Brocade Communications Systems, Inc. (BRCD - 4.43) was the recipient of a price-target increase this morning, as UBS upped its target to $4.35 from $3.75.
Many of the other analysts interested in BRCD hold a slightly higher view of the stock. Thomson Reuters places the consensus 12-month price target at $4.95, which represents a 15% premium to Wednesday's close of $4.30.
Yet, Zacks is reporting that 71% of the brokerages following the telecom company give it a "hold" or worse recommendation.
There looks to be an overwhelming inclination for calls among the options crowd, as evidenced by the stock's 10-day call/put volume ratio of 137.55 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio arrives at an optimistic peak, signaling that traders on these exchanges have never made bullish bets over bearish at a faster clip during the past year.
Plus, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.15 indicates that calls heavily outnumber puts among options slated to expire within three months. Furthermore, this ratio ranks one percentage point away from an annual optimistic peak, indicating that short-term options traders have been more bullishly aligned only 1% of the time during the past year.
Elsewhere, short interest on the equity jumped 27.6% during the past month, suggesting that the recent increase in call buying could be related to hedging activity by the shorts. However, the bearish bandwagon is far from crowded, as it would take just under two sessions to buy back all of these pessimistic positions, at BRCD's average pace of trading.
Recent XIV Action May Bode Well for Bulls
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