Schaeffer's Trading Floor Blog

Analyst Update: Citigroup, Under Armour, and Transocean

Analysts adjusted their positions on C, UA, and RIG

by 1/4/2013 11:04 AM
Stocks quoted in this article:

U.S. markets are mixed this morning, as the unemployment rate remained at 7.8% despite a rise in December's jobs report. Here's a quick update on today's latest brokerage notes, including adjustments for banking giant Citigroup Inc. (NYSE:C - 41.94), athletic apparel designer Under Armour Inc (NYSE:UA - 50.32), and offshore oil and gas wells contractor Transocean LTD (NYSE:RIG - 50.78).

  • While Goldman Sachs slapped several financial firms with downgrades today, the brokerage added C to its "conviction buy" list and lifted its price target to $49 from $42. This adjustment arrives just weeks before the New York-based bank unveils its first earnings report with new CEO Michael Corbet. C shot to an 18-month best of $42.10 on the news, which also amplified its year-over-year return to 49%. Ahead of C's quarterly report slated for Jan. 17, options traders appear to be upping their bullish bets. During the past 10 days, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than three calls for every put on the stock. The resulting call/put volume ratio of 3.07 is just one percentage point shy of a yearly peak, indicating traders have been snapping up calls over puts at a near annual-high pace. Elsewhere on the Street, short interest on the equity rocketed 77.5% during the past month, suggesting the recent acceleration in call buying could be related to hedging activity by the shorts. But the bearish bandwagon is far from crowded, as it would take under two days for these pessimistic positions to unwind.

  • UA was upgraded to "outperform" from "neutral," and received a price-target hike to $59 from $57 at Credit Suisse this morning, citing the company's efforts to improve inventory and sourcing as a catalyst. While the stock is sitting on a 52-week gain of 39%, it is currently doing battle with its 40-day trendline, which has acted as resistance since late November. Should UA topple this area, another challenge awaits, as its 200-day moving average hovers above. Meanwhile, most analysts are skeptical toward the equity, with 13 out of 20 doling out "hold" or worse suggestions.

  • Finally, RIG agreed to pay a $1.4 billion settlement for its part in BP plc's (ADR) Gulf of Mexico oil spill in 2010. On a separate note, analysts at Guggenheim raised their price target on the stock to $55 from $54 (but kept their "neutral" rating intact). Wall Street seems pleased by the news, sparking a near 3.5% rally in the shares. Technically speaking, RIG has done fairly well over the past 12 months, rising roughly 25%. Looking at the sentiment backdrop, the options pits favor the bulls. The security's 10-day ISE, CBOE, and PHLX call/put volume ratio sits at 6.25, signaling traders have bought to open 625 calls for every 100 puts during the past two weeks. Plus, the Schaeffer's put/call open interest ratio (SOIR) of 0.67 confirms calls easily outnumber puts among options slated to expire within three months.

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