Analyst Upgrades: Alcoa, Avago, Verint Systems

Analysts upwardly revised their ratings on AA, AVGO, and VRNT

Dec 4, 2014 at 9:02 AM
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Analysts are weighing in today on aluminum magnate Alcoa Inc (NYSE:AA), semiconductor firm Avago Technologies Ltd (NASDAQ:AVGO), and video surveillance expert Verint Systems Inc. (NASDAQ:VRNT). Here's a quick roundup of today's bullish brokerage notes on AA, AVGO, and VRNT.

  • Wells Fargo initiated coverage on AA with an "outperform" rating, rewarding the shares for their nearly 84% year-over-year advance. At last night's close, the stock had docked at $17.21. Nevertheless, Alcoa Inc has been met with skepticism by options traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the security's 50-day put/call volume ratio across this trio of exchanges is 0.79, which rests in the 94th percentile of its annual range. Similarly, AA's Schaeffer's put/call open interest ratio (SOIR) of 1.02 ranks just 2 percentage points from a 12-month high. A capitulation among these skeptical bettors could result in tailwinds for the shares.

  • After posting a huge fiscal fourth-quarter earnings beat last night -- and raising its first-quarter outlook -- AVGO was greeted with a round of price-target hikes at no fewer than 14 brokerage firms. The analysts at Credit Suisse are the most ambitious of the bunch, upping their target to $125 from $105, and reiterating an "outperform" rating. This revised number is 31.4% above Avago Technologies Ltd's Wednesday night perch at $95.13 -- though the shares are ready to pop 8% out of the gate, and have more than doubled in value year-over-year. By and large, the brokerage crowd is already behind the equity, which sports 15 "buy" or better ratings, versus four "holds" and not a single "sell" recommendation. However, AVGO's consensus 12-month price target of $97.09 is just a stone's throw away from present trading levels, paving the way for this morning's flurry of positive attention.

  • Finally, VRNT also beat the Street's per-share profit estimate in the earnings confessional last night. The stock subsequently received price-target hikes from FBR (to $67 from $64), Deutsche Bank (to $65 from $61), and RBC (to $66 from $60), with all three reiterating the equivalent of a "buy" opinion. On the charts, Verint Systems Inc. has tacked on roughly 42% year-to-date to trade at $60.93, and hit a record high of $61.05 on Monday. Nevertheless, the stock's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.42 ranks in the 84th percentile of its annual range, suggesting traders have bought to open puts over calls at a much faster-than-usual pace in recent months. Should these bearish bettors start hitting the exits, it could add fuel to VRNT's technical fire.


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