By Josh Selway / October 11, 2017 / www.schaeffersresearch.com /
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President Donald Trump earlier today once again took aim at NBC in a tweet, a move that could be having a negative effect on other media stocks. For instance, Twenty-First Century Fox Inc (NASDAQ:FOXA) and CBS Corporation (NYSE:CBS) are both sharply lower today, and data suggests shares of both companies could have further to drop. Let's take a closer look at FOXA and CBS below.
Media Sector Looks Weak
First of all, it should be noted that the Media sector was already near the bottom of Schaeffer's Senior Quantitative Analyst Rocky White's sector scorecard -- meaning it has little upside potential, from a contrarian standpoint. Currently, just 36% of the stocks in this group are trading above their 80-day moving average, which is the lowest of any sector we follow. This underperformance has caught the attention of short sellers, as short interest on the group as a whole is up roughly 9% during the past year.
FOXA Stock Falters Below 50-Day
Zeroing in on FOXA stock, the shares have shed 2.5% today to trade at $26.10. This is nothing new, as the security has undperformed the S&P 500 Index (SPX) by 7 percentage points during the past two months amid overhead pressure for its 50-day moving average. Since topping out at $32.60 in late March, the shares have dropped almost 20% of their value.
Meanwhile, short sellers have continued to roll in. Since mid-May, these bearish bets have grown by 90%, and the 35.9 million shares now sold short represents almost six times the stock's average daily trading volume. If this trend continues, it'll make it harder for Twenty-First Century Fox to gain momentum on the charts.
Elsewhere, analysts have seemingly ignored the equity's disappointing price action. Sixty percent of the brokerage firms that track the security say it's a "strong buy," and the average 12-month price target of $33.25 represents a premium of 27.4%, and sits in two-year-high territory. It would not be surprising to see downgrades and/or price-target cuts come through on FOXA.
Analysts, Options Traders Remain Upbeat on CBS Stock
CBS stock has so far given back 1.4% at $56.61, pacing for its lowest close since November. The shares have trailed the broader SPX by almost 17 percentage points during the past two months, and early last month fell below their 320-day moving average for the first time in almost a year. This trendline ultimately thwarted the equity's next two breakout attempts.
Like its sector peer, CBS still enjoys bullish ratings from covering analysts. Specifically, 16 of 21 say it's a "buy" or "strong buy." Plus, the shares have a consensus 12-month price target of $74.67, representing upside of 32% from current levels. Clearly, there's room for bearish analyst attention.
In the options pits, near-term traders have been surprisingly call-skewed. This is according to the security's Schaeffer's put/call open interest ratio (SOIR) of 0.46. Not only does this show that call open interest more than doubles put open interest for options set to expire within three months, but it signals such a call-skew is very unusual.