Analyst Downgrades: Norfolk Southern Corporation, Google Inc., and Yahoo! Inc.

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 Apr 20, 2015 at 5:32 PM

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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