Analyst Upgrades: Zynga, El Pollo Loco, and Splunk

Analysts issued bullish brokerage notes on ZNGA, LOCO, and SPLK

Nov 7, 2014 at 9:15 AM
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Analysts are upwardly revising their ratings on gaming guru Zynga Inc (NASDAQ:ZNGA), quick-service restaurateur El Pollo Loco Holdings Inc (NASDAQ:LOCO), and software specialist Splunk Inc (NASDAQ:SPLK). Here's a quick look at today's bullish brokerage notes on ZNGA, LOCO, and SPLK.

  • ZNGA is ready to rally more than 8% out of the gate, after the company's better-than-expected third-quarter revenue was met with a price-target hike to $3.44 from $3.42 at Credit Suisse, and an upgrade to "buy" from "hold" at Needham. (Janney, meanwhile, followed in the recent footsteps of Benchmark, and cut its target price to $2.50 from $3.25, while maintaining its "neutral" rating). It's been a tough year for Zynga Inc, which has shed nearly 38% since the start of 2014 to trade at $2.36 -- yet option traders have kept the faith. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 50-day call/put volume ratio of 18.37 ranks in the 95th percentile of its annual range. Simply stated, calls have been bought to open over puts with more rapidity just 5% of the time within the past year.

  • Morgan Stanley raised its price target on LOCO to $23 from $22, although reiterated its "underweight" rating, after the company said its third-quarter revenue beat the consensus estimate. Since going public in late July, shares of LOCO have nearly doubled, yet sentiment outside of the options pits is tilted toward the skeptical side. For starters, short interest accounts for more than one-third of the stock's available float. Additionally, 80% of covering analysts maintain a "hold" or "strong sell" suggestion, while the average 12-month price target of $28.33 stands at a discount to Thursday's closing price of $37.30. Should the equity maintain its momentum, an unwinding of bearish bets and/or a round of upgrades and/or price-target hikes could help fuel El Pollo Loco Holdings Inc's fire.

  • SPLK is pointed higher ahead of the bell, after Evercore upped its outlook to "buy" from "hold" and boosted its price target to $75 from $61, representing expected upside of 15.7% to last night's close at $64.83. Although the equity is down 5.6% year-to-date, SPLK has made significant strides since bottoming out at a mid-October low of $49.61, thanks to a lift from its 10-day moving average -- tacking on almost 31% in that time frame. A continued rise may shake some of the weaker bearish hands loose, which could translate into tailwinds for the shares. At the ISE, CBOE, and PHLX, the stock's 10-day put/call volume ratio of 1.32 ranks just 8 percentage points from an annual bearish peak. Echoing this is SPLK's Schaeffer's put/call open interest ratio (SOIR) of 1.03, which ranks higher than 78% of similar readings taken in the past year. Simply stated, short-term speculators are more put-skewed than usual toward Splunk Inc.
 

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