Analyst Update: Ambarella, Cempra, Southwest Airlines

Analysts adjusted their ratings on Ambarella Inc (NASDAQ:AMBA), Cempra Inc (NASDAQ:CEMP), and Southwest Airlines Co (NYSE:LUV)

Jun 23, 2015 at 11:37 AM
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Analysts are weighing in today on semiconductor firm Ambarella Inc (NASDAQ:AMBA), drugmaker Cempra Inc (NASDAQ:CEMP), and transportation issue Southwest Airlines Co (NYSE:LUV). Here's a quick roundup of today's brokerage notes on AMBA, CEMP, and LUV.

  • AMBA is bouncing back from yesterday's bloody session, up 8.6% at $102.43. Boosting the stock is a bullish nod from CNBC's Jim Cramer, who called it "too inexpensive to ignore." Similarly, FBN Securities called yesterday's pullback a "buying opportunity" due to the company's "multiple growth drivers in many attractive markets." On the charts, Ambarella Inc has been an all-star, more than doubling in value in 2015, and tripling year-over-year. However, levels of skepticism remain high. For instance, 28.1% of AMBA's float is sold short, representing four days' worth of pent-up buying demand, at typical volumes. Similarly, traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.16 puts for every call in the last 10 days -- a ratio that ranks in the 90th annual percentile. Should shorts and option bears begin to hit the exits, it could further energize AMBA's ascent.

  • CEMP has jumped 5.6% to $38.48, following a price-target hike to $57 from $44 at Stifel. The big gains are business as usual for the shares, which have added roughly 64% in 2015 -- and more than tripled in value year-over-year. The brokerage crowd has already recognized Cempra Inc's technical exploits, with all nine covering analysts doling out "strong buy" endorsements. However, additional price-target hikes may be in the cards, as CEMP's consensus 12-month price target of $40.60 is just 5.5% above current trading levels. Should that happen, CEMP could make a run at its mid-March all-time high of $41.63.

  • Morgan Stanley initiated coverage on LUV with an "underweight" assessment and a $37 price target. The note has had a negative effect on the stock, which is off 0.3% at $34.69. Longer term, it's been a brutal year for Southwest Airlines Co, which has surrendered 18% in 2015. As such, bearish options activity has been running hot at the ISE, CBOE, and PHLX. During the last 10 weeks, traders have bought to open 0.55 puts for every call -- a ratio that ranks just 3 percentage points from a 52-week high.

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