Schaeffer's Trading Floor Blog

Analyst Downgrades: Renren Inc, Tim Hortons Inc. (USA), and Wolverine World Wide, Inc.

Analysts downwardly revised their ratings on RENN, THI, and WWW

by 8/26/2014 9:21 AM
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Analysts are weighing in today on China-based networking platform Renren Inc (NYSE:RENN), coffee concern Tim Hortons Inc. (USA) (NYSE:THI), and performance footwear designer Wolverine World Wide, Inc. (NYSE:WWW). Here's a quick roundup of today's bearish brokerage notes on RENN, THI, and WWW.

  • RENN posted a second-quarter earnings beat last night, but revealed steep year-over-year declines in profit and revenue. On the charts, the stock has been lackluster, as well, down more than 5% year-over-year to trade at $3.27. As such, Barclays reduced its price target on Renren Inc to $3 from $3.30. Other brokerage firms are even more bearish, as the equity's consensus 12-month price target checks in at $2.78 -- 2 cents from RENN's 52-week low of $2.76 from early December.

  • THI is up more than 9% ahead of the open, after Burger King Worldwide Inc (NYSE:BKW) announced it will buy the Canada-based coffee chain. This only adds to Tim Hortons Inc.'s (USA) technical strength, as the shares are up roughly 28% year-to-date to trade at $74.72. Meanwhile, during the overnight hours, Desjardins cut its rating to "hold" from "buy," and Longbow downwardly revised its opinion to "neutral" from "buy" -- though Canaccord Genuity, CIBC, TD Securities, and Desjardins all raised their price targets on the equity. Heading into today, 100% of the brokerage firms covering THI had given the stock a "buy" or better recommendation.

  • Finally, Macquarie initiated coverage on WWW with a "neutral" rating and $29 price target. The relatively tepid note isn't surprising, given that the stock has shed nearly 21% in 2014 to rest at $26.89. Elsewhere, short sellers have been having a field day with Wolverine World Wide, Inc., as 11.2% of the equity's float is sold short, which would take more than two weeks to buy back, at average daily trading levels.

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Buzz Stocks: Twitter Inc, Netflix, Inc., Burger King Worldwide Inc, and Tim Hortons Inc. (USA)

Stocks in the news today include TWTR, NFLX, BKW, and THI

by 8/26/2014 9:08 AM
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U.S. stock futures are on the upswing again this morning, with the S&P 500 Index (SPX) set to revisit the 2,000 level. In company news, today's stocks to watch include microblogging platform Twitter Inc (NYSE:TWTR), streaming entertainment provider Netflix, Inc. (NASDAQ:NFLX), fast-food giant Burger King Worldwide Inc (NYSE:BKW), and Canadian coffee-and-doughnut chain Tim Hortons Inc. (USA) (NYSE:THI).

  • Twitter Inc (NYSE:TWTR) has expanded its Twitter Ads network to 12 new countries across Central and Eastern Europe, with the company citing "tremendous growth in this region over the last year." In a statement, TWTR noted that the newly expanded roster of nations means Twitter Ads are now available in 35 countries across Europe, the Middle East, and Africa. (TechCrunch)

  • Netflix, Inc. (NASDAQ:NFLX) was completely shut out at last night's Emmy awards, with its flagship show House of Cards losing out to the defunct AMC Networks Inc (NASDAQ:AMCX) juggernaut Breaking Bad in key drama categories. However, awards season wasn't a complete wash for NFLX. Earlier this month, at the Creative Arts Emmys, Orange Is the New Black regular Uzo Aduba took home a statue for Outstanding Guest Actress in a Comedy. (Mashable; People)

  • One day after reports of a major fast-food merger sent both stocks soaring, Burger King Worldwide Inc (NYSE:BKW) is now officially moving forward with its acquisition of Tim Hortons Inc. (USA) (NYSE:THI). The deal will allow BKW to relocate its headquarters to Canada in a tax inversion, though sources indicate the U.S. will still receive its fair share of taxes from the newly formed burger-and-doughnuts behemoth. Helping to fund the deal is Dairy Queen tycoon Warren Buffett, who's putting $3 billion in preferred equity financing toward the takeover. (CNBC)

  • Apple Inc. (NASDAQ:AAPL) is offering free battery replacements for some of the iPhone 5 units sold between September 2012 and January 2013. According to AAPL, the repairs are being offered because some of the batteries in question may "suddenly experience shorter battery life or need to be charged more frequently." (CNN Money)

  • On the earnings front, Best Buy Co Inc (NYSE:BBY), DSW Inc. (NYSE:DSW), and Trina Solar Limited (ADR) (NYSE:TSL) will be in focus today after reporting their latest quarterly results. (MarketWatch)

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Analyst Upgrades: GT Advanced Technologies Inc, LinkedIn Corp, and SunEdison Inc

Analysts upwardly revised their ratings on GTAT, LNKD, and SUNE

by 8/26/2014 8:52 AM
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Analysts are weighing in today on LED specialist GT Advanced Technologies Inc (NASDAQ:GTAT), professional networking name LinkedIn Corp (NYSE:LNKD), and solar issue SunEdison Inc (NYSE:SUNE). Here's a quick roundup of today's bullish brokerage notes on GTAT, LNKD, and SUNE.

  • GTAT has been a technical standout, more than doubling in value this year to rest at $17.93. In fact, during the last month, the shares have outperformed the broader S&P 500 Index (SPX) by nearly 29 percentage points. This on-chart strength may be what prompted Piper Jaffray to resume coverage of GT Advanced Technologies Inc with an "overweight" rating. A short-covering rally could be forthcoming, as well, as 35.5% of the stock's float is dedicated to short interest. At GTAT's average daily trading volume, it would take more than a week to cover these bearish bets.

  • LNKD has been on a tear recently, besting the SPX by close to 38 percentage points during the past 60 sessions. In fact, at $222.48, the shares are sitting nearly 64% higher from their annual low of $136.02, touched in early May. Elsewhere, First Analysis initiated coverage of LinkedIn Corp, handing out an "overweight" rating, along with a $280 price target. On the options front, however, sentiment is tilted in a bearish direction. The stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.14 ranks just 11 percentage points from an annual acme. A capitulation among these option bears could provide LNKD with a tailwind.

  • Finally, SUNE is up 72.5% in 2014 to trade at $22.51, ushered higher by its ascending 20-week moving average and recently boosted by a better-than-expected second-quarter earnings report. Accordingly, FBR upped its price target on the shares to $28 from $20, and affirmed its "outperform" opinion. This is business as usual for SunEdison Inc, as 80% of covering analysts have doled out "buy" or better recommendations, and the equity's consensus 12-month price target of $26.79 stands in territory not charted for more than five years.

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Options Check-Up: Zynga Inc, Splunk Inc, and QUALCOMM, Inc.

Analyzing recent option activity on ZNGA, SPLK, and QCOM

by 8/26/2014 7:59 AM
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Among the stocks attracting attention from options traders lately are social gaming issue Zynga Inc (NASDAQ:ZNGA), software concern Splunk Inc (NASDAQ:SPLK), and digital communications specialist QUALCOMM, Inc. (NASDAQ:QCOM). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on ZNGA, SPLK, and QCOM.

  • Since topping out at a multi-year high of $5.89 in mid-March, shares of ZNGA have shed roughly 49% to trade at $3.01. In the stock's options pits, traders have been initiating long calls relative to puts at an annual-high clip in recent weeks. Specifically, the equity's 10-day call/put volume ratio of 45.75 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than all other readings taken in the last 52 weeks. Zynga Inc's front-month options are currently pricing in low volatility expectations, as evidenced by the security's Schaeffer's Volatility Index (SVI) of 47%, which sits lower than 90% of similar readings taken in the past year.

  • Option players have grown increasing bullish toward SPLK, as the company prepares to step into the earnings confessional after Thursday's close. At the ISE, CBOE, and PHLX, for example, the stock's 10-day call/put volume ratio of 9.48 ranks in the 99th percentile of its annual range. Simply stated, calls have been bought to open over puts with more rapidity just 1% of the time within the past year. Given SPLK's impending earnings announcement, premium on the equity's front-month options is pretty pricey at the moment. In fact, Splunk Inc's SVI of 59% ranks higher than 67% of comparable readings taken over the past 12 months. On the charts, SPLK finished Monday's session 0.6% lower at $43.68, extending its year-to-date decline to 36.4%.

  • QCOM also finished in the red on Monday -- despite the broad market's bullish bias -- ending the session 0.3% lower at $76.59. Longer term, the shares are up a slight 3.2% year-to-date. Traders have taken the optimistic route of late, and over the past 10 sessions, QUALCOMM, Inc. has racked up a call/put volume ratio of 3.76 on the ISE, CBOE, and PHLX -- which ranks just 9 percentage points from an annual bullish peak. Those looking to bet on QCOM's short-term trajectory are able to do so at a relative bargain -- the security's SVI of 12% checks in lower than 98% of similar readings taken in the past 12 months.

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Stocks On the Move: Digital Ally, Inc., GrubHub Inc, and Qihoo 360 Technology Co Ltd

DGLY, GRUB, and QIHU are moving sharply in Monday's trading

by 8/25/2014 1:44 PM
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U.S. stocks have retreated from their early highs -- which featured a brief, first-ever move above 2,000 for the S&P 500 Index (SPX) -- but M&A enthusiasm still has the major equity indexes on positive ground this afternoon. Among the names making notable moves are surveillance specialist Digital Ally, Inc. (NASDAQ:DGLY), food delivery firm GrubHub Inc (NYSE:GRUB), and anti-virus issue Qihoo 360 Technology Co Ltd (NYSE:QIHU). Here's a quick look at how DGLY, GRUB, and QIHU are faring on the charts today.

  • Shares of DGLY have spiked more than 59% today to trade at $12.64, bringing the stock back into positive territory on a year-to-date basis (by more than 37%). Digital Ally, Inc. is a maker of wearable body cameras, and -- like its sector peer TASER International, Inc. (NASDAQ:TASR) -- the stock has experienced a surge of interest following the tragic events in Ferguson, Missouri. It's a rare bit of attention for DGLY, which typically flies under Wall Street's radar. The stock isn't even optionable, and there's not a single analyst rating on the name. However, bears have placed a few bets on DGLY, as 11.2% of the equity's float is dedicated to short interest.

  • GRUB has plummeted 7.6% to trade at $39.53, after the company unveiled plans to sell 10 million shares in a follow-on public offering. Today's steep pullback appears to have bottomed out in the $38-$39 area -- which previously marked a few tops for GrubHub Inc shares, but may now be emerging as support. Most analysts have high hopes for the Wall Street newcomer, which just made its public trading debut back in April. Among the four brokerage firms following GRUB, all of them maintain "buy" or better ratings.

  • QIHU has tanked 9.1% to $92.59, with traders unimpressed by last night's second-quarter earnings report -- which revealed shrinking margins for the Beijing-based tech firm. Analysts at Barclays brushed off the troubling news, upping their price target to $145 from $139. Most brokerage firms have slightly lower expectations for Qihoo 360 Technology Co Ltd, which sports an average 12-month price target of $134.78. However, with nine analysts out of 10 holding a "strong buy" rating on QIHU, the stock could be vulnerable to downgrades if the post-earnings sell-off persists.

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