Schaeffer's Trading Floor Blog

Analyst Update: Yahoo! Inc., Netflix, Inc., and Keurig Green Mountain Inc

Analysts are weighing in on YHOO, NFLX, and GMCR

by 5/14/2014 2:06 PM
Stocks quoted in this article:

The major market indexes are lower this afternoon, as Wall Street weighs the latest inflation data. Meanwhile, among the equities in focus are Internet titan Yahoo! Inc. (NASDAQ:YHOO), streaming content provider Netflix, Inc. (NASDAQ:NFLX), and coffee concern Keurig Green Mountain Inc (NASDAQ:GMCR), which have all attracted the attention of analysts.

  • YHOO is up 0.6% at $34.61 today, amid reports that the firm purchased Snapchat rival Blink. The acquisition buzz has helped to overshadow a negative analyst note, after Nomura trimmed its price target on YHOO to $40 from $43. However, some options traders are gambling on an intermediate-term pullback for Yahoo! Inc., as one of the more popular strikes today is the July 27 put. Almost all of the out-of-the-money puts have crossed on the ask side, implied volatility is trending higher, and volume has surpassed open interest at the strike, hinting at buy-to-open activity. A breach of the $27 level would place YHOO in territory not charted since August 2013. Technically speaking, YHOO has advanced more than 30% over the past year, with recent dips contained by its 50-week moving average. A continued run up the charts may prompt the aforementioned bears to unwind their bets, which could give an extra boost to the stock.

  • NFLX is also defying broad-market headwinds -- and shaking off a price-target cut to $405 from $410 at Nomura -- up 0.9% at $350.31. The stock is no stranger to skepticism among analysts, though. Despite a year-over-year advance of nearly 50%, Netflix, Inc. boasts just 13 "buy" or better ratings, compared to 16 "hold" or worse suggestions. Options players are also upping the bearish ante. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.06 stands higher than 71% of all comparable readings from the past year. In other words, options traders have bought to open NFLX puts over calls at an accelerated clip during the past two weeks.

  • Finally, after gapping 7.6% higher yesterday on news of The Coca-Cola Company's (NYSE:KO) increased stake, GMCR has surrendered 1.9% to linger near $116.83. This morning, analysts at Northcoast Research encouraged GMCR investors to take profits, with the brokerage firm cutting its price target to $95 and downgrading the stock to "sell" from "buy." Today's pullback may have been in the cards, though. In light of yesterday's bull gap, Keurig Green Mountain Inc's 14-day Relative Strength Index (RSI) bolted to 73 -- in overbought territory. However, should short sellers hit the bricks, GMCR could enjoy an added lift. Short interest accounts for 12.5% of the stock's total available float, and would take more than eight sessions to buy back, at the security's average pace of trading.

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