Schaeffer's Trading Floor Blog

Analyst Upgrades: Dick's Sporting Goods, VeriFone Systems, and Yum! Brands

Analysts upwardly revised their ratings on DKS, PAY, and YUM

by 3/12/2013 8:52 AM
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Analysts are weighing in today on athletic equipment retailer Dick's Sporting Goods Inc (NYSE:DKS - 45.11), electronic payment provider VeriFone Systems Inc (NYSE:PAY - 20.46) , and quick-service restaurateur Yum! Brands, Inc. (NYSE:YUM - 67.84). Here's a quick roundup of today's bullish brokerage notes.

  • Despite reporting weaker-than-expected quarterly earnings on Monday morning, DKS was upgraded to "outperform" from "market perform" at BMO -- and added to Goldman Sachs' "conviction buy" list -- this morning. However, the latter also cut its price target to $53 from $57, while Northland issued its own downward price-target adjustment. The stock sits almost 1% below breakeven in 2013, yet near-term calls easily outnumber puts, as evidenced by DKS' Schaeffer's put/call open interest ratio (SOIR) of 0.65. In fact, this ratio ranks lower than all other readings taken within the last 12 months, confirming short-term traders are more call-heavy now than at any other time during the past year.

  • Although PAY has surrendered about 30% so far this year, the stock was raised to "positive" from "neutral," and received a price-target hike to $25 from $20 at Susquehanna ahead of the opening bell. This upbeat attention comes on the heels of the company announcing the departure of CEO Douglas Bergeron yesterday. Meanwhile, bearish speculation has been running high toward PAY. Short interest spiked by more than 8% during the last two reporting periods, and these pessimistic bets now represent over 9% of the equity's available float. It would take almost a week to buy back these shorted shares, at the security's average pace of trading.

  • Up nearly 6% in pre-market activity, YUM scored price-target boosts at Jefferies (to $60 from $54) and Susquehanna (to $67 from $62) today, after the company reported a smaller-than-expected drop in China-based sales for the first quarter. The equity has tacked on just over 2% year-to-date, which could explain the put-skewed activity in the options pits. YUM's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.91 ranks higher than 78% of similar annual readings, indicating traders have been picking up puts over calls at a faster-than-usual pace.

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