Schaeffer's Trading Floor Blog

Analyst Upgrades: Amazon.com, Google, and Netflix

Analysts upwardly revised their ratings on AMZN, GOOG, and NFLX

by 1/18/2013 9:08 AM
Stocks quoted in this article:

Analysts are weighing in today on Internet marketplace Amazon.com, Inc. (NASDAQ:AMZN - 270.48), search engine giant Google Inc (NASDAQ:GOOG - 711.32), and streaming video service Netflix, Inc. (NASDAQ:NFLX - 97.70). Here's a quick roundup of today's bullish brokerage notes.

  • AMZN -- which sits on a year-over-year advance of about 39% -- was upgraded to "outperform" from "sector perform" at Pacific Crest this morning. Given this technical strength, it's no surprise that calls have an edge over puts in the options pits. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 1.07 for AMZN, indicating traders have bought to open 107 calls for every 100 puts during the past two weeks. This ratio ranks higher than 59% of similar readings taken within the last 12 months, meaning speculators have been scooping up calls over puts at an accelerated clip.

  • With fourth-quarter earnings scheduled for release after the close on Jan. 22, GOOG scored a price-target hike to $860 from $840 at Nomura today. The security has climbed more than 11% during the past year, yet Schaeffer's put/call open interest ratio (SOIR) for GOOG checks in at 1.07 -- confirming puts outnumber calls among options expiring in the next three months. This ratio is just 1 percentage point shy of an annual peak, meaning traders have rarely been more put-heavy toward the equity during the past year. From a contrarian perspective, an unwinding of these bearish bets could end up translating into an options-related boon for GOOG.

  • Also on tap to report quarterly earnings next week is NFLX, which was raised to "buy" from "neutral" at Janney Capital ahead of the opening bell. The stock has gained roughly 6% year-to-date, while also besting the broader S&P 500 Index (SPX) by roughly 46 percentage points during the past three months. Nevertheless, there is still plenty of bearish speculation surrounding the security. Short interest currently accounts for 27% of NFLX's available float -- or the equivalent of nearly a week's worth of pent-up buying pressure, at the equity's average pace of trading. In other words, NFLX could end up benefiting from future short-covering activity, which could help push the shares higher.

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