Schaeffer's Trading Floor Blog

Analyst Update: Apple Inc. (AAPL), Groupon Inc, and Broadcom Corporation

Analysts are weighing in on AAPL, GRPN, and BRCM

by 5/2/2014 2:21 PM
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The major market indexes are lower in afternoon trading, as Wall Street digests the monthly payrolls report and a joint statement on Ukraine from President Obama and German Chancellor Angela Merkel. Meanwhile, among the equities in focus are tech titan Apple Inc. (NASDAQ:AAPL), online discount provider Groupon Inc (NASDAQ:GRPN), and semiconductor concern Broadcom Corporation (NASDAQ:BRCM), which have all attracted the attention of analysts.

  • AAPL is 0.2% higher at $592.71, after Jefferies lifted its price target to $700 from $625 and reiterated its "buy" endorsement. The shares are on pace for a weekly gain of more than 3.6%, and embarked on a quest for new highs earlier this week, sending its 14-day Relative Strength Index (RSI) to 75 -- in overbought territory. While most analysts are already enamored with AAPL -- 29 out of 38 deem it a "buy" or better -- the options crowd has picked up puts at an accelerated clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.71 stands just 6 percentage points from a 12-month acme. As a result of this healthier-than-usual appetite for puts -- some of which may indicate protective put buying among Apple Inc. (NASDAQ:AAPL) shareholders looking to lock in gains -- the security's Schaeffer's put/call open interest ratio (SOIR) of 0.78 ranks in the 85th percentile of its annual range. In other words, short-term options players are more put-biased than usual right now.

  • GRPN is fractionally lower at $7.05, after Morgan Stanley tempered its second-quarter earnings expectations ahead of the firm's quarterly earnings release next Tuesday. However, the brokerage firm reiterated its "overweight" rating on GRPN, and its price target of $13 represents expected upside of 84% to the stock's current price. On the charts, the equity has surrendered 40% year-to-date, ushered lower beneath its 10-day and 20-day moving averages. Despite its lackluster price action, Groupon Inc (NASDAQ:GRPN) boasts 10 "buy" or better ratings, compared to 11 lukewarm "holds" and just two "strong sells" -- leaving the door wide open for downgrades in the wake of an unimpressive earnings report. On the flip side, options players have been upping the bearish ante. The stock's SOIR of 0.67 stands higher than 78% of all comparable readings from the past year, implying that short-term speculators are more put-centered than usual at the moment.

  • Finally, BRCM is flirting with breakeven at $30.56, after Nomura downgraded the stock to "neutral" from "buy" and trimmed its price target by $3 to $30. From a longer-term perspective, BRCM has spent the bulk of 2014 struggling beneath resistance in the $31-$31.50 region -- home to its descending 80-week moving average -- yet remains more than 3% higher year-to-date. Nevertheless, today's downgrade marked a relatively rare bearish note for Broadcom Corporation (NASDAQ:BRCM). Eighteen analysts maintain "buy" or better opinions of the equity, compared to 13 "holds" and just one "strong sell." Should the security backpedal in the face of multi-layered resistance, additional downgrades could exacerbate selling pressure on the shares.

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