Schaeffer's Trading Floor Blog

Analyst Update: Facebook Inc (FB), IBM, and Verizon

Analysts adjusted their positions on FB, IBM, and VZ

by 1/14/2013 12:06 PM
Stocks quoted in this article:

Stocks are bouncing around breakeven in lunchtime trading, as Wall Street digests some disappointing news for Apple Inc.'s (NASDAQ:AAPL) iPhone 5. Here's a quick update on some of the latest brokerage notes, including adjustments for social networking site Facebook Inc (NASDAQ:FB - 31.33), tech giant International Business Machines Corp. (NYSE:IBM - 192.59), and telecommunications firm Verizon Communications Inc. (NYSE:VZ - 42.81).

  • FB got an upbeat note today, as analysts at Deutsche Bank lifted their rating to "buy" from "hold." Technically speaking, the shares have been on a tear, outpacing the broader S&P 500 Index (SPX) by nearly 60 percentage points during the past three months, and tacking on more than 66% since trading at their most recent low of $18.87 on Nov. 12. An area of support now appears to be forming in the $30-$32 region, which previously acted as a technical ceiling since late July.

  • J.P. Morgan Securities weighed in on several tech companies today, encouraging investors to pull money out of traditionally conservative bets like IBM, and go for riskier names like Hewlett-Packard Company (NYSE:HPQ) and Dell Inc. (NASDAQ:DELL). The brokerage firm backed this note by downgrading IBM to "neutral" from "overweight," while cutting its price target to $197 from $215. Today's news has resulted in a 1% pullback for the shares, which are now faltering near breakeven for the year. And there could be more downside ahead, especially if analysts continue to be leery of the stock. IBM counts nine "buy" or better endorsements, versus 12 "hold" or worse suggestions. Furthermore, the consensus 12-month price target of $223.05 represents a 16% premium to the blue chip's current price.

  • VZ is also off about 1% today, following UBS' decision to drop its view of the company to "neutral" from "buy." Running at a deficit in 2013, negative sentiment appears to be mounting against the stock, especially among options traders. VZ has racked up a 10-day put/call volume ratio of 1.36 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), signaling traders have bought to open 136 puts for every 100 calls during the past two weeks. Plus, the Schaeffer's put/call open interest ratio (SOIR) of 2.02 confirms puts double calls among options slated to expire within three months. This ratio registers in the 77th percentile of its annual range, suggesting that near-term options players have been more put-heavy toward VZ just 23% of the time during the last year.

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