Analyst Upgrades: Facebook, NVIDIA, and Red Hat

Analysts upwardly revised their ratings on FB, NVDA, and RHT

by Alex Eppstein

Published on Dec 19, 2014 at 9:28 AM
Updated on Jul 2, 2020 at 9:26 AM

Analysts are weighing in today on social network Facebook Inc (NASDAQ:FB), chipmaker NVIDIA Corporation (NASDAQ:NVDA), and open source software firm Red Hat Inc (NYSE:RHT). Here's a quick roundup of today's bullish brokerage notes on FB, NVDA, and RHT.

  • Citigroup boosted its price target on FB to $91 from $86, and underscored a "buy" endorsement. The positive analyst note appears to be warranted, considering the stock's 43.5% year-to-date advance to rest at $78.40. Brokerage firms are already largely in Facebook Inc's corner, with 31 of 33 sporting "buy" or better ratings, versus just two "holds" and not a single "sell" recommendation. However, short-term option traders have rarely been as put-skewed as they are now, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.84, which ranks in the 96th annual percentile. While some of these open put positions may have been at the hands of shareholders protecting paper profits, a capitulation among "vanilla" bears could spell additional upside.

  • NVDA saw its rating boosted to "neutral" from "underperform," and its price target raised to $22 from $19, at BofA-Merrill Lynch. This bullish brokerage note is also well-deserved, given the stock's 26.2% year-to-date gain to trade at $20.22. However, not everyone on the Street is sold on NVIDIA Corporation. Seventeen out of 26 covering brokerage firms designate the shares a "hold" or worse, and their consensus 12-month price target of $21.28 is just a chip-shot away. Additionally, 7.6% of NVDA's float is sold short, which would take 8.4 days to buy back, at typical daily trading levels. A shift in sentiment -- in the form of additional upgrades and/or short-covering activity -- could spur the equity to additional gains.

  • Following last night's third-quarter earnings beat, RHT is seeing a rush of positive analyst attention. No fewer than 17 covering brokerage firms upped their price targets on the stock, with Oppenheimer leading the way -- boosting its target to $80 from $74, to go along with an "outperform" opinion. Red Hat Inc is benefiting big-time from these developments, sitting roughly 10% higher ahead of the bell. In other words, the shares -- which landed at $61.50 last night -- will likely build on their 25.5% year-over-year lead today, and explore decade-plus highs. Over the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), RHT has racked up a put/call volume ratio of 0.52 -- in the 81st percentile of its annual range, suggesting a healthier-than-usual appetite for bearish bets over bullish. However, given the stock's technical tenacity, some of these bets may have been initiated by shareholders as downside insurance.

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