New Watch List Entries
None, no new watch list candidates
Active Watch List Candidates
BCR - C.R.Bard Inc
TMO - Thermo Fisher Scientific
Dropped Watch List Entries
CELG, CMI, and LMT have graduated to our active plays.
New Watch List Candidates:
No new watch list candidates tonight. Please see our new play section for an updated radar screen.
Active Watch List Candidates:
C. R. Bard Inc. - BCR - close: 147.00
BCR has been underperforming with shares down six out of the last seven sessions. Last week's pullback has created a bearish reversal pattern on the weekly chart.
We're going to give BCR one week to reverse higher. If not we will remove it as a watch list candidate.
Earlier Comments: August 3, 2014:
C.R. Bard (a.k.a. BARD) is "a leading multinational developer, manufacturer, and marketer of innovative, life-enhancing medical technologies in the product fields of vascular, urology, oncology, and surgical specialty.
BARD markets its products and services worldwide to hospitals, individual health care professionals, extended care facilities, and alternate site facilities. BARD pioneered the development of single-patient-use medical products for hospital procedures; today BARD is dedicated to pursuing technological innovations that offer superior clinical benefits while helping to reduce overall costs (source: company website)."
Thus far 2014 has been a bit of a roller coaster ride for BCR investors. That is a bit surprising considering that BCR has significantly beaten Wall Street's earnings estimates two quarters in a row. The company saw its Q2 revenues rise +8.8% to $827 million. BCR's Q2 profit soared +29.6% to $2.06 a share. Management then raised guidance and the stock broke out past major resistance near $150.00.
The broader market's recent weakness has pulled BCR back toward the $150 area, which should be support. If the stock bounces we want to be ready to hop on board.
Wait for a close above $152.00 and then buy calls the next morning with a stop loss at $146.95.
I am not setting an exit target tonight but I'll note that the point & figure chart is bullish and forecasting at long-term target of $194.
Breakout trigger: Wait for a close above $152.00
Then buy calls the next day with a stop at $146.95.
BUY the 2015 Jan $160 call (BCR150117C160)
Option Format: symbol-year-month-day-call-strike
Originally listed on the Watch List: 08/03/14
Thermo Fisher Scientific - TMO - close: 121.22
TMO flirted with resistance in the $122.50-123.00 region last week but never quite got past it.
Tonight I am adjusting our entry point strategy. Instead of waiting for a close above $122.50 we want to wait for a close above $123.00 before initiating new positions.
Earlier Comments: August 10, 2014:
TMO is considered part of the healthcare sector. They provide products and services in their analytical instruments, laboratory services, specialty diagnostics, and their new Life Sciences division.
According to the company website, "Thermo Fisher Scientific Inc. is the world leader in serving science, with revenues of $17 billion and 50,000 employees in 50 countries. Our mission is to enable our customers to make the world healthier, cleaner and safer. We help our customers accelerate life
sciences research, solve complex analytical challenges, improve patient diagnostics and increase laboratory productivity. Through our four premier brands â€“ Thermo Scientific, Life Technologies, Fisher Scientific and Unity Lab Services â€“ we offer an unmatched combination of innovative technologies, purchasing convenience and comprehensive support."
TMO is developing a trend of beating Wall Street's estimates. Back in April they reported their first quarter results that beat estimates on both the top and bottom line. Management then raised their guidance for 2014. TMO did it again when they reported Q2 earnings on July 23rd. However, this report is significant because it's the first earnings report including its new Life Sciences acquisition.
Wall Street was expecting TMO to report earnings of $1.63 a share on revenues of $4.25 billion. The company beat these expectations. Earnings rose +30% to $1.72 a share. Revenues soared +33% to $4.32 billion. Gross margins improved 154 basis points to 45.4%. Management then adjusted their revenue guidance higher.
TMO's management has also upgraded their expected synergies from the Life Sciences acquisition. They now expect to reap $350 million in synergies over the next three years. That's up from $300 million.
The stock has reflected TMO's bullish performance with big gains over the past couple of years. Yet the rally peaked in March 2014 and shares have been digesting gains for months. This past week saw TMO testing significant support near its long-term trend of higher lows. This looks like an opportunity to hop on board.
I am suggesting we wait for TMO to close above $122.50 and then buy calls the next morning with a stop loss at $117.40. The $127.00 level is overhead resistance but we're betting on a bullish breakout to record highs.
Breakout trigger: Wait for a close above $123.00
then buy calls the next morning with a stop at $117.40
BUY the 2015 Jan $130 call (TMO150117c130)
- or -
BUY the 2016 Jan $130 call (TMO160115c130)
08/24/14 adjust entry strategy: wait for a close above $123.00 and then buy calls the next day (instead of a close above $122.50)
Option Format: symbol-year-month-day-call-strike
Originally listed on the Watch List: 08/10/14