Schaeffer's Trading Floor Blog

Analyst Update: Alcoa Inc, Monster Beverage Corp, and Zillow Inc

Analysts adjusted their ratings on AA, MNST, and Z

by 7/29/2014 2:21 PM
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Analysts are weighing in today on aluminum giant Alcoa Inc (NYSE:AA), energy drink brand Monster Beverage Corp (NASDAQ:MNST), and online real estate resource Zillow Inc (NASDAQ:Z). Here's a quick look at today's brokerage notes on AA, MNST, and Z .

  • AA is up 0.5% to trade at $17.10, after receiving a $3 price-target hike to $20 at Goldman Sachs (which also reiterated its "buy" rating). The shares have been in rally mode for a while, more than doubling in value year-over-year. If this continues, other brokerage firms could follow Goldman's lead, as eight out of 15 covering analysts still consider the stock a "hold" or worse, and Alcoa Inc's consensus 12-month price target of $15.13 stands at a discount to the current price. A round of upgrades and/or price-target hikes could give the equity a lift.

  • MNST has tacked on 0.7% to hover near $65.43, despite seeing its rating downgraded to "neutral" from "buy," and its price target slashed to $73 from $80, at UBS. On a long-term basis, the shares are down roughly 3.5% in 2014. Consequently, this morning's bearish note could be just the tip of the iceberg, as eight out of 10 covering analysts still give Monster Beverage Corp a "strong buy" endorsement, versus just one "hold" and one "strong sell." Plus, the stock's consensus 12-month price target of $77.92 stands in territory not explored for two years. Looking ahead, the company is tentatively slated to step into the earnings confessional next week.

  • Z -- which will also report earnings next week, the evening of Tuesday, Aug. 5 -- has shed 4.7% to trade at $152.78, paring all of yesterday's acquisition-induced gains. Still, the shares remain up nearly 87% year-to-date. Zillow Inc benefited from a pair of bullish brokerage notes yesterday, and Benchmark doubled down on its optimistic stance today by raising its price target even further, to $185. That's a lot higher than Z's average 12-month price target of $126.54, which represents a significant discount to current trading levels.

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Stocks On the Move: Corning Incorporated, Oshkosh Corporation, and Pharmacyclics, Inc.

GLW, OSK, and PCYC are moving sharply in Tuesday's trading

by 7/29/2014 2:05 PM
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U.S. stocks are marginally higher this afternoon, with solid gains for DuPont (NYSE:DD) and Merck & Co., Inc. (NYSE:MRK) propping up the Dow. Among the names making notable moves are LCD specialist Corning Incorporated (NYSE:GLW), defense firm Oshkosh Corporation (NYSE:OSK), and biopharmaceutical firm Pharmacyclics, Inc. (NASDAQ:PCYC). Here's a quick look at how GLW, OSK, and PCYC are faring on the charts today.

  • GLW is down 9.8% at $19.90 this afternoon, as the Gorilla Glass producer's second-quarter results -- and freshly cut full-year growth forecast -- have disappointed traders. As a result of today's bearish gap, shares of Corning Incorporated have broken below support at their 50-day moving average. GLW could be vulnerable to analyst downgrades in the short term, as six firms rate the stock a "strong buy."

  • OSK is also feeling the post-earnings pain, after the defense company fell short of fiscal third-quarter profit expectations and downwardly revised its full-year guidance. Oshkosh Corporation shares have tumbled 13.8% to trade at $45.83, completely erasing their year-to-date gains (the stock is now down 9% for 2014). Today's news has already triggered one price-target cut for OSK, with J.P. Morgan Securities lowering its forecast to $57 from $65. The stock's average 12-month price target stands at $62.69, so additional negative notes could be forthcoming.

  • On the positive end of the spectrum, PCYC has popped 12.6% to trade at $122.12 after the Food and Drug Administration (FDA) approved additional uses for the company's Imbruvica drug. High hopes for the leukemia treatment also led Leerink Swann to upgrade Pharmacyclics, Inc. to "outperform" from "market perform," and raise its price target on the stock to $142 from $102. With 12.2% of PCYC's float dedicated to short interest, it seems likely that some of the weaker bearish hands are getting squeezed out by today's rally.

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Earnings on Deck: Twitter Inc, Garmin Ltd., and SodaStream International Ltd

Taking a closer look at TWTR, GRMN, and SODA ahead of their earnings results

by 7/29/2014 11:26 AM
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U.S. markets are trading higher today, thanks in part to a round of well-received corporate earnings reports. After tonight's close, quarterly results from microblogging site Twitter Inc (NYSE:TWTR) will hit the Street, while reports from navigation concern Garmin Ltd. (NASDAQ:GRMN) and at-home beverage issue SodaStream International Ltd (NASDAQ:SODA) are due ahead of tomorrow's open. Here's a quick look at TWTR, GRMN, and SODA as earnings approach.

  • In the two times TWTR has reported earnings since going public last fall, the company has exceeded analysts' bottom-line estimates each time. However, the stock's post-earnings price action hasn't translated, with the shares averaging a single-session loss of 16.4%, which widens to 19.5% going out one week. Another slump in the wake of its quarterly report could have the brokerage bunch re-evaluating their tune on Twitter Inc, which could pressure the shares lower. Roughly 29% of covering analysts maintain a "strong buy" rating toward a stock that's shed about 40% this year, while the average 12-month price target of $42.94 sits at a 12.4% premium to the stock's current perch at $38.20.

  • Over the past eight quarters, GRMN has bested consensus profit estimates six times, resulting in an average one-week post-earnings gain of 1.6% for the stock. This positive price action only highlights the equity's withstanding technical tenacity, with the shares up around 53% year-over-year to trade at $56.98. Should the equity once again benefit from a well-received earnings report, a round of upgrades and/or price-target hikes could help propel GRMN even further north. At present, no fewer than 70% of covering analysts rate GRMN a "hold" or "strong sell," while the consensus 12-month price target of $59.51 represents a slim 4.4% premium to present trading levels. In fact, although J.P. Morgan Securities raised its price target for Garmin Ltd. by $1 to $51 overnight, it still sits at a discount to the stock's current price.

  • Finally, SODA -- which is down 39% year-to-date at $30.11, despite last Thursday's gap higher -- has been a historic underperformer in the wake of its quarterly results, shedding an average of 0.7% in the session after reporting. Given the equity's dismal technical showing in 2014, short interest accounts for a lofty 31.2% of the stock's available float, and would take more than six sessions to cover, at SODA's average daily pace of trading. For SodaStream International Ltd's second quarter, analysts are calling for a profit of 31 cents per share -- a 29-cent decline over what the company earned one year ago.

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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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