Schaeffer's Trading Floor Blog

Analyst Update: Google Inc (GOOG),, and Sodastream International

Analysts shifted their outlooks on GOOG, CRM, and SODA

by 1/23/2013 10:47 AM
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The Dow and S&P 500 Index are exploring new multi-year highs again today, fueled by well-received earnings in the tech sector and hopes for an extension to the debt ceiling. In equities news, three names turning higher after receiving votes of confidence on Wall Street are: Internet kingpin Google Inc (NASDAQ:GOOG - 746.66), enterprise software provider, inc. (NYSE:CRM - 171.00), and home-carbonation developer Sodastream International Ltd (NASDAQ:SODA - 51.08).

  • Analysts have turned their attention to GOOG today, following the tech giant's mixed turn in the earnings confessional last night (per-share results topped expectations, while revenue fell short). A number of firms -- including Raymond James, Piper Jaffray, J.P. Morgan Securities, Morgan Stanley, Barclays, and more -- boosted their price target on the stock this morning. Two outliers, however -- Pivotal Research and BMO -- lowered their respective outlooks. The 12-month average price target, according to Thomson Reuters, now stands at $801.42, or 7.3% above the stock's current price. Meanwhile, the overall opinion on GOOG is notably rosy. Of the 30 analysts following the stock, 25 have named it a "buy" or better, leaving five "hold" ratings and not a single "sell" vote.

  • Elsewhere, CRM scored a positive mention at Lazard, which upped its price target to $210 from $200 while keeping its "buy" rating for the shares in place. The stock has appreciated more than 42% in the last 12 weeks, and just recently enjoyed a test of support at its 40-day moving average. In recent sessions, however, bearish speculation has been on the rise for CRM, as evidenced by its 10-day put/call volume ratio of 1.83. In other words, option speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 183 puts for every 100 calls. This ratio is higher than all but 4% of the past year's readings, suggesting pessimism among the options crowd is approaching an annual peak. Similarly, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.51 indicates that puts in the front three-months' series outweigh calls by a margin of roughly 3-to-2. What's more, this SOIR reading is higher than 89% of the past year's readings.

  • Lastly, Oppenheimer lifted its price target on SODA to $60 from $55 and reiterated its "outperform" rating. The stock has gained more than 2.5% today, lifting its 2013 returns to nearly 14%. In the last two months, in fact, SODA has outperformed the S&P 500 Index (SPX), in terms of relative strength, by more than 30 percentage points. Short sellers remain a prominent faction, however, as 42% of the stock's float has been sold short. At the equity's average daily volume, it would take more than six trading days to cover all existing shorted positions. A short-covering trend may have already started, however, as the amount of short interest has dropped nearly 18% during the past month. As these bears continue to head toward the exits, SODA could enjoy a contrarian tailwind.

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