Schaeffer's Trading Floor Blog

Analyst Update: Joy Global Inc., Williams-Sonoma, Inc. (WSM), and Guess?, Inc. (GES)

Analysts revised their ratings on JOY, WSM, and GES

by 8/29/2013 9:46 AM
Stocks quoted in this article:

Analysts are weighing in today on mining-equipment manufacturer Joy Global Inc. (NYSE:JOY), home-products retailer Williams-Sonoma, Inc. (NYSE:WSM), and apparel and accessories retailer Guess?, Inc. (NYSE:GES). Here's a quick roundup of today's adjusted brokerage notes.

  • Despite yesterday's stronger-than-expected earnings report, JOY saw its price target slashed to $47 from $60 at Jefferies -- while Barclays, BMO Capital, and Raymond James also reduced their price targets -- after CEO Mike Sutherlin warned that current trends are "unlikely to support annual revenue above $4 billion." Adding insult to injury, Moody's projected that JOY's newly established share repurchase program will result in weaker credit metrics for the company. As with the rest of the mining sector, JOY has taken a hit on the charts in 2013, dropping 23.3% year-to-date to its current price of $48.89. Elsewhere, the brokerage bunch is holding onto its optimistic outlook. From the 18 analysts weighing in, JOY has received 10 "buy" or better endorsements, compared to eight lukewarm "holds." Furthermore, the stock's 12-month price target of $64.66 stands in territory untouched since late February. Should Joy Global Inc. continue its downward trajectory, more downgrades and/or price-target cuts may be in store, which could pressure the shares further south.

  • Leading into last night's upbeat earnings report, WSM tagged a new all-time high of $61.56, before settling in at its current perch of $56.97. With that being said, Barclays and Bernstein hiked their price targets for the stock to $53 from $49, and to $55 from $52, respectively. (Canaccord Genuity and Suntrust Robinson, meanwhile, sliced their price targets.) Stepping back, WSM has enjoyed a nice run on the charts over the past year, tacking on nearly 37% year-over-year. Still, short interest grew 18.5% during the last two reporting periods, and now accounts for 8.2% of the stock's available float -- which would take almost nine sessions to cover, at WSM's average pace of trading. In other words, Williams-Sonoma, Inc. may end up benefiting from future short-covering activity, which could serve as a contrarian tailwind.

  • Jefferies and Wedbush raised their price targets for GES to $29 from $27, and to $33 from $32, respectively, following yesterday's quarterly earnings beat. (Susquehanna, on the other hand, lowered its price target.) Technically speaking, GES sports a year-to-date gain of 11.3%. Still, the stock has underperformed the broader S&P 500 Index (SPX) by 16.4 percentage points during the past 20 sessions, and since tagging an annual high of $34.36 on Aug. 5, the stock has fallen 20.5% to trade at $27.31. Against this technical backdrop, GES options traders have bought to open roughly 12 puts for every call during the last two weeks, according to the stock's International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) 10-day put/call volume ratio of 12.04. This ratio ranks in the 90th percentile of its annual range, indicating Guess?, Inc. options traders have been scooping up long puts (relative to calls) at a faster-than-usual pace.

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