Analyst Update: Cliffs Natural, Buffalo Wild Wings, DryShips

Analysts offered their two cents on CLF, BWLD, and DRYS

Oct 28, 2014 at 12:50 PM
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U.S. stocks are cautiously higher at midday, as Wall Street weighs a mixed bag of economic data and awaits the start of the Federal Open Market Committee's (FOMC) two-day policy meeting. Among equities attracting the attention of analysts are mining issue Cliffs Natural Resources Inc (NYSE:CLF), fast-casual restaurateur Buffalo Wild Wings (NASDAQ:BWLD), and dry bulk shipping concern DryShips Inc. (NASDAQ:DRYS).

  • CLF is the biggest percentage gainer on the Big Board thus far -- and was temporarily halted earlier -- up 18% at $10.90. The stock is soaring after Cliffs Natural Resources Inc reported stronger-than-anticipated quarterly earnings, and assured shareholders it has "more than enough liquidity." Furthermore, CLF is shaking off a price-target cut to $13 from $15 at RBC, which also reiterated its "sector perform" rating. It looks like short sellers could be hitting the bricks, as more than half of the stock's float is dedicated to short interest. In addition, short-term options traders could be dumping their bearish bets. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.70 stands higher than three-quarters of all other readings from the past year, suggesting near-term speculators were more put-heavy than usual heading into earnings.

  • BWLD is among the best Nasdaq performers, up 12.1% at $150.01, thanks to its own earnings beat. As a result, Morgan Stanley lifted its price target to $141 from $138, and reiterated its "equal weight" assessment, while Baird hiked its price target by $20 to $180, and upgraded BWLD to "outperform." (Buckingham Research, on the other hand, trimmed its price target by $1 to $113, and underscored a chilly "underperform" opinion.) Most analysts are already in the bulls' corner when it comes to BWLD, as the stock boasts 10 "buy" or better endorsements, compared to eight lukewarm "holds." Short-term options players, meanwhile, are more put-biased than usual, as the stock's SOIR of 1.66 sits just 11 percentage points from a 12-month acme. Likewise, short interest grew nearly 33% during the past two reporting periods, and now accounts for close to 12% of BWLD's total available float.

  • Finally, DRYS is up 3.3% at $1.59, after Imperial Capital performed an about-face, upgrading the stock to "outperform" from "underperform," and lifting its price target to $1.90 from $1.40. Nevertheless, DryShips Inc. has surrendered nearly two-thirds of its value in 2014, with recent rebound attempts rejected by its 20-day moving average. It's no surprise, then, to find Wall Street bearishly biased toward DRYS, which sports a SOIR of 0.66 -- above 98% of all other readings from the past year. Plus, short interest nearly doubled during the past two reporting periods, and Imperial Capital is now the lone brokerage firm not harboring a "hold" or worse opinion.

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