Schaeffer's Trading Floor Blog

Analyst Update: Baidu Inc (ADR), Inc, and American International Group Inc

Analysts are weighing in on BIDU, SOHU, and AIG

by 2/24/2014 12:54 PM
Stocks quoted in this article:

The broad-market indexes are in the black at midday, extending their February rally. Meanwhile, among the equities in focus are Chinese Internet issues Baidu Inc (ADR) (NASDAQ:BIDU) and Inc (NASDAQ:SOHU), as well as insurance titan American International Group Inc (NYSE:AIG), which have all attracted the attention of analysts.

  • BIDU -- which will report earnings after the close on Wednesday -- is up 0.6% at $173.62, after Goldman Sachs upgraded the shares to "buy" from "neutral." Most of Wall Street is already in BIDU's corner, with 11 out of 14 analysts doling out "strong buy" endorsements, and not a single "sell" or worse rating in sight. In the same optimistic vein, Baidu Inc (ADR) sports a Schaeffer's put/call open interest ratio (SOIR) of 0.61 -- lower than all other readings from the past year. In other words, short-term option players haven't been more call-biased during the last 12 months.

  • SOHU, on the other hand, is down 3.3% to trade at $72.60, after Goldman Sachs downgraded the stock to "neutral" from "buy." The shares are now in the red for 2014, which should please more than a few skeptics on the Street. Despite declining by 17.3% during the most recent reporting period, short interest still represents more than four sessions' worth of pent-up buying demand, at Inc's average pace of trading. Plus, just two analysts offer up "buy" or better recommendations, compared to five "hold" or worse ratings, and the average 12-month price target of $77.12 represents expected upside of just 6.2% from SOHU's current perch.

  • Finally, AIG is up 1.4% at $49.65, after KBW lifted its price target by $1 to $55. The shares have underperformed the broader S&P 500 Index (SPX) by about 5 percentage points during the past two months, yet short-term option traders remain optimistic. The stock's SOIR of 0.44 not only indicates that calls more than double puts among options expiring within three months, it also sits at an annual low, implying that speculators are much more call-skewed than usual right now. Meanwhile, half of the 18 covering brokerage firms deem American International Group Inc worthy of a "strong buy." Should AIG continue to flail beneath resistance at $50, a change of heart among option players and/or analysts could translate into contrarian headwinds for the shares.

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