Analyst Downgrades: Norfolk Southern, Google, Yahoo!

Analysts downwardly revised their ratings on Norfolk Southern Corp. (NSC), Google Inc (GOOGL), and Yahoo! Inc. (YHOO)

by Karee Venema

Published on Apr 14, 2015 at 9:25 AM
Updated on Jun 29, 2020 at 11:19 AM

Analysts are weighing in on freight railway operator Norfolk Southern Corp. (NYSE:NSC), as well as search engine specialists Google Inc (NASDAQ:GOOGL) and Yahoo! Inc. (NASDAQ:YHOO). Here's a quick roundup of today's bearish brokerage notes on NSC, GOOGL, and YHOO.

  • NSC is bracing for a nearly 6% drop out of the gate, after the company's weaker-than-expected first-quarter forecast was met with a round of bearish brokerage attention. Included in the bunch were Barclays, UBS, and BofA-Merrill Lynch, which all reduced their price targets to $105 -- roughly in line with last night's close at $104.87. Since notching an all-time high of $117.64 in late November, NSC has been churning between $100 and $112. If today's projected price move pans out, the equity could surrender its foothold atop the lower end of this range, as well as its 60-week moving average -- a trendline that has ushered the security higher for more than two years. On the sentiment front, speculators have shown a distinct preference for near-the-money puts over calls in the April-dated series, which expires at this Friday's close. Norfolk Southern Corp.'s front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) is currently docked at a top-heavy 9.35.

  • Credit Suisse weighed in on a number of notable Internet names, and for GOOGL, this meant a price-target cut to $683 from $700 -- although the brokerage firm said the stock remained a "top pick" among large caps. On the charts, the security has spent 2015 bouncing between $491 and $583, and closed last night at $548.64, 3.4% above its year-to-date breakeven line. In the options pits, speculators have been initiating long calls over puts at a near-annual-high clip in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Google Inc's 50-day call/put volume ratio of 1.81 ranks higher than 90% of all similar readings taken in the past year.

  • YHOO, meanwhile, saw its price target reduced to $66 from $69 at Credit Suisse, which still represents expected upside of 47.4% to Monday's settlement at $44.77 -- and rests in territory not charted since August 2000. Technically speaking, YHOO has shed about 15% since hitting a 14-year high of $52.62 in mid-November, with the shares' most recent rally attempt contained by their 80-day moving average. However, options traders have been switching sides in recent weeks. Although long puts had been popular, YHOO's 10-day ISE/CBOE/PHLX call/put volume ratio currently stands at 4.70 -- in the 88th annual percentile. In other words, calls have been bought to open over puts at a faster-than-usual clip.

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