Schaeffer's Trading Floor Blog

Analyst Update: Goldman Sachs, MasterCard, and Level 3 Communications

Analysts adjusted their positions on GS, MA, and LVLT

by 1/9/2013 10:46 AM
Stocks quoted in this article:

Markets are trading in positive territory this morning, as Wall Street appears optimistic about corporate earnings season, following Alcoa Inc.'s (NYSE:AA) well-received fourth-quarter report. Here's a quick update on some of the latest brokerage notes, including adjustments for investment banking firm Goldman Sachs Group, Inc. (NYSE:GS - 133.99), global payments business MasterCard Inc (NYSE:MA - 525.64), and telecom concern Level 3 Communications, Inc. (NYSE:LVLT - 23.57).

  • GS is making headlines today, as the financial giant was named part of a group of banks that could agree to a $1.5 billion settlement with Uncle Sam regarding faulty foreclosure claims. Meanwhile, GS vows to become more transparent -- at the request of its investors -- saying it will now report money-market mutual funds values on a daily basis, rather than the required monthly basis. In other news, Barclays weighed in on the stock, lifting its price target by $10 to $155. This newly adjusted target sits well above the average 12-month price target of $133.46, which is actually a discount to GS' current trading level. As additional target hikes are not out of the question for the equity, neutral-minded analysts could join the bulls' camp, especially if the shares amplify their year-over-year ascent of 41.5%. Currently GS counts eight "buy" or better endorsements, versus 13 middling "holds," and one "strong sell" suggestion.

  • Goldman Sachs' brokerage arm upgraded its stance on MA to "buy" from "neutral" this morning. Investors applauded the note and hoisted the stock to an all-time best of $527.16. MA has been quite a standout on the charts over the past year, gaining 52% since last January. But skepticism is mounting in the options space, which could ignite a contrarian tailwind if the shares extend their record-setting rally. MA has racked up a 10-day put/call volume ratio of 1.21 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), signaling traders have bought to open 121 puts for every 100 calls during the past two weeks. Plus, the Schaeffer's put/call open interest ratio (SOIR) of 1.60 confirms puts outnumber calls among options slated to expire within three months. This ratio ranks 1 percentage point from an annual high, suggesting short-term options players have rarely been more put-heavy during the past year.

  • Lastly LVLT was slapped with a downgrade today, as analysts at D.A. Davidson lowered their rating to "neutral" from "buy." Technically speaking, the shares have tacked on 33% over the past 52 weeks, outpacing the broader S&P 500 Index (SPX) by 21 percentage points throughout the past 40 sessions. But perhaps a turnaround is in the cards for LVLT, as the security is off some 3.7% this morning. What's more, LVLT's Relative Strength Index (RSI) checks in at a lofty 75 -- which resides in overbought territory.

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