Schaeffer's Trading Floor Blog

Analyst Upgrades: Netflix, SanDisk, and Western Digital

Analysts upwardly revised their ratings on NFLX, SNDK, and WDC

by 1/24/2013 9:17 AM
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Analysts are weighing in today on streaming video service Netflix, Inc. (NASDAQ:NFLX - 103.26), data storage provider SanDisk Corporation (NASDAQ:SNDK - 47.65), and hard drive manufacturer Western Digital Corp. (NASDAQ:WDC - 47.07). Here's a quick roundup of today's bullish brokerage notes.

  • Up nearly 40% in pre-market action, NFLX was flooded with bullish attention this morning, after reporting better-than-expected fourth-quarter earnings post-close yesterday. Specifically, the stock scored upgrades at Raymond James (to "market perform" from "underperform") and J.P. Morgan Securities (to "overweight" from "neutral"), while Northland Capital, Macquarie, Wedbush, Cantor Fitzgerald, Lazard, BMO, Janney Capital, and Barclays also raised their respective ratings/price targets. However, there is still plenty of bearish speculation surrounding NFLX, as Credit Suisse lowered its rating this morning to "neutral" from "outperform." Elsewhere, short interest accounts for 27% of the equity's float -- or the equivalent of almost a week's worth of pent-up buying pressure, at the stock's average pace of trading.

  • SNDK -- which exceeded analysts' quarterly earnings projections after yesterday's close (but disappointed on the revenue front) -- was lifted to "buy" from "hold" at Needham ahead of the open. (Meanwhile, Credit Suisse, Piper Jaffray, Bernstein, and Raymond James upwardly revised their price-targets.) The stock has trekked roughly 10% higher so far this year, which may have been attracting call buyers to the options pits. In fact, SNDK's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio checks in at 2.23. In other words, calls bought to open have more than doubled puts during the last four weeks.

  • WDC is also in the earnings spotlight today, after revealing a fiscal second-quarter profit that topped consensus bottom-line estimates. In response, FBN Securities boosted the security's price target to $50 from $40, while analysts at Stifel Nicolaus, Lazard, Needham Research, and Evercore Partners followed suit. (BMO, however, trimmed its price target.) The equity sits on a year-to-date advance of nearly 11%, yet near-term puts still outstrip calls, as evidenced by WDC's Schaeffer's put/call open interest ratio (SOIR) of 1.26. This ratio is just 2 percentage points shy of an annual high, meaning short-term traders have rarely been more put-heavy toward the stock during the past year.

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