Schaeffer's Trading Floor Blog

Analyst Update: Microsoft, Yelp, and Take-Two Interactive

Analyst Update: Microsoft, Yelp, and Take-Two Interactive

by 12/12/2012 11:04 AM
Stocks quoted in this article:

U.S. equities are headed north in morning trading, as Wall Street gears up for the upcoming policy decision from the Federal Reserve. Here's a quick update on today's latest brokerage notes, including adjustments for Windows 8 and Xbox 360 inventor Microsoft Corporation (NASDAQ:MSFT - 27.32), online urban guide Yelp Inc (NYSE:YELP - 19.30), and video game designer Take-Two Interactive Software, Inc. (NASDAQ:TTWO - 13.27).

  • MSFT is up about 0.5% today following some upbeat news. The tech giant said it will increase production of its Surface tablet and make it available to more retailers by the middle of the month. Also, Standpoint Research weighed in on the blue chip, lifting its rating to "buy" from "hold." Although MSFT is sitting on modest 6% return in 2012, its sentiment makeup is noticeably positive. The brokerage bunch has handed out 20 "buy" or better endorsements, versus eight "holds" and zero "sells." Meanwhile, optimism is on the rise in the options arena. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 2.34, as calls bought to open have more than doubled puts over the past couple of weeks.

  • YELP has endured a bumpy ride since first going public in early March, turning in a 19% deficit. On a relative-strength basis, the stock has lagged the S&P 500 Index (SPX) by nearly 25 percentage points over the past three months. But the Wall Street freshman is up about 2% this morning, after Credit Suisse started coverage on the stock with an "outperform" rating. (Analysts at J.P. Morgan also initiated coverage on YELP with a lukewarm "neutral.") However, YELP might have problems maintaining this momentum, as several layers of technical resistance hover above. Namely, the shares are facing the $20-$20.50 area -- which has limited all daily closes since the beginning of November -- and their 40-day trendline, which has acted as resistance since mid-October.

  • Piper Jaffray this morning upgraded TTWO to "overweight" from "neutral," hoping the latest installment of the popular gaming series, Grand Theft Auto, will garner a similar response as Activision Blizzard, Inc.'s (NASDAQ:ATVI) newest Modern Warfare release. Citing TTWO's recent outperformance of its rivals, the brokerage firm also hiked its price target by $6 to $18. In fact, the stock has outpaced the SPX by 20 percentage points over the past 60 sessions, helping to pare its slim 2% year-to-date loss. Should this positive price action continue, a wave of short-covering could help the shares higher. Short interest jumped 10.3% over the most recent reporting period, and now makes up 26% of the equity's available float. At TTWO's average pace of trading, it would take almost eight days to buy back all of these shorted shares.


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