Schaeffer's Trading Floor Blog

Analyst Downgrades: Boston Scientific Corporation, GlaxoSmithKline plc (ADR), and Wal-Mart Stores, Inc.

Analysts downwardly revised their ratings on BSX, GSK, and WMT

by 7/29/2014 9:20 AM
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Analysts are weighing in today on pharmaceutical firms Boston Scientific Corporation (NYSE:BSX) and GlaxoSmithKline plc (ADR) (NYSE:GSK), and big-box retailer Wal-Mart Stores, Inc. (NYSE:WMT). Here's a quick roundup of today's bearish brokerage notes.

  • Sterne Agee initiated coverage on BSX with a "neutral" rating. Taking a step back, analysts are divided over the stock, which has received 12 "buy" or better opinions, against 10 "holds." Meanwhile, on the charts, Boston Scientific Corporation has been in a holding pattern, largely churning between $12.50 and $14 since early January, but still managing a nearly 8% year-to-date gain to trade at $12.97.

  • Following new developments related to the conduct of two representatives in China, GSK was hit with four bearish brokerage notes, including a downgrade to "sell" from "buy" at Liberum, and price-target cuts at Barclays, Berenberg, and Morgan Stanley. This follows last Wednesday morning's weaker-than-expected second-quarter earnings report and reduced full-year outlook, which has led to a 9% dive during the subsequent four sessions. As a result of this recent sell-off, GlaxoSmithKline plc (ADR) -- currently perched at $48.20 -- is staring at a year-to-date deficit of nearly 10%. Short sellers have taken notice of the stock's struggles. GSK's short-interest ratio sits at 5.1, meaning it would take over a week for short sellers to buy back all of their bearish bets, at the equity's average daily trading volume.

  • Finally, WMT saw its rating cut to "neutral" from "buy" at Goldman Sachs earlier. Given the stock's 2014 deficit of roughly 4%, it's no surprise that the Street would temper its outlook on the retailer. Additional downgrades could be on the way, too, should Wal-Mart Stores, Inc. shares continue their recent pattern of lower highs and lows. After all, of the 19 analysts covering the stock, seven still maintain "strong buy" ratings, with another two doling out "buy" recommendations. On Monday, WMT closed at $75.71.

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Buzz Stocks: Citigroup Inc, Targacept, Inc., Herbalife Ltd., and General Motors Company

Stocks in the news today include C, TRGT, HLF, and GM

by 7/29/2014 9:17 AM
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U.S. stock futures are pointed higher this morning, catching a lift from well-received blue-chip earnings. In company news, today's stocks to watch include banking giant Citigroup Inc (NYSE:C), biotech name Targacept, Inc. (NASDAQ:TRGT), nutritional supplements specialist Herbalife Ltd. (NYSE:HLF), and automaker General Motors Company (NYSE:GM).

  • Citigroup Inc (NYSE:C) is reportedly looking to hire up to 100 bankers in its Asia-Pacific commercial banking business. The move is "not about adding hundreds of new clients in the region, but winning more wallet share from commercial banking clients who have cross-border business by providing them with more loans, FX, cash and trade products," said division head Ashish Bajaj. (Economic Times)

  • Targacept, Inc. (NASDAQ:TRGT) is canceling its TC-5214 overactive bladder program after disappointing results from a Phase 2b trial. It's the latest in a string of clinical missteps for TRGT; in addition to strikeouts on drugs for Alzheimer's and schizophrenia, TC-5214 previously proved ineffective as a depression treatment back in 2012. (Triad Business Journal)

  • Herbalife Ltd. (NYSE:HLF) is set to open more than 12% lower following last night's second-quarter earnings miss. The stock has been particularly volatile lately, with outspoken HLF bear Bill Ackman alleging last week that Herbalife's business model is nothing more than a pyramid scheme. (Barron's)

  • Sources indicate that General Motors Company (NYSE:GM) is bumping up the launch of its lighter full-size pickups to fall 2018 -- roughly nine months ahead of schedule -- in an attempt to stay competitive with Ford Motor Company (NYSE:F). Even with the accelerated launch, GM will still be about four years behind Ford. (Economic Times)

  • On the earnings front, Pfizer Inc. (NYSE:PFE), Merck & Co., Inc. (NYSE:MRK), Sirius XM Holdings Inc. (NASDAQ:SIRI), and Talisman Energy Inc. (USA) (NYSE:TLM) were among the big names to report their latest quarterly results. (MarketWatch; Nasdaq)

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Analyst Upgrades: BlackBerry Ltd, International, Ltd. (ADR), and EMC Corporation

Analysts upwardly revised their ratings on BBRY, CTRP, and EMC

by 7/29/2014 8:52 AM
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Analysts are weighing in today on mobile phone maker BlackBerry Ltd (NASDAQ:BBRY), China-based travel website International, Ltd. (ADR) (NASDAQ:CTRP), and hardware issue EMC Corporation (NYSE:EMC). Here's a quick roundup of today's bullish brokerage notes.

  • BBRY has pulled back since hitting a year-to-date high of $11.65 earlier this month, and currently rests at $9.95. However, the shares seem to have found a floor in the $9.75 neighborhood, which emerged as support in mid-June. Against this backdrop, Wells Fargo lifted its price-target range on the cell phone firm by $1, to $9.50-$10.50, while maintaining its "market perform" rating. This is a pretty typical evaluation of BlackBerry Ltd, which has received 21 "hold" opinions from 25 covering analysts, as well as a 12-month price target of $10.04. In other words, the Street isn't expecting much upside from BBRY; should the stock add to its year-to-date gain of more than 33%, additional bullish notes could follow.

  • CTRP -- which is slated to step into the earnings confessional tomorrow afternoon -- saw its price target upped to $78 from $53 at Barclays, to go along with an "overweight" endorsement. This isn't entirely surprising, considering the equity has advanced 34.5% year-to-date, and has rallied 89% over the past year. Additional bullish brokerage notes could be on the way, too, should the shares keep trucking higher. Right now, International, Ltd.'s (ADR) consensus 12-month price target sits at $61.21 -- below Monday's closing price of $66.73.

  • Finally, EMC had its price target lifted by $1 to $33 at UBS, which also reiterated its "buy" rating on the stock. On the charts, the security has performed admirably, adding nearly 18% in 2014 -- helped by a news-induced gap higher early last week. This technical tenacity is reflected on Wall Street, where 21 out of 25 covering analysts give EMC Corporation a "buy" or better assessment, compared to four holds and not a single "sell" recommendation. Yesterday, the shares closed at $29.67.

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Stocks On the Move: Trulia Inc, El Pollo Loco Holdings Inc, and First Solar, Inc.

TRLA, LOCO, and FSLR are moving sharply in Monday's trading

by 7/28/2014 1:42 PM
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U.S. stocks are trading south of breakeven this afternoon, though they've pared the worst of their pre-market losses and are fighting back toward the breakeven line. Among the names making notable moves are real estate site Trulia Inc (NYSE:TRLA), chicken chain El Pollo Loco Holdings Inc (NASDAQ:LOCO), and alternative energy name First Solar, Inc. (NASDAQ:FSLR). Here's a quick look at how TRLA, LOCO, and FSLR are faring on the charts today.

  • TRLA has spiked 17.2% to $66.05, with traders responding to a buyout bid from Zillow, Inc. (NASDAQ:Z) that's expected to close in early 2015. Earlier in the session, TRLA tagged a new all-time high of $66.68, while the bid from Zillow values the stock at about $70.53 per share. Today's M&A news likely caught Trulia Inc bears off-guard; currently, short interest accounts for 38.6% of the stock's float, or 10.7 times its average daily trading volume.

  • Wall Street newcomer LOCO has spiked 29.6% to trade at $31.15 this afternoon, down from a record high of $32.82 earlier in the day. California-based El Pollo Loco Holdings Inc made its public trading debut last Friday, with the stock opening at $19 per share -- well above LOCO's initial public offering (IPO) price of $15 per share.

  • FSLR has jumped 3.5% to trade at $66.28, boosted by a deal to supply XSOL Co. with 100 megawatts of solar modules annually for projects in the Japanese market. Shares of First Solar, Inc. have already rallied more than 21% so far in 2014, but most analysts remain skeptical. Among 13 brokerage firms tracking FSLR, only 38% have deemed the stock worthy of a "buy" rating.

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Analyst Update: Dollar General Corp., Pitney Bowes Inc., and Travelers Companies Inc

Analysts adjusted their ratings on DG, PBI, and TRV

by 7/28/2014 1:32 PM
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Analysts are weighing in today on discount retailer Dollar General Corp. (NYSE:DG), office equipment expert Pitney Bowes Inc. (NYSE:PBI), and blue-chip insurance issue Travelers Companies Inc (NYSE:TRV). Here's a quick look at today's brokerage notes on DG, PBI, and TRV.

  • DG is getting a lift, after a pair of rivals decided to join forces. Specifically, the shares are 1.7% higher at $56.58 -- though they remain roughly 6% lower on a year-to-date basis. On the sentiment front, Dollar General Corp. was started at "hold" by Argus; however, this skepticism isn't seen in the options pits. In fact, DG's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio registers at a brow-raising 135.35 -- higher than any other reading taken in the past year, hinting at extreme optimism among traders.

  • PBI is off slightly at $26.90, despite being raised to "buy" from "hold" at Brean Capital. On a longer-term basis, the equity is an outperformer, tacking on nearly 87% since this time last year. However, short sellers aren't sold on Pitney Bowes Inc. -- specifically, 9.2% of the stock's float is sold short, which would take 12.5 sessions to buy back, at average daily trading levels. In other words, there's plenty of sideline cash available to fuel a big short-covering rally, should PBI continue to trek higher on the charts. A potential catalyst is coming up, too, with the company slated to report second-quarter earnings on Wednesday morning.

  • Finally, Dow component TRV saw its rating cut to "hold" from "buy" at Sandler O'Neill, and is currently down 1% at $91.18. With the move lower, the stock is approaching its year-to-date breakeven level, located at $90.54. However, that hasn't stopped short-term options traders from gravitating toward calls. Travelers Companies Inc's Schaeffer's put/call open interest ratio (SOIR) of 0.41 rests just 6 percentage points from an annual low, suggesting speculators have rarely preferred calls over puts more strongly, among options set to expire in the next three months.

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