Schaeffer's Trading Floor Blog

Analyst Update: Green Mountain Coffee Roasters, Transocean, and Brinker International

Analysts adjusted their positions on GMCR, RIG, and EAT

by 11/20/2012 12:24 PM
Stocks quoted in this article:

While stocks are wavering around breakeven this afternoon, here is quick update of today's latest brokerage notes, including adjustments for coffee specialist Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR - 29.26), offshore drilling outfit Transocean LTD (NYSE:RIG - 45.18), and restaurant owner/operator Brinker International, Inc. (NYSE:EAT - 29.41).

  • Following GMCR's appointment of a former Coca-Cola Company exec as its new CEO, at least two brokerage firms applauded the move. Namely, SunTrust Robinson Humphrey lifted its rating to "buy" from "neutral," and Williams Capital raised its rating to "buy" from "hold." GMCR has jumped more than 6% so far today, and is chipping away at its 39% year-to-date deficit. Elsewhere on the Street, the Schaeffer's put/call open interest ratio (SOIR) for the stock sits at 0.79, signaling that calls outnumber puts among options expiring within three months. But this recent tendency toward calls may not be as upbeat as it seems. During the past month, short interest climbed 11%, and currently makes up 39% of the security's float. Consequently, a portion of this call volume could be due to hedging activity by the shorts.

  • RIG was slapped with a downbeat adjustment this morning, as Susquehanna dropped its price target by $1 to $60. This is still a rather optimistic target for RIG, which hasn't traded at this level since July 2011. Technically speaking, the shares are up 18% in 2012, but faltering just below breakeven for the past 52 weeks. And there could be additional target cuts on the horizon, should the stock continue this pattern. The average 12-month price target of $60.47 represents a 33% premium to Monday's closing price of $45.46.

  • Finally, Zacks downgraded EAT to "neutral" from "outperform," citing "sluggish casual dining demand and low consumer spending amid an uncertain economic environment." Although the shares have added a healthy 9.5% since the beginning of the year, pessimism is on the rise in the options arena. During the past month, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) bought to open 9.87 puts for every call. Meanwhile, the 10-day put/call ratio climbed to 48.57, meaning that options players have bought to open over 4,800 puts for every 100 calls on EAT in the last two weeks.

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