Analyst Update: Freeport-McMoRan, Freescale, Southwest

Analysts adjusted their ratings on Freeport-McMoRan Inc (FCX), Freescale Semiconductor Ltd (FSL), and Southwest Airlines Co (LUV)

Jan 28, 2015 at 1:42 PM
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Analysts are weighing in today on mining magnate Freeport-McMoRan Inc (NYSE:FCX), semiconductor specialist Freescale Semiconductor Ltd (NYSE:FSL), and discount airline Southwest Airlines Co (NYSE:LUV). Here's a quick look at today's brokerage notes on FCX, FSL, and LUV.

  • Shares of FCX are continuing to struggle -- down 3% today to $17.83, after touching a five year low of $17.65. The stock received price target cuts from no fewer than seven brokerage firms after reporting a drastic fourth-quarter loss last night (subscription required). Brean and BB&T both downgraded Freeport McMoRan Inc to "hold" from "buy," while Nomura and BMO both slashed their price targets by $5, to $30 and $23, respectively. Not surprisingly, sentiment in the options pits is nearing a bearish climax, with FCX's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.09 reading higher than 97% of all similar readings taken over the past year. Looking elsewhere, there's plenty of room for additional downgrades, as 75% of covering analysts rating the stock a "buy" or better, with no "sell" recommendations to be found.

  • On the other hand, FSL is enjoying an 18.4% gain this afternoon to flirt with $31.20 -- and earlier notched a record high of $33.54 -- after releasing an impressive fourth-quarter earnings report last night. In response, at least 12 brokerage firms have raised their price targets on the stock, including a $10 hike from Needham to $45, which also raised its rating to "strong buy" from "buy," and an $8 increase from J.P. Morgan Securities to $29, which reiterated its "neutral" rating. However, Freescale Semiconductor Ltd bears could be spooked, with over 19% of the equity's available float sold short, which would take eight sessions for short sellers to cover, at average daily trading volumes. What's more, FSL's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.39 sits in the 67th percentile of its annual range, showing a preference for puts over calls over the past two weeks. Traders were paying above-average prices for their short-term bets ahead of earnings, with FSL's Schaeffer's Volatility Index (SVI) of 57% reading higher than 65% of all similar annual readings.

  • LUV has added 2.4% to trade at $46.98, and reached an all-time high of $47.08, after Credit Suisse raised its price target to $62 from $48 and upgraded its rating to "outperform" from "neutral." The upbeat attention is well-deserved, as LUV has advanced a staggering 128% over the past 52 weeks. However, sentiment in Southwest Airlines Co's options pits is still bearish, with its 50-day ISE/CBOE/PHLX put/call volume ratio of 0.31 reading higher than four-fifths of all comparable annual readings. An unwinding of pessimism amongst options traders could result in additional tailwinds for the soaring stock.

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