Schaeffer's Trading Floor Blog

Analyst Update: Yelp Inc, Barrick Gold Corporation (USA), and Newmont Mining Corp

Analysts adjusted their ratings on YELP, ABX, and NEM

by 7/31/2014 12:25 PM
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  • YELP posted its first-ever quarterly profit last night -- topping the Street's consensus view -- and was subsequently met with a rush of positive brokerage attention. In fact, no fewer than 10 firms increased their price targets on the stock (although Raymond James lowered its rating to "market perform" from "outperform"). Of course, none of this is helping Yelp Inc today, with the shares off nearly 11% to trade at $67.56 -- bringing their year-to-date performance into the red. Should this downtrend continue, YELP could get hit with additional downgrades, as 19 out of 26 covering analysts offer up a "buy" or better recommendation on the equity.

  • ABX reported weaker-than-expected second-quarter earnings last night, but lowered its full-year cost guidance. Nevertheless, UBS upped its price target on the stock to $19 from $18.50, and reaffirmed its "neutral" opinion of the shares. On the charts, Barrick Gold Corporation (USA) has been struggling -- up less than 4% in 2014 to rest near $18.26 -- and saw its most recent rally stymied in the $19-$19.50 area. As such, short sellers have taken an increasing interest in the security, with short interest rising 21.4% during the two most recent reporting periods to more than 15 million shares.

  • Following yesterday's update on the status of its Indonesian copper mine, NEM received a pair of price-target hikes at Mackie (to $21 from $20) and RBC (to $29 from $27) -- though Cowen reduced its price target on the stock by 3 cents to $32.11. Newmont Mining Corp shares have fared better than those of rival ABX, tacking on roughly 9% year-to-date to wink at the $25.08 level. Still, the Street is skeptical of the equity; in fact, 14 out of 16 covering analysts have doled out "hold" or worse recommendations on the shares.

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Earnings on Deck: LinkedIn Corp, Skullcandy Inc, and Burger King Worldwide Inc

Taking a closer look at LNKD, SKUL, and BKW ahead of their earnings results

by 7/31/2014 10:54 AM
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Second-quarter earnings season is quickly winding down. This week, however, there are still a number of notables set to hit the confessional, including professional networking site LinkedIn Corp (NYSE:LNKD), headphones maker Skullcandy Inc (NASDAQ:SKUL), and fast-food concern Burger King Worldwide Inc (NYSE:BKW). Here's a quick look at LNKD, SKUL, and BKW as earnings approach.

  • Over the past eight quarters, LNKD has matched or exceeded analysts' bottom-line estimates each time, resulting in an average single-session post-earnings gain of 1.4%. When LinkedIn Corp steps onto the earnings stage after tonight's close, Wall Street is calling for a per-share profit of 39 cents -- one cent more than what the company earned one year ago. On the sentiment front, short sellers have been upping the bearish ante toward a stock that's shed 16% year-to-date to trade at $181.47. Over the past two reporting periods, specifically, short interest jumped 25.7%, and is now lingering at levels not seen since December 2012.

  • SKUL has experienced some wild single-session post-earnings price swings over the past eight quarters, including a 24.2% pop in March, and a 22.5% plunge in March 2013. On average, though, the equity has shed 1% in the session subsequent to reporting, which widens to 3.1% going out one week. Another post-earnings move lower for SKUL could prompt a round of price-target cuts, considering the consensus 12-month price target for Skullcandy Inc sits at $8.36 -- or 21.5% above the equity's current perch at $6.88. For tonight's second-quarter results, analysts are expecting a per-share profit of one penny.

  • In the wake of weaker-than-expected earnings from sector peers McDonald's Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM), BKW is slated to report its own quarterly results bright and early tomorrow morning. Over the past eight quarters, the company has matched or exceeded consensus profit estimates each time, which has translated into an average single-session post-earnings gain of 1.3% for the stock. Another well-received report could shake some of the skeptics loose, which might help Burger King Worldwide Inc extend its 15% year-to-date lead. Among covering analysts, 75% maintain a "hold" or "sell" suggestion toward the equity, while the average 12-month price target of $27.86 stands at a slim 5.7% premium to BKW's present price of $26.36. Meanwhile, short interest accounts for 10% of the stock's float, representing three weeks' worth of pent-up buying demand, at average daily trading levels.

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Analyst Downgrades: Glu Mobile Inc., Whole Foods Market, Inc., and Yum! Brands, Inc.

Analysts downwardly revised their ratings on GLUU, WFM, and YUM

by 7/31/2014 9:18 AM
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Analysts are weighing in today on mobile gaming issue Glu Mobile Inc. (NASDAQ:GLUU), organic grocer Whole Foods Market, Inc. (NASDAQ:WFM), and Pizza Hut parent Yum! Brands, Inc. (NYSE:YUM). Here's a quick roundup of today's bearish brokerage notes.

  • Despite topping the Street's bottom-line projections for the second quarter, and announcing the acquisition of Cie Games, GLUU is set to open roughly 10% lower this morning. Part of this pre-market sell-off may be attributable to a downgrade to "hold" from "buy" at Benchmark (although Canaccord Genuity and Stifel each raised their price targets). Taking a step back, analysts have been extremely optimistic toward Glu Mobile Inc.; in fact, eight brokerage firms have doled out a "strong buy" rating toward the stock. This bullish configuration is understandable, too, given the equity's year-to-date advance of nearly 78%.

  • WFM is also set to open lower this morning, after last night reporting lower-than-expected fiscal third-quarter sales and reducing its full-year guidance. Subsequently, the stock saw its price target slashed at Cantor, Jefferies, Suntrust Robinson, and J.P. Morgan Securities (which also reduced its rating to "neutral" from "overweight"). Elsewhere, short interest has been rising on Whole Foods Market, Inc. -- which has shed 32.4% in 2014 to trade at $39.11 -- and now makes up nearly 10% of the equity's float.

  • Finally, YUM is getting pummeled by Wall Street, after the company said the recent expired-meat scandal has resulted in a "significant, negative impact" on sales in China. Specifically, Deutsche Bank, Janney, RBC, and Stifel lowered their price targets on the stock, which has tumbled nearly 12% since the news broke, and now trades at $73 per share. YUM's consensus 12-month price target is still lodged at $87.11, meaning additional bearish brokerage notes could be on the way.

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U.S. stock futures are pointed south ahead of the bell, with concerns over a possible Argentine default rattling investors. In company news, today's stocks to watch include Finnish mobile firm Nokia Corporation (ADR) (NYSE:NOK), buyout target Family Dollar Stores, Inc. (NYSE:FDO), wireless giant Verizon Communications Inc. (NYSE:VZ), and blue-chip pharmaceutical name Johnson & Johnson (NYSE:JNJ).

  • Nokia Corporation (ADR) (NYSE:NOK) struck a deal to acquire wireless assets from Panasonic, in a move designed to expand NOK's reach in the crucial Japanese market. Financial terms of the deal were not disclosed. (Reuters)

  • Now that the company is set to be acquired, investor Carl Icahn is unwinding his stake in Family Dollar Stores, Inc. (NYSE:FDO). On Tuesday, Icahn Associates unloaded 3.8 million shares, with another 2.8 million hitting the market on Wednesday. So far, Icahn's realized profit on the FDO stake is estimated at more than $100 million. (Forbes)

  • Verizon Communications Inc. (NYSE:VZ) received a strongly worded letter from Federal Communications Commission (FCC) Chair Tom Wheeler, as the watchdog organization expressed serious concerns over VZ's "throttling" practices for top data users. In the missive, Wheeler asked Verizon how it could justify slowing data services "to a user who has paid, after all, for 'unlimited' service." (TechCrunch)

  • After suspending use of its power morcellators earlier this year, Johnson & Johnson is officially recalling the devices from the global market. The Food and Drug Administration (FDA) has raised concerns that power morcellators, used for hysterectomies and fibroid surgeries, may spread undetected cancer cells in patients. (Bloomberg)

  • On the earnings front, Exxon Mobil Corporation (NYSE:XOM), MasterCard Inc (NYSE:MA), Whole Foods Market, Inc. (NYSE:WFM), and Yelp Inc (NYSE:YELP) were among the big names to report their latest quarterly results. (CNBC; Wall Street Journal [subscription required]; Barron's; FOX Business)

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Analyst Upgrades: Baidu Inc (ADR), SodaStream International Ltd, and Western Digital Corp

Analysts upwardly revised their ratings on BIDU, SODA, and WDC

by 7/31/2014 8:42 AM
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Analysts are weighing in today on Chinese search engine Baidu Inc (ADR) (NASDAQ:BIDU), home carbonation system maker SodaStream International Ltd (NASDAQ:SODA), and digital storage solutions provider Western Digital Corp (NASDAQ:WDC). Here's a quick roundup of today's bullish brokerage notes.

  • Extending last week's post-earnings bull gap, BIDU ran to a record high of $229.60 earlier this week, and currently sits at $219.13 -- up 67% year-over-year. Accordingly, Standard Chartered raised its price target on the stock by $50 to $275, to go along with an "outperform" rating. This optimistic sentiment isn't unusual on Wall Street. In fact, 11 out of 13 analysts following Baidu Inc (ADR) have handed out "strong buy" evaluations, compared to just two "holds" and not a single "sell" opinion.

  • SODA rallied 10% yesterday to close at $32.76, thanks to a better-than-expected second-quarter earnings report. In response, Barclays raised its rating on the equity to "equal weight" from "underweight" (although Canaccord Genuity, J.P. Morgan Securities, and Roth each lowered their price targets). Generally speaking, analysts are at least slightly skeptical of SodaStream International Ltd, which has received just one "strong buy" endorsement, versus seven "holds" and two "strong sell" opinions. This makes sense, too, given the shares' 34% year-to-date deficit.

  • Finally, WDC reported a fiscal fourth-quarter earnings beat last night, and was subsequently met with a flurry of bullish brokerage notes. In fact, no fewer than eight firms upped their price targets on the shares. Additional price-target hikes could be on the way, too, as Western Digital Corp's consensus 12-month price target of $104.42 is just a chip-shot away from its current perch at $101.17.

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