Option Investor

Daily Newsletter, Wednesday, 4/10/2019

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Priced In

by Thomas Hughes

Click here to email Thomas Hughes


Economic Data, the FOMC, and Trade News failed to move the market. Dare I say it? It looks like economic conditions, the FOMC, interest rates, and the trade deal are priced into the indices. That leaves only one thing and that is earnings. With the peak-season due to begin in two days, there is a lot riding on what could be, is likely to be, the worst quarter of earnings growth in two years.

Market Statistics

On the economic front, the CPI Consumer Price Index was mixed. Headline inflation was hotter than expected and rose the most in one month in over a year. Balancing that was a core-reading stripping out food and energy that shows inflation is still rising at only a tepid rate. This at once suggests the FOMC may have to raise rates later this year while reinforcing the need for patience, nothing new in that.

The FOMC minutes were released this afternoon and they did not give up any new insights either. The Fed, in their discussion, left the door open to future rate hikes with comments to the effect 'patience' does not preclude 'data dependent'. If the data says hike rates the rates will go up. A few members see possibility rates will need a modest increase by the end of the year. The majority agree no hikes is the more likely course of action given the evolution of risks and data. The Fedwatch Tool is predicting a 55% chance of rate cut by the end of the year.

Regarding growth, the FOMC says that GDP will bounce back solidly in the second half of the year. They also give themselves a nice pat on the back for that citing their patience as a driving cause. The FOMC's patience is certainly helping the economy to bounce back, the lack of it is also a big reason why the economy slowed in the first place.

The committee also talked about the balance sheet wind-down. They revealed a desire to remove uncertainty as a reason for producing a timetable at the lasts meeting.

Trade talks wear on and progress continues to be made. Treasury Secretary Steve Mnuchin has been in near-constant talks with Liu He and making great progress. According to him, the two sides have just about agreed on the enforcement mechanism which includes enforcement offices to be set up by both sides. Other than that little detail was given other than a desire to end talks quickly. That said, Mnuchin also says there is no timeline and talks will take as long as they take.

In international news, the IMF downgraded its global growth forecast for the second time this year. The IMF says world GDP is going to be 3.3%, down from 3.5%, and possibly will be downgraded again. The downgrade notes downside risks and calls on world leaders to make a coordinated effort to stimulate growth. Reading between the lines the report says world leaders need to get their trade issues worked out.

Economic Calendar

The Economy

The Consumer Price Index was a mixed bag for sure. The headline figure rebound from last month's long-term low in the strongest one-month gain in over a year while core CPI continues to moderate. Headline CPI jumped 0.4% MOM and 1.9% YOY while core CPI rose only 0.1% and 2.0%. Both core and headline inflation are well below the peaks set last year and give little reason for the FOMC to hike rates. This month's increase is due in large part to energy and gasoline, the energy index rose 3.5% and was 60% of the total increase in consumer prices. Tomorrow we'll get the latest read on PPI.

The Dollar Index

The Dollar Index was up down and sideways on today's news. On the one hand, the data and the FOMC are on track for no rate hikes this year, far more dovish than what the market was expecting just a few months ago, while on the other the ECB is also getting dovish. The ECB held rates steady in today's policy announcement and made no changes to their planned TLTRO III. The DXY ended the day slightly lower after experiencing a volatile session. The move stopped short at the short-term moving average where it may find support. Regardless, the DXY is trapped within a trading range and not likely to exit any time soon.

The Gold Index

Gold prices moved up with today's dollar weakness and set a new near-term high. The spot price is moving up from the $1,300 level and looks like it will move higher. The indicators are bullish and rising which is consistent with higher prices but the indications are weak. A move higher may find resistance at $1,320 or, if that is broken, near $1,340. In either case, gold prices will still be range bound.

The Gold Miners ETF moved contrary to the underlying commodity falling in today's action. The ETF shed nearly a full percent in a move suggesting another peak has been reached. This is the 5th peak within the current trading range but may not indicate a price reversal. The indicators are still a bit weak and mixed but basically showing a bullish entry signal that could take the ETF up to the top of the range. If the GDX is able to move up resistance is at $23.00 and $23.50. If not, support is at the short-term moving average and $22.00.

The Oil Index

Oil prices held steady despite bullish inventory data. The level of WTI in storage fell -1.5 million barrels versus an expected rise of 0.20%. Compounding this was a massive -7.7 million barrel decline in gasoline inventories. WTI rose a little more than 0.35% in today's trading and did not set a new high. Despite this, gold looks like it is preparing for another push higher, this time to $68.

The Oil Index moved up in today's trading and confirms support is growing along the short-term moving average. Today's candle doesn't set a new high but does appear bullish and part of a consolidation and continuation of recent trends. The indicators are rising and momentum is bullish so higher prices are expected. Resistance is just above today's high, a break above that would be bullish too. When resistance breaks a move up to 1,400 is expected.

In The News, Story Stocks and Earnings

Delta Airlines announced earnings before the opening bell. The company beat on the top and bottom lines sparking a massive pre-market surge in stock prices that fizzled out during the day. The company says strength was driven by improvements across the operation, higher premium ticket pricing, and savings in maintenance/repair/overhaul. Guidance for the full year was raised but to a wide range around consensus which may have something to do with today's volatility. The stock closed with a nice increase but the candle leaves a lot to be desired.

Bed, Bath & Beyond reported earnings after the bell. The specialty home products retailer says comps fell -1.4% but guidance was strong. Slowing in-store traffic was offset by better than forecast digital sales as company initiatives bear fruit. The CEO says 2019 is going to be a good year because EPS growth is going to stabilize and accelerate. He set full year guidance at $2.12 versus the expected $1.85 and shares jumped 4% on the news.

The VIX fell with today's action but it still doesn't look great. Volatility is low relative to last year's big spikes but still well above the bull market lows and flirting with a reversal. Today's candle retreat to support at 13.30 where fear has had a hard time getting by. This marks the 6th time prices have halted at this level in the last 6 weeks and the indicators are turning bullish. Both MACD and stochastic are mildly bullish now, a move in the VIX above the short-term moving average would confirm the signal they are suggesting. With earnings season set to kick off in two days and a sell-the-news-event brewing with trade, I think the VIX is giving us a warning that should be noted; fear could spike at any minute, and it could be a big one.

The Indices

The indices drifted sideways and did not look very strong about it. Most are sitting near their recent highs, the NASDAQ Composite set a new one. The tech-heavy index created a small green candle with barely visible upper shadow creeping up to set a microscopic new high. The move may be bullish but it looks weak and tentative and the indicators aren't great either. MACD momentum is bullish but very weak and diverging from the 2019 rally while stochastic is high in overbought territory. My misgivings may be overblown but with the all-time so close to hand getting bullish now isn't really worth it anyway. If prices move to set a new high, break to new highs, and hold them we start talking extended rally once again.

The Dow Jones Transportation Average posted the second-largest advance in today's session, about 0.40%. The transports formed a small green candle showing support at the previous high but again, the indicators do not look great. Momentum has diverged from the new high while stochastic is high in the upper signal zone suggesting weakness and overbought conditions. This situation may only lead to consolidation but could lead to full reversal should earnings season not pan out.

The broad market S&P 500 gained about 0.30% in today's trading to form a small green spinning top with upper and lower shadows. The index did not set a new high and does not look particularly bullish despite sitting above support. The indicators are both peaking out with the index and suggest a move to test support is imminent. A move to 2,880 is possible, a move below that level would be bearish at least for the near-term.

The Dow Jones Industrial Average closed with the smallest gain and hardly any gain at all, only 0.02%. the blue-chip index formed a small spinning top doji near yesterday's low and looks like it will move lower. The indicators are both showing bearish crossovers consistent with a pullback or test of support that could move the index down to 26,000 or lower in the near-term.

The indices are giving mixed indications no two ways about it. There are signs the market is peaking but whether that is a near-term peak of consolidation or a longer-term peak of reversal is hard to say. I would expect to see similar action tomorrow, quiet and without much movement, and then a possibility of bigger moves on Friday. JP Morgan and WFC are going to report earnings before the bell on Friday and those are going to be important events. Their results and their outlook will set the tone for the entire season. I am firmly bullish for the long-term but neutral and cautious at least until after Friday mornings earnings reports.

Until then, remember the trend!

Thomas Hughes

New Option Plays

Triple the Footprint

by Jim Brown

Click here to email Jim Brown

Editors Note:

This retailer is thinking big as in tripling their store count. Five Below currently has 750 stores. Sales in 2019 rose 22% compared to 3.7% for Target.


New positions are only added on Wednesday and Saturday except in special circumstances.


FIVE - Five Below - Company Profile

Five Below, Inc. operates as a specialty value retailer in the United States. It offers accessories, including novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories, athletic tops and bottoms, and T-shirts, as well as nail polishes, lip glosses, fragrances, and branded cosmetics; and items used to complete and personalize living space, including glitter lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty decor, and related items, as well as provides storage options for the customers room. The company also provides sport balls; team sports merchandise and fitness accessories, such as hand weights, jump ropes, and gym balls; games, including name brand board games, puzzles, collectibles, and toys covering remote control; and pool, beach, and outdoor toys, games, and accessories. In addition, it offers accessories, such as cases, chargers, headphones, and other related items for cell phones, tablets, audio, and computers; books, video games, and DVDs; craft activity kits; arts and crafts supplies that consist of crayons, markers, and stickers; and trend-right items for school comprising backpacks, fashion notebooks and journals, novelty pens and pencils, locker accessories, and everyday name brand items. Further, the company provides party goods, decorations, gag gifts, and greeting cards, as well as every day and special occasion merchandise products; assortment of classic and novelty candy bars, movie-size box candy, seasonal-related candy, and gum and snack food; chilled drinks through coolers; and seasonally-specific items used to celebrate and decorate for events. It primarily serves tween and teen customers. As of February 2, 2019, Five Below, Inc. operated 750 stores. The company was formerly known as Cheap Holdings, Inc. and changed its name to Five Below, Inc. in August 2002. Five Below, Inc. was founded in 2002 and is headquartered in Philadelphia, Pennsylvania. Company description from FinViz.com.

Five Below has 750 stores and is targeting 2,500. Their rapid expansion is the key to their surging 22% rise in revenue. They are not planning on 2,500 in 2019 but that is their goal over the next several years. They opened 125 stores in 2018. Average store volume is $2 million. Same store sales on those open more than a year was +4.4%. This rapid expansion should keep investors attention.

They are projecting 2019 revenue to rise 19.6%-20.9% to $1.865-$1.885 billion with a goal of 145-150 new stores. They are adding three new states and will be operational in 36 states plus DC by year-end.

Their Q4 earnings of $1.59 beat estimates for $1.57. Revenue of $602.7 million narrowly beat estimates for $601.0 million.

Shares spiked $10 after earnings but gave it all back before beginning the current rally. Shares are very close to a breakout over $130.

Earnings June 26th.

Buy May $135 call, currently $2.50, stop loss $123.00.


No New Bearish Plays

In Play Updates and Reviews

Second Lowest

by Jim Brown

Click here to email Jim Brown

Editors Note:

Wednesday was the second lowest volume day of the year at 6.17 billion shares. Fortunately, the A/D line was almost 3:1 in favor of advancers. This kept the S&P and Nasdaq positive at the close and the Russell 2000 regained everything it lost on Tuesday. This was a good day disguised as mediocre because of the minor 6-point Dow gain. Boeing, UnitedHealth, Home Depot and McDonalds were the biggest losers holding the index down.

Current Portfolio

Stop Loss Updates

Check the graphic below for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline.

Profit Targets

Check the graphic below for any profit stops in green. We need to always be prepared for a profit exit at resistance.

Current Position Changes

No Changes

Full updates on all plays on Wednesday and Saturday. Only closed plays are updated on other days.

BULLISH Play Updates

INTC - Intel - Company Profile


IDC and Gartner Group both said a shortage of Intel processors slowed PC sales in Q1 and pushed some manufacturers to use AMD chips. While that is bad for Intel on the volume side it means they are not cutting prices and margins on everything they can make will stay high.

Original Trade Description: Feb 16th

Intel Corporation designs, manufactures, and sells computer, networking, data storage, and communication platforms worldwide. The company operates through Client Computing Group, Data Center Group, Internet of Things Group, Non-Volatile Memory Solutions Group, Programmable Solutions Group, and All Other segments. Its platforms are used in notebooks, desktops, and wireless and wired connectivity products; enterprise, cloud, and communication infrastructure market segments; and retail, automotive, industrial, and various other embedded applications. The company offers microprocessors, and system-on-chip and multichip packaging products. It also provides NAND flash memory products primarily used in solid-state drives; and programmable semiconductors and related products for communications, data center, industrial, military, and automotive markets. In addition, the company develops computer vision and machine learning, data analysis, localization, and mapping for advanced driver assistance systems and autonomous driving. It serves original equipment manufacturers, original design manufacturers, industrial and communication equipment manufacturers, and cloud service providers. Intel Corporation has collaboration with Tata Consultancy Services to set up a center for advanced computing that develops solutions in the areas of high performance computing, high performance data analytics, and artificial intelligence. The company was founded in 1968 and is based in Santa Clara, California. Company description from FinViz.com.

In November Intel announced a $15 billion share buyback program. Intel had $4.7 billion remaining under a prior authorization putting them just shy of $20 billion. This represents almost 10% of the outstanding shares. Six years ago, Intel had 6.5 billion shares outstanding. If they complete this buyback program, they will have just over 4 billion shares outstanding.

Intel is poised to profit from the coming 5G revolution. Apple has already said they are going to use Intel's 5G model in their 2020 phones. Intel has participated in more than 25 5G trials with potential partners. In the last quarter Intel said revenue from communications service providers rose 30%. The company said in August it is pursuing the $24 billion communications infrastructure segment of the market and expects to gain significant market share by 2022. Intel is not just a PC and server processor company any more.

Intel reported Q4 earnings of $1.28 that beat estimates for $1.22. However, revenue of $18.66 billion missed estimates for $19.02. Their biggest problem was guidance for Q1 of 87 cents on $16 billion in revenue. Analysts were expecting $1 on $17.29 billion.

Intel is poised to benefit from a trade agreement with China. They currently get 24% of their revenue from China. With the advent of 5G, Intel is poised to be a leading player. They bill themselves as an "end to end" provider. The 5G revolution is not only going to replace nearly every piece of networking gear on the planet, every cellphone owner will be upgrading to a new 5G phone, many with an Intel modem. Remember the old commercials from the 2000's, "Intel Inside?" With Intel's new push into the internet of things (IoT), smartphone communications and self-driving vehicles, they really will be inside most electronic products.

Intel is expected to grow revenue by 5% in 2019. That is better than the sector forecast for 2% growth.

Earnings April 25th.

We have to reach out to the June option cycle to get a strike that comes after earnings and will keep the premiums inflated. We can buy time, but we do not have to use it.

Position 2/19:
Long June $55 call @ $1.53, see portfolio graphic for stop loss.

LOW - Lowes Companies - Company Profile


No specific news. After a monster run, LOW finally rested on Tuesday but recovered slightly today.

Original Trade Description: March 30th

Lowe's Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States, Canada, and Mexico. It offers a line of products for maintenance, repair, remodeling, and decorating. The company provides home improvement products in various categories, such as lumber and building materials, tools and hardware, appliances, fashion fixtures, rough plumbing and electrical, seasonal and outdoor living, lawn and garden, paint, millwork, flooring, and kitchens, as well as outdoor power equipment. It also offers installation services through independent contractors in various product categories; extended protection plans; and in-warranty and out-of-warranty repair services. The company sells its national brand-name merchandise and private branded products to homeowners, renters, and professional customers. As of November 5, 2018, it operated 2,390 home improvement and hardware stores. The company also sells its products through online sites comprising Lowes.com and Lowesforpros.com; and through mobile applications. Lowe's Companies, Inc. was founded in 1946 and is based in Mooresville, North Carolina. Company description from FinViz.com.

Earnings May 29th.

Lowes is in the midst of a restructuring and the new CEO, Marvin Ellison took over in July. Since then he has closed stores all across the country and hired thousands of IT workers to improve online sales. As a result, Lowes is closing the gap with Home Depot.

In the last quarter the company posted earnings of 80 cents that beat estimates by a penny. Overall revenue rose 1% to $15.65 billion. The slower revenue growth was due to the store closures.

The CEO said the hard work has now been done over the last six months and they are fully prepared for a strong spring and summer selling season. In January alone, same store sales rose 5.8%.

Shares closed at a 6-month high on Friday and appear poised to retest the peak of $117 from September. I am using the June option to retain premium ahead of the May earnings. We will exit before the earnings.

Position 4/1/19:
Long June $115 call @ $2.51, see portfolio graphic for stop loss.

MSFT - Microsoft - Company Profile


No specific news. Only 3 cents from a new high.

Original Trade Description: March 23rd

Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide. Its company's Productivity and Business Processes segment offers Office 365 commercial products and services, such as Office, Exchange, SharePoint, Skype for Business, Microsoft Teams, and related Client Access Licenses (CALs); Office 365 consumer services, including Skype, Outlook.com, and OneDrive; LinkedIn online professional network; and Dynamics business solutions comprising financial management, enterprise resource planning, customer relationship management, supply chain management, and analytics applications for small and medium businesses, large organizations, and divisions of enterprises. The company's Intelligent Cloud segment licenses server products and cloud services, such as SQL Server, Windows Server, Visual Studio, System Center, and related CALs, as well as Azure, a cloud platform; and enterprise services, including premier support and Microsoft consulting services to assist customers in developing, deploying, and managing Microsoft server and desktop solutions, as well as provides training and certification to developers and IT professionals. Its More Personal Computing segment offers Windows OEM, volume, and other non-volume licensing of the Windows operating system; patent licensing, Windows Internet of Things, and MSN display advertising; devices comprising Surface, PC accessories, and other intelligent devices; Xbox hardware and software and services; and Bing and Bing Ads search advertising. The company markets its products through original equipment manufacturers, distributors, and resellers; and online and Microsoft retail stores. Microsoft Corporation has collaboration with E.ON; strategic alliance with Nielsen Holdings plc and PAREXEL International Corp.; collaboration with NIIT Technologies Ltd.; and a strategic collaboration with Mastercard Incorporated. The company was founded in 1975 and is headquartered in Redmond, Washington. Company description from FinViz.com.

Microsoft is closing in on one billion Windows 10 installations. This is a money printing machine. Their server software, Office 365, SQL Server, Azure cloud service, are all money printers. They are very close to killing the video game market and putting Gamestop out of business by releasing a download only video game console. They are going to put the Xbox in the cloud. This is called Project XCloud. The idea is to be able to play any game on any device at any time without a controller or software CD. This took some of the excitement out of the Google Stadia announcement.

This is a simple recommendation. Shares closed at a new high on Thursday and pulled back to short-term support on Friday. "IF" the market recovers, Microsoft should make new highs again.

Earnings May 1st.

Position 3/25/19:
Long May $120 call @ $2.99, see portfolio graphic for stop loss.

NTNX - Nutanix - Company Profile


No specific news.

Original Trade Description: March 13th

Nutanix, Inc., together with its subsidiaries, develops and provides an enterprise cloud platform in North America, Europe, the Asia Pacific, the Middle East, Latin America, and Africa. Its solution addresses a range of workloads, including enterprise applications, databases, virtual desktop infrastructure, unified communications, and big data analytics. The company offers Acropolis, an open platform comprising hyperconvergence, native virtualization, enterprise storage, virtual networking, and platform services; and Prism, an end-to-end consumer-grade management plane providing management and analytics across its software products and services. It also provides Nutanix Calm that offers native application orchestration, automation, and lifecycle management to its enterprise cloud platform. In addition, the company offers Beam, a multi-cloud optimization service; and Frame, a desktop-as-a-service. It serves customers in a range of industries, including automotive, consumer goods, education, energy, financial services, healthcare, manufacturing, media, public sector, retail, technology, and telecommunications, as well as service providers. The company was founded in 2009 and is headquartered in San Jose, California. Company description from FinViz.com.

Nutanix shares were crushed on March 1st after they posted an adjusted loss of 14 cents. Analysts were expecting 25 cents, so this was a beat. Revenue of $335.4 million beat estimates for $331 million. However, billings rose from $355.9 million to $413.4 million. Analysts were expecting $416.5 million and not a big miss.

The problem came from guidance. They guided for the current quarter for a loss of 60 cents on revenue of $290-$300 million and billings of $360-$370 million. Analysts were expecting 28 cents on revenue of $348 million and billings of $430.2 million. That was a major miss.

The CFO said, "The guidance reflects the impact of inadequate marketing spending for pipeline generation and slower than expected sales hiring." "We took a critical look at these areas and have taken actions to address them."

Shares fell $17 to $33 on the news. After a week of sideways consolidation shares have started to move higher. The CFO said they corrected the problem. That may not mean there will be a recovery in the current quarter but there will be a recovery. I am recommending we buy the dip.

The first option cycle out of the 30-day premium depreciation window is July. We can buy time, but we do not have to use it.

Position 3/14/19:
Long July $42.50 call @ $3.25, see portfolio graphic for stop loss.

SWKS - Skyworks - Company Profile


No specific news. New 5-month high close.

Original Trade Description: April 6th

Skyworks Solutions, Inc., together with its subsidiaries, designs, develops, manufactures, and markets proprietary semiconductor products, including intellectual property worldwide. Its product portfolio includes amplifiers, antenna tuners, attenuators, circulators/isolators, DC/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrids, LED drivers, low noise amplifiers, mixers, modulators, optocouplers/optoisolators, phase locked loops, phase shifters, power dividers/combiners, receivers, switches, synthesizers, technical ceramics, voltage controlled oscillators/synthesizers, and voltage regulators. The company provides its products for use in the aerospace, automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet, and wearable markets. It sells its products through direct sales force, electronic component distributors, and independent sales representatives. Skyworks Solutions, Inc. has a collaboration agreement with MediaTek Incorporated to deliver standards-based 5G solution. The company was founded in 1962 and is headquartered in Woburn, Massachusetts. Company description from FinViz.com.

The chip sector has rallied 38% in 2019 compared to 23% for the S&P. However, some chip stocks have not participated. Skyworks spiked to $85 after its earnings in February then traded sideways until last week. Friday's close was a 5-month high and a breakout of the recent range.

They reported earnings of $1.83 that missed estimates for $1.84. Revenue of $972 million missed estimates for $973 million. The generated a record $549 million in free cash flow from operations and ended the quarter with more than $1 billion in cash. Obviously, those misses were minor, and shares spiked on their strong guidance. They guided for Q2 for earnings of $1.43 and revenue of $800-$820 million. Q1/Q2 are normally light quarters for chip stocks because the surge in smartphone building occurs in Q3/Q4.

They also announced a $2 billion stock buyback program that replaced their expiring $1 billion program that had $129 million left to spend. They also announced a quarterly dividend of 38 cents that was paid on March 19th.

Skyworks will be a major beneficiary of the 5G rollout. They have already installed 5G base stations all across Europe and have secured contracts with multiple vendors for 5G chips. They are also a major supplier for Apple and Samsung and those new phones will begin hitting the market in August.

Earnings May 7th.

I am using a short-term May option because we will exit before the May earnings.

Position 4/8/19:
Long May $90 call @ $2.60, see portfolio graphic for stop loss.

XRAY - Dentsply Sirona - Company Profile


No specific news. Testing resistance at $51.

Original Trade Description: April 3rd

DENTSPLY SIRONA Inc. designs, develops, manufactures, and markets various dental and oral health products, and other consumable healthcare products primarily for the professional dental market worldwide. The company operates in two segments, Technologies & Equipment; and Consumables. Its dental supplies include endodontic instruments and materials, dental anesthetics, prophylaxis pastes, dental sealants, impression materials, restorative materials, tooth whiteners, and topical fluoride products; and small equipment products comprise dental hand pieces, intraoral curing light systems, dental diagnostic systems, and ultrasonic scalers and polishers. The company also offers dental laboratory products, such as dental prosthetics that include artificial teeth, precious metal dental alloys, dental ceramics, and crown and bridge materials. In addition, it provides dental technology products, including dental implants and related scanning equipment, treatment software, and orthodontic appliances for dental practitioners and specialist, and dental laboratories; and dental equipment, such as treatment centers, imaging equipment, and computer aided design and machining systems for dental practitioners and laboratories. Further, the company offers healthcare consumable products, such as urology catheters, medical drills, and other non-medical products. It markets and sells dental products through distributors, dealers, and importers to dentists, dental hygienists, dental assistants, dental laboratories, and dental schools; and urology products directly to patients, as well as through distributors to urologists, urology nurses, and general practitioners. The company was formerly known as DENTSPLY International Inc. and changed its name to DENTSPLY SIRONA Inc. in February 2016. DENTSPLY SIRONA Inc. was founded in 1899 and is headquartered in York, Pennsylvania. Company description from FinViz.com.

XRAY was one of the three worst performing healthcare stocks in 2018. Things are looking up now that they are well into their restructuring program. The company reported earnings of 58 cents that beat estimates for 54 cents. Revenues of $1.06 billion beat estimates for $1.03 billion. Both metrics were down from the year ago quarter.

However, the company projected for earnings to rise 15.5% in 2019 with revenue of $3.95-$4.05 billion, which beat estimates for $3.94 billion. They guided for 2019 earnings of $2.25-$2.40 with a midpoint of $2.32 that easily beat estimates for $2.15.

Shares spiked sharply after the report and have traded sideways for the last month. There is an uptick in progress and Today's close was a 12-month high.

Earnings May 31st.

If XRAY can move over current resistance they have room to run.

Position 4/4/19:
Long July $55 call @ $1.40, see portfolio graphic for stop loss.

BEARISH Play Updates

No Current Puts