Analyst Upgrades: Valeant, Abercrombie, American Eagle

Analysts upwardly revised their ratings and price targets on Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Abercrombie & Fitch Co. (NYSE:ANF), and American Eagle Outfitters (NYSE:AEO)

Aug 15, 2016 at 10:01 AM
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Analysts are weighing in on drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX), as well as retail stocks Abercrombie & Fitch Co. (NYSE:ANF) and American Eagle Outfitters (NYSE:AEO). Here's a quick roundup of today's bullish brokerage notes on VRX, ANF, and AEO.

  • Mizuho upgraded VRX to "neutral" from "underperform" and boosted its price target to $25 from $11, with the brokerage firm saying the company's "financial engineering" in the wake of last week's quarterly earnings report creates "a lower likelihood of stock collapse," and its sum-of-the-parts (SOTP) analysis makes it "challenging to recommend shorting the stock." Against this backdrop, VRX is up 6.2% out of the gate at $26.45. Longer term, shares of Valeant Pharmaceuticals Intl Inc are down 89% year-over-year, and options traders have been upping the bearish ante of late. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), VRX's 10-day put/call volume ratio of 0.99 ranks in the 82nd annual percentile.

  • Retail stocks have been in focus of late, as a number of notable names report earnings. Ahead of its own quarterly results -- due ahead of the open next Tuesday, Aug. 30 -- ANF saw its price target raised to $23 from $20 at Deutsche Bank. At last check, the stock had jumped 1.2% to trade at $22.17. Since hitting a year-to-date low of $16.49 during the late-June broad-market sell-off, the shares of ANF have tacked on more than 33%. A continued climb could shake some of the weaker bearish hands loose, too. Short interest on Abercrombie & Fitch Co. accounts for 20.6% of the available float, or 7.8 times the average daily pace of trading.

  • Deutsche Bank also chimed in on AEO, increasing its rating to "buy" from "hold" and its price target to $22 from $17. As such, the shares have jumped 1.5% to $19.22 -- fresh off a three-year high of $19.55. This is just more of the same for the retail stock that's rallied more than 45% off its mid-May lows near $13.20. Nevertheless, options traders have been scooping up long puts over calls at an accelerated clip in the weeks leading up to the company's early morning turn in the earnings confessional on Wednesday. At the ISE, CBOE, and PHLX, American Eagle Outfitters's 10-day put/call volume ratio of 7.15 ranks 4 percentage points from a 52-week peak.
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