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Fifth Third Jumps on Upgrade

Sentiment is largely bullish among analysts toward FITB

by 9/6/2011 2:30:33 PM
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In the early hours of trading today, Nomura lifted its rating on Fifth Third Bancorp (FITB - 9.78) to "buy" from "neutral."

This positive note is shared by most of the other analysts following FITB. According to Zacks, 13 out of 23 analysts consider it worthy of a "buy" or better rating, 12 of which are "strong buy" recommendations.

Furthermore, Thomson Reuters places the consensus 12-month price target on the equity at $15.38, representing a considerable premium of 60% to Friday's close of $9.62. This bullish attitude among analysts could leave FITB susceptible to downgrades and/or price-target cuts, should the shares not live up to expectations.

Short interest for FITB has jumped significantly -- up nearly 39% over the past month. Yet, these bearish bets account for just 1.39% of the security's float, representing a rather meager supply of sideline cash. In other words, relatively few traders are betting on the stock to decline.

However, options players appear to be bearish toward FITB, as evidenced by the stock's 10-day put/call volume ratio of 2.92 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio arrives in the 95th percentile of its annual range -- just five percentage points from a pessimistic peak -- signaling that traders on these exchanges have rarely purchased bearish bets over bullish at a faster pace during the past year.

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