Analyst Upgrades: Aerie Pharma, Netflix, Reynolds American

Analysts upwardly revised their ratings on Aerie Pharmaceuticals Inc (NASDAQ:AERI), Netflix, Inc. (NASDAQ:NFLX), and Reynolds American, Inc. (NYSE:RAI)

Jun 16, 2015 at 9:24 AM
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Analysts are weighing in on drugmaker Aerie Pharmaceuticals Inc (NASDAQ:AERI), streaming giant Netflix, Inc. (NASDAQ:NFLX), and tobacco enthusiast Reynolds American, Inc. (NYSE:RAI). Here's a quick roundup of today's bullish brokerage notes on AERI, NFLX, and RAI.

  • AERI is eyeing a 44% pop out of the gate, after the Food and Drug Administration (FDA) granted the company permission to change the main late-stage trial goal of its eye treatment, Rhopressa. What's more, the stock received a trio of bullish brokerage notes, including an upgrade to "buy" from "hold" at Needham and a price-target hike to $30 from $15 at Cantor. Elsewhere, RBC raised its price target to $31 from $27, explaining, "This is likely the best chance at success Rhopressa has going forward." Today's projected price move is much needed for a security that's down 54.5% year-to-date, mostly due to a massive late-April Rhopressa-related bear gap. However, option traders have shown a distinct preference for long calls over puts of late, and at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), they have bought to open 17.48 calls for every put in the last two weeks. On Monday, Aerie Pharmaceuticals Inc settled at $13.27.

  • Despite yesterday's reports that NFLX could have some fresh competition on its hands, Needham raised its price target on the shares to $780 from $600, saying it had not priced China into its estimates. Not only does this new price target represent an optimistic 19.3% premium to last night's close at $654.02, but it sits in territory yet to be charted. Record highs are nothing new for the shares, which have been on a tear in 2015 -- and topped out at an all-time peak of $692.79 last Wednesday amid chatter of a stock split. Speculative traders, meanwhile, are more put-skewed than usual toward options expiring in three months or less. Specifically, Netflix, Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 1.30 ranks in the 79th annual percentile. In the front-month series -- which expires at this Friday's close -- peak put open interest can be found at the June 550 strike.

  • Echoing the recent outlook by Cowen and Company, Goldman Sachs reinstated its "conviction buy" rating on RAI and set a price target of $81, after the company completed its acquisition of Lorillard Inc. (NYSE:LO) last Friday. The stock has put in a solid showing on the charts over the past 52 weeks, up 20.3%. More recently, RAI has been consolidating atop its rising 120-day moving average since hitting a mid-May record peak of $77.68, and closed Monday at $72.60. A shift in sentiment among option traders could help Reynolds American, Inc. resume its quest for all-time highs. In fact, the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 10.34 sits higher than 96% of all similar readings taken in the past year, meaning puts have been bought to open over calls at a near-annual-high clip.
 

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