Analyst Update: eBay Inc, Petroleo Brasileiro Petrobras SA (ADR), and CSX Corporation

Analysts are weighing in on EBAY, PBR, and CSX

by Karee Venema

Published on Oct 16, 2014 at 1:42 PM
Updated on Apr 20, 2015 at 5:10 PM

Stocks are back in the red after making an earlier attempt to move above breakeven. Among equities in focus, online auctioneer eBay Inc (NASDAQ:EBAY), oil-and-gas issue Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), and freight firm CSX Corporation (NYSE:CSX) have all attracted the attention of analysts.

  • EBAY plunged to a nearly two-year low of $46.34 earlier, after the company's third-quarter earnings report and downwardly revised fourth-quarter forecast -- which includes the highly watched holiday season -- was followed by no fewer than 21 bearish brokerage notes. RBC, for example, cut its price target on the stock by $7 to $55 and downgraded its outlook to "sector perform" from "outperform," saying as competition grows in the marketplace arena, EBAY's business is "clearly deteriorating." Year-to-date, shares of eBay Inc have surrendered roughly 13% to trade at $47.58, and should the security continue to struggle, an additional round of downgrades and/or price-target cuts could be on the horizon. At present, 14 analysts have levied a "buy" or better rating toward the stock, compared to 14 "holds" and not a single "sell." Plus, the consensus 12-month price target of $60.86 stands at a 28% premium to current trading levels, and sits in territory yet to be charted.

  • It's been a volatile run for PBR of late -- as uncertainty swirls around Brazil's upcoming presidential election. In today's session, the security has plunged 4.4% to $14.87, after Societe Generale cut its rating on Petroleo Brasileiro Petrobras SA (ADR) to "hold" from "buy," and reduced its price target on the equity's American Depositary Shares (ADR) to $18 from $20. Short-term speculators have shown a preference for calls over puts toward a stock that's up 7.6% year-to-date. Specifically, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.53 ranks lower than 83% of similar readings taken in the past year.

  • CSX is on pace to notch an 11% weekly win, thanks in part to well-received M&A speculation and quarterly earnings results. Today, the shares are up 0.9% at $33.28, after news the freight operator is still in the market for locomotives was met with a round of upbeat analyst notes. Morgan Stanley offered up the most optimistic outlook, raising its price target to $39 from $37, while underscoring its "overweight" rating. Credit Suisse, meanwhile, boosted its target price to by $5 to $38 and upgraded its outlook to "outperform" from "neutral," citing a strong pricing forecast. Elsewhere, activist investor Bill Ackman weighed in on the proposed merger between CSX Corporation and Canadian Pacific Railway Limited (USA) (NYSE:CP), saying "there are some rail combinations that are pro-competitive as opposed to anti-competititve [sic]." In the options pits, sentiment has tilted toward the skeptical side. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.33 ranks in the 86th annual percentile, while CSX's SOIR of 0.86 ranks just 8 percentage points below a 52-week peak.

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