Schaeffer's Trading Floor Blog

Analyst Update: Lowe's, Renren, and Dick's Sporting Goods

Analysts adjusted their positions on LOW, RENN, and DKS

by 11/14/2012 2:07 PM
Stocks quoted in this article:

Heading into the last two hours of trading, here is quick update to today's latest brokerage notes, including adjustments for home improvements outfit Lowe's Companies, Inc. (NYSE:LOW - 32.35), Chinese social networking platform Renren Inc (NYSE:RENN - 3.29), and athletic gear retailer Dicks Sporting Goods Inc (NYSE:DKS - 50.45).

  • Thanks to the steady U.S. housing market recovery, LOW was greeted with an upbeat analyst note today. Specifically, Oppenheimer lifted its price target to $42 from $32. LOW has surged nearly 38% higher over the past year, but like sector peer Home Depot (NYSE: HD), the options pits seem to favor the bears. The security's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio sits at 1.38, signaling traders have bought to open 138 puts for every 100 calls during the past month. Plus, the Schaeffer's put/call open interest ratio of 1.22 confirms that puts outnumber calls among options slated to expire within three months. This ratio ranks in the 96th percentile of its annual range, suggesting that short-term options players have seldom been more put-heavy during the past year.

  • RENN's 26.5% year-over-year deficit is in danger of getting worse, following the company's third-quarter loss, reported last night. With this news, Barclays cut its price target to $4.20 from $5.50. Prior to its quarterly showing, there was a significant trend towards calls among options players, as evidenced by the stock's 10-day call/put volume ratio of 18.26 on the ISE, CBOE, and PHLX. However, short sellers could be accountable for some of the call buying of late, picking up optimistic options to hedge their pessimistic positions. Short interest on the equity ballooned 12.7% during the last two reporting periods, and at RENN's average pace of trading, it would take over nine sessions for all of these bearish bets to unwind.

  • On the heels of its upbeat third-quarter earnings and full-year earnings guidance, DKS was upgraded to "buy" from "neutral" at SunTrust, while its price target was raised by $1 to $59 by Canaccord Genuity. Despite DKS' 23% 52-week climb, there appears to be plenty of pessimism levied against the stock, which could translate into a contrarian boon. Short interest currently accounts for 11.7% of the security's float. Consequently, it would take more than two weeks to buy back all of these shorted shares.

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