27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
The bullish case for Automatic Data Processing (NASDAQ:ADP) can no longer be justified after the stock's notable outperformance versus the S&P 500 index over the past 18 months, according to Bank of America Merrill Lynch.
The Analyst
Jason Kupferberg downgraded ADP from Buy to Neutral with an unchanged $175 price target.
The Thesis
ADP's stock over the past 18 months benefited from activist investor Pershing Square's involvement, while the company showed strong execution and margin expansion, Kupferberg said in a Wednesday downgrade note. (See his track record here.)
Pershing Square exited the stock, and the recent outperformance sets up a "higher implied bar" for performance that may already be priced into the stock, the analyst said.
For example, ADD should be able to hit at least the midpoint of its fiscal 2021 adjusted EBIT margin target of 23.25% to 25.25%, but this level of expansion isn't as strong as what was seen in fiscal 2019, he said.
Also, management's three-year revenue growth CAGR guidance in June 2018 of 7% to 9% off 2018 numbers could be impacted by the unfavorable interest rate environment, lower-than-expected growth in the PEO business and foreign exchange fluctuations, Kupferberg.
Now may be the "time for a breather," as BofA's unchanged $175 price target implies upside potential of just 7%, the sell-side firm said.
Price Action
Shares of Automatic Data Processing were trading lower by 1.76% Wednesday afternoon at $161.43.
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Benzinga's Top Upgrades, Downgrades For September 11, 2019
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Public domain photo via Wikimedia.
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
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