How to Play the Fed Report; Bristol-Myers Downgrade Mocked

NEW YORK (TheStreet) -- With the Federal Reserve's statement set to be released on Wednesday afternoon, the CNBC "Fast Money Halftime" traders were gearing up with their positions. 

Pete Najarian, co-founder of optionmonster.com and trademonster.com, says investors should stick with the financial and health care sectors. Specifically, he pointed out bullish options activity in KeyCorp  (KEY), a regional bank.

Regional banks are the place to be, added Joseph Terranova, chief market strategist for Virtus Investment Partners. In addition to being long regional banks, he is a seller of utility stocks. 

As the economy continues to improve, most investors are expected the Fed to adjust its economic outlook going forward. This has led many investors to believe that an interest rate increase is on the table. One among them is Jim Lebenthal, CFO and CIO of Lebenthal & Company. 

Lebenthal "strongly believes" the Fed will raise rates in September, and he expects the overall market to rally as a result. However, he was quick to point out that Greece is still a big factor when it comes to which direction stocks are headed. 

The conversation turned to Bristol-Myers Squibb (BMY), which was initiated with an underperform rating and $60 price target by analysts at Piper Jaffray. 

Terranova was beside himself. Challenging the call, he questioned why anyone in their right mind would short-sell the stock at $65 with hopes of it trading down to $60. Bristol-Myers Squibb "could be bought tomorrow," given the strong M&A environment in the pharmaceuticals sector, he asserted. 

"I'll go the other way, I'll slap a $75 price target on Bristol-Myers," Terranova said. 

He was not alone; the other traders also took the bullish view. "I just bought some more last week," added Pete Najarian, who is optimistic about the company and its oncology treatment pipeline. He made the case that Bristol-Myers has both pharmaceutical and biotech businesses, which justifies the stock's higher valuation. 

Lebenthal agreed, adding that Bristol-Myers Squibb is a leader in its businesses and has strong market share. 

Finally, the traders looked to get in shape by checking out FitBit, the maker of electronic fitness monitoring devices, which is scheduled to IPO on Thursday with the ticker symbol FIT. Official pricing will happen Wednesday night, but the initial proposed range of $14 to $16 has already been raised to $17 to $19. Given its current pricing, the company would open for trading with a market cap of around $3.7 billion and have a PE ratio of 28.

While the stock is a very interesting takeout target, investors who miss out on the IPO should avoid the stock, said Jon Najarian co-founder of optionmonster.com and trademonster.com. Since FitBit generally does so well around the holidays, investors may be better off waiting for the stock to settle down post-IPO and buy it in September or October, ahead of the fourth quarter.  

Lebenthal was also cautious on the stock. While he expects a strong IPO for FitBit, he says the company doesn't have a defensible moat to stop its competition from making similar products -- similar to the issues faced by GoPro (GPRO). 

Garmin (GRMN) is another similar company to FitBit and its stock has been trending lower for the past 12 months, added Pete Najarian. Because of this, he's leery of FitBit. However, he took objection to Lebenthal's description of GoPro as moat-less, arguing the camera maker has valuable content, which could drive future revenues.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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