Schaeffer's Trading Floor Blog

Analyst Update: Yelp Inc, SolarCity Corp, and Pfizer Inc.

Analysts are weighing in on YELP, SCTY, and PFE

by 5/8/2014 3:14 PM
Stocks quoted in this article:

Encouraging global data and central bank chatter on both sides of the pond helped stocks to an early lead, but the major market indexes are now struggling to stay north of breakeven. Meanwhile, among the equities in focus are online review concern Yelp Inc (NYSE:YELP), alternative energy issue SolarCity Corp (NASDAQ:SCTY), and blue-chip drugmaker Pfizer Inc. (NYSE:PFE), which have all attracted the attention of analysts.

  • YELP is fractionally higher at $52.76, after Morgan Stanley upgraded the stock to "overweight" from "equal weight." However, the stock is still down 10.4% week-to-date, due to the recent sell-off in momentum names. In fact, the equity has underperformed the broader S&P 500 Index (SPX) by 45 percentage points during the past three months, and touched a year-to-date nadir of $49.11 yesterday. Nevertheless, Wall Street remains enamored with Yelp Inc. Twenty-two out of 29 analysts maintain "buy" or better opinions on the stock, with not a single "sell" to be found. Should YELP resume its longer-term downtrend, a flood of downgrades could translate into additional headwinds for the shares.

  • SCTY has bounced back from its own year-to-date low, up 13.7% at $54.22 on the heels of a well-received earnings showing. The firm's upwardly revised guidance caught the attention of the analyst community, with J.P. Morgan Chase upgrading the stock to "overweight" from "neutral," and Roth Capital upping its rating to "buy" from "neutral." In addition, Baird chimed in with a price-target hike to $80 from $75, and reiterated its "outperform" recommendation. There's still plenty of room on the bullish bandwagon, though, as puts have grown increasingly popular. 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 0.53 stands higher than two-thirds of all comparable readings from the past year. In other words, option buyers have picked up SolarCity Corp puts over calls at an accelerated clip during the past two weeks.

  • Finally, PFE -- which also touched a new year-to-date low yesterday -- is 0.3% higher at $29.12, despite an overnight price-target cut to $35 from $36 at Credit Suisse. Traders are instead clinging to hopes of a sweetened buyout offer for AstraZeneca plc (ADR) (NYSE:AZN) before the weekend. Although PFE has been spurned more than once on the M&A front -- and despite the stock's year-to-date loss of 5% -- option players remain optimistic. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 5.88 indicates that nearly six Pfizer Inc. calls have been bought to open for every put during the past two weeks. What's more, this ratio sits just 8 percentage points shy of an annual acme, pointing to a bigger-than-usual bias toward long calls of late.

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