Schaeffer's Trading Floor Blog

Analyst Update: Broadcom, Dunkin, and Deckers Outdoor

Analysts adjusted their positions on BRCM, DNKN, and DECK

by 11/26/2012 11:43 AM
Stocks quoted in this article:

As U.S. markets slip into the red on fiscal-cliff anxieties, here is a quick update on today's latest brokerage notes, including changes for global semiconductor concern Broadcom Corporation (NASDAQ:BRCM 31.96), coffee and doughnuts specialists Dunkin Brands Group Inc (NASDAQ:DNKN 30.88), and footwear designer Deckers Outdoor Corp (NASDAQ:DECK 34.58).

  • Analysts at Benchmark Capital weighed in on the semiconductor sector this morning, lifting its view on the group to "overweight" from "market weight," while upgrading BRCM to "buy" from "hold." Even though the stock has only gained 8.6% in 2012, sentiment remains firmly bullish toward BRCM. There are 33 "buy" or better endorsements, versus four "holds," and zero "sell" suggestions. Elsewhere, the Schaeffer's put/call open interest ratio (SOIR) of 0.52 confirms that calls nearly double puts among options slated to expire within three months. This ratio ranks one percentage point from an annual low, suggesting short-term options players have rarely been more call-heavy during the past year.

  • Moving on, DNKN is up about 1% today after UBS initiated coverage with a "buy" rating, which is in accord with half of the 16 analysts following the stock. Should DNKN garner more optimistic attention, short traders could continue to hit the bricks. During the most recent reporting period, short interest dropped 15.6%, but still accounts for nearly 10% of the security's available float. Furthermore, it would take more than six sessions for all of these bearish bets to unwind, which could result in a contrarian boon for the shares.

  • Lastly, a report by Bloomberg News suggested that DECK could be an attractive target for acquisition due to its 56.2% year-to-date deficit. The article even goes as far to say that the California-based company has "the cheapest valuation of any U.S. footwear and accessories maker," which only adds to the possibility of a takeover bid. Despite this news, Wedbush hiked its price target for DECK to $40 from $38, while keeping its "outperform" rating. This target is in line with the consensus 12-month price target of $40.07, which is a 21% premium to Friday's closing price of $33.08. On a relative-strength basis, DECK has lagged the S&P 500 Index (SPX) by 33 percentage points during the last three months, and has gathered eight lukewarm "holds" among 13 analysts, compared to five "strong buys."

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