Comcast Corporation ( CMCSA ) confessed its third-quarter earnings after the close on Wednesday. While the media mogul posted an 8.2% decline from the year-ago quarter, CMCSA still reported a consensus-beating profit of 31 cents per share on $9.5 billion in revenue. CMCSA chalked up the decline to costs related to the company's pending acquisition of NBC Universal -- which is set to close by the end of the year, according to company officials.
As a result of the company's strong earnings, CMCSA was rewarded by the brokerage bunch on Thursday. Specifically, Wunderlich Securities raised the stock's price target to $28.50 from $24, while Credit Suisse upped its price target on CMCSA to $22 from $19. In general, analysts remain somewhat skeptical when it comes to CMCSA, with Zacks reporting that 12 ranking analysts call the stock a "buy" or better, while 13 deem the shares a tepid "hold." Going forward, a reversal of sentiment from this skeptical crew could add a fresh boost of buying pressure on the media issue.
Meanwhile, put players also targeted CMCSA yesterday, as evidenced by the equity's many appearances on the Schaeffer's Most Active Options filter. Roughly 12,000 contracts changed hands on the session -- well above the TV titan's expected daily put volume of fewer than 8,800 contracts.
Thursday's put-heavy activity is nothing new; in the past two weeks, speculators on the International Securities Exchange (ISE) have bought to open 4.8 puts for every call, a ratio which ranks above 90.6% of all other readings taken during the past year. In other words, traders on the ISE have rarely initiated bearish bets on CMCSA at a faster clip.
However, upon further review, it doesn't seem that Thursday's put players were necessarily initiating bearish bets. The November 17 put was one of the day's most popular strikes, with roughly 6,000 contracts traded. Open interest fell by 5,500 contracts, pointing to liquidation activity at this strike -- which is well out of the money . However, with nearly 13,000 contracts open at this strike, the November 17 contract still holds the title of peak put open interest for the front-month series.
However, the November 18 put is a close runner up, with just over 12,000 contracts currently open at this strike. Going forward, a continuation of yesterday's liquidation activity could provide a lift for the shares, should more bears capitulate to the stock's technical strength.
As a result of Wednesday's stellar report, CMCSA soared to a fresh annual high of $20.95 on Thursday. In fact, this technical feat was simply a continuation of a recent trend for CMCSA, which has been climbing steadily higher along the support of its 10-day and 20-day moving averages since mid-October. Moreover, in the past 20 sessions alone, CMCSA has outperformed the broader S&P 500 Index (SPX) by 13.4%.
However, prior to this week, the shares had been stymied by the $20 level, which has historically been a sore spot for CMCSA. This round number rejected the stock's rally attempts in April and August. Going forward, this level could now serve as an additional layer of support for the media issue.
Given CMCSA's technical and fundamental muscle of late, we could see more analysts and option players abandon their bearish positions. As more bears concede to the CMCSA's strength, it could provide an additional boost for the shares.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
