Schaeffer's Trading Floor Blog

Analyst Upgrades: Facebook Inc (FB), Merck & Co., Inc., and Time Warner Inc

Analysts upwardly revised their ratings on FB, MRK, and TWX

by 5/1/2014 9:29 AM
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Analysts are weighing in today on social networking giant Facebook Inc (NASDAQ:FB), pharmaceutical titan Merck & Co., Inc. (NYSE:MRK), and entertainment mogul Time Warner Inc (NYSE:TWX). Here's a quick roundup of today's bullish brokerage notes.

  • Despite underperforming the broader S&P 500 Index (SPX) over the past three months, FB was added to Credit Suisse's U.S. Focus list. In other news, Facebook Inc debuted a new service that CEO Mark Zuckerberg expects will help app developers "monetize in a serious way on mobile." Since touching a record high of $72.59 on March 11, FB shares have surrendered 17.6% to trade at $59.78. Nevertheless, option traders and analysts remain bullishly biased. In fact, 31 out of 34 covering brokerage firms consider FB worthy of a "buy" or better rating, with not a single "sell" suggestion to be seen. Should the stock extend its recent slide, this sentiment backdrop leaves it vulnerable to a mass exodus of option bulls and/or a wave of downgrades -- both potential catalysts lower.

  • BMO hiked its price target on MRK to $63 from $60, and underscored its "outperform" rating on the blue chip. The positive analyst attention comes on the heels of unconfirmed reports that Merck & Co., Inc. is considering unloading more than $15 billion worth of off-patent drugs. On the charts, the shares of MRK finished at a six-year closing high of $58.56 on Wednesday, bringing their year-to-date gain to 17%. There's still plenty of room on the bullish bandwagon, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 0.49 stands just 12 percentage points from an annual peak, pointing to a healthier-than-usual appetite for long puts of late. Meanwhile, six out of 13 analysts maintain tepid "hold" ratings. Should MRK extend its quest for new highs, a shift in sentiment among options players and/or analysts could translate into added buying power.

  • Finally, TWX enjoyed a post-earnings boost of 2.7% to settle at $66.46 on Wednesday, and analysts continue to wax optimistic on the stock. After yesterday's close, TWX received price-target hikes from four brokerage firms, including Janney (to $75 from $73.50) and Cowen and Company (to $77 from $75). However, Time Warner Inc is no stranger to optimism. The stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 11.67 stands higher than 97% of all comparable readings from the past year, and 14 out of 20 analysts offer up "strong buy" opinions. Despite yesterday's advance, though, TWX has been relatively lackluster in 2014, giving up 4.7% under resistance in the $68-$70 neighborhood.

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