Schaeffer's Trading Floor Blog

Analyst Upgrades: Apple Inc. (AAPL), VMware, Inc., and SanDisk Corporation

Analysts upwardly revised their ratings on AAPL, VMW, and SNDK

by 3/21/2014 8:54 AM
Stocks quoted in this article:

Analysts are weighing in today on iPhone parent Apple Inc. (NASDAQ:AAPL), virtualization concern VMware, Inc. (NYSE:VMW), and data storage provider SanDisk Corporation (NASDAQ:SNDK). Here's a quick roundup of today's bullish brokerage notes.

  • After the close yesterday, Macquarie launched coverage of AAPL with an "outperform" endorsement and a $630 price target -- which represents expected upside of 19.2% from the stock's current perch at $528.70. However, while Apple Inc. is no stranger to optimistic analyst attention -- 27 out of 36 covering brokerage firms offer up "buy" or better ratings -- the options crowd has grown wary of late. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.72 sits 8 percentage points from an annual high, pointing to a healthier-than-usual appetite for long puts over calls. Nevertheless, short-term traders are gambling at a relative discount, as AAPL's Schaeffer's Volatility Index (SVI) of 19% has been lower just 3% of the time during the past year.

  • Janney raised its fair value price on VMW to $130 from $105, and reiterated its "buy" recommendation. Although the shares have outperformed the S&P 500 Index (SPX) by 18.5 percentage points during the past three months, and touched a near-two-year high of $111.04 yesterday, the short-term speculative crowd hasn't been more put-heavy during the past year. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) stands at an annual peak of 1.36. Elsewhere on Wall Street, short interest jumped 25.7% during the last two reporting periods, and now represents nearly two weeks' worth of pent-up buying demand, at VMware, Inc.'s average pace of trading. Should the security -- which settled at $110.67 yesterday -- extend its uptrend, a mass exodus of option bears or short sellers could translate into contrarian upside.

  • Finally, SNDK tagged a 14-year high of $81.54 yesterday, before settling at $80.72. What's more, Argus thinks higher highs are in store, and lifted its price target on the equity by $12 to $92. Despite the stock's uptrend, option players have been purchasing puts over calls at an accelerated rate, as evidenced by its 10-day ISE/CBOE/PHLX put/call volume ratio of 1.44, in the 94th percentile of its annual range. Of course, some of those puts may have been purchased by shareholders looking to lock in profits in the event of a dip on the charts. Meanwhile, short sellers have clearer motives. Short interest accounts for 8.4% of SanDisk Corporation's total available float, and would take more than a week to repurchase, at the stock's average rate of trading. Should the skeptics hit the bricks, a short-squeeze situation could add contrarian fuel to SNDK's fire.

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