.00 debit or better.
4. MAS Earnings Preview- Sizable buying in the May $22 and July $23 calls today. The call to put ratio was 18:1. The stock successfully retested the 200-day SMA last week and is now moving higher with the long-term uptrend still intact. (MAS) trades at a P/E ratio of 20.25x (2014 estimates), PEG ratio of 0.46x (2014 estimates), P/S ratio of 0.97x, 8.1% revenue growth, and has an average analyst price target of $25. On 4/23, Citigroup maintained a Hold rating with a $24 price target and on 3/31 Barclays maintained an overweight rating with a $26 price target. The options market is pricing in a $1.50 move through May options expiration. Bullish options trade idea: Buy the May $22/$24 call spread for a $0.80 debit.
5. COV Earnings Preview- Large buying in the May $70 and $72.50 calls today with 6,600+ traded vs. the daily average of 683. The call to put ratio is 8:1. The stock has moved higher after earnings on five out of the last seven reports. (COV) shares retested support at the 100-day SMA today, printing a bullish pattern. It trades at a P/E ratio of 15.76x (2015 estimates), PEG ratio of 1.29x (2015 estimates), 4-5% revenue growth over the next two years, and has an average analyst price target of $80. On 3/27, J.P. Morgan Chase maintained an Overweight rating with a $79 price target.On 3/11, BTIG initiated coverage with a Buy rating and a $83 price target. The options market is pricing in a $3.00 move through May options expiration. Bullish options trade idea: Buy the May $70 call for $2.00 or better.

These earnings previews are 1st published on the daily unusual options activity posts ahead of earnings.

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