Schaeffer's Trading Floor Blog
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U.S. markets are retreating from last week's record highs today, as traders express caution ahead of Wednesday's release of the minutes from the latest Federal Open Market Committee (FOMC) meeting. Meanwhile, among equities in focus are semiconductor concern Applied Materials, Inc. (NASDAQ:AMAT), financial firm Wells Fargo & Co (NYSE:WFC), and fast-food giant Yum! Brands, Inc. (NYSE:YUM), which have all attracted the attention of analysts.

  • AMAT rallied to a fresh 10-year peak of $23.46 in the wake of a pair of bullish notes at J.P. Morgan Securities and a strong reading on global semiconductor growth. Specifically, the brokerage firm upgraded Applied Materials, Inc. to "overweight" from "neutral," and boosted its price target to $30 from $19. Year-to-date, the stock has tacked on 30% to trade at $22.97, yet the equity's consensus 12-month price target rests at $22.81, and eight of the 16 covering analysts maintain a "hold" or "sell" recommendation toward AMAT. In other words, another round of upgrades and/or price-target hikes could be in the works. Tonight, the company will host its analyst briefing, as well as a joint briefing with Tokyo Electron over their impending merger.

  • Thanks to a solid lift from its 60-day moving average, WFC has surged nearly 26% from its early November low of $41.71 to trade at $52.60. FBR took note of this uptrend overnight when it raised its price target for Wells Fargo & Co to $60 from $50. Additionally, the brokerage firm recommended buying the equity ahead of its second-quarter earnings report -- slated for release Friday morning -- citing the company's ability to "earn [its] cost of capital." The banking concern has beat the Street's bottom-line estimates in each of the past eight quarters, and another win on Friday morning could shake some of the weaker option bears loose. At present, the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.89 ranks in the skeptically skewed 78th percentile of its annual range.

  • RBC weighed in on YUM ahead of the company's turn in the earnings confessional next Wednesday, raising its price target for the stock to $94 from $87 on an upbeat sales outlook in China, and named Yum! Brands, Inc. a "Top Pick." Additionally, RBC said, "We believe accelerating two-year same-store sales (SSS) trends can convince the market that the KFC brand in China has healed and the Taco Bell turn is sustainable." Since its last quarterly showing in late April, shares of YUM have added around 6% to linger near $82.08. Against this backdrop, long calls have been initiated at a near-annual-high clip, per the equity's 50-day ISE/CBOE/PHLX call/put volume ratio of 1.99, which ranks higher than 96% of similar readings taken in the past year.

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