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Archer Daniels Midland Falls on Lukewarm Analyst Coverage

Argus started coverage of ADM with a 'hold'

by 10/17/2011 11:45:16 AM
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Argus initiated coverage on Archer Daniels Midland Company (ADM - 27.24) this morning with a tepid 'hold' rating.

Overall, the brokerage bunch is split when it comes to ADM. Zacks tallies six "hold" or worse recommendations, versus four "buy" or better endorsements.

What's more, Thomson Reuters places the consensus 12-month price target for ADM at $34.92, representing a 25.8% premium to Friday's close of $27.75.

Elsewhere on Wall Street, short interest for ADM fell by 12.7% during the most recent reporting period. These bearish bets now account for just 1.9% of the security's float, representing a rather scant supply of sideline cash.

Yet, options traders seem to have adopted a pessimistic stance on ADM, as evidenced by the stock's 10-day put/call volume ratio of 2.08 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This put-heavy ratio ranks above 96% of all other readings taken during the past 12 months, suggesting that traders on these exchanges have initiated bearish bets over bullish at a faster clip than usual over the past two weeks.

Likewise, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.18 indicates that puts outnumber calls among options slated to expire within three months. This ratio lands just two percentage points from a pessimistic peak, implying that near-term option traders have rarely been more negatively aligned toward ADM.

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