Analyst Update: AT&T Inc., Shopify Inc, and Sonic Corporation

Analysts are weighing in on AT&T Inc. (T), Shopify Inc (SHOP), and Sonic Corporation (SONC)

by Alex Eppstein

Published on Sep 28, 2016 at 2:26 PM

Analysts are weighing in on telecom titan AT&T Inc. (NYSE:T), commerce platform Shopify Inc (NYSE:SHOP), and fast-food stock Sonic Corporation (NASDAQ:SONC). Here's a quick roundup of today's brokerage notes on T, SHOP, and SONC.

  • T is down 1.9% at $40.69, after UBS lowered its rating to "neutral" from "buy," and cut its price target to $43 from $46, citing "increased competitive intensity in wireless and incremental costs associated with AT&T's DTV Now rollout." Longer-term, however, the stock's year-to-date gains are over 18%. Meanwhile, in the options arena, open interest is very much tilted in the direction of puts when focusing on short-term strikes. Specifically, AT&T Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 1.87 sits in the put-skewed 88th percentile of its annual range.
  • Morgan Stanley lowered its rating on SHOP to "equal weight" from "overweight," but bumped its price target by $10 to $47. "SHOP's merchant count has decelerated over the past few years and we expect merchant growth will continue to moderate as the platform grows," wrote the brokerage firm in a note. Accordingly, the shares are down 3.1% at $42.51, trimming their year-to-date lead to a still-robust 64.8%. Last week, in fact, Shopify Inc stock touched a record high of $45.20. In spite of today's downgrade, the fact remains that SHOP shares are well-loved on Wall Street, with 11 of 13 analysts maintaining "buy" or better opinions -- and not a single "sell" rating to be found.
  • SONC is getting hammered, as analysts react to the burger joint's bleak fourth-quarter earnings estimate. Specifically, the company said it's been hit by "lower-than-expected traffic, reflecting lower consumer spending in restaurants and continued aggressive competitive activity." As alluded to, the Street is panning the preliminary results, as no fewer than seven analysts have cut their price targets. For example, Piper Jaffray slashed its price target to $30 from $42, speculating, "Deflationary price trends in the grocery channel are likely pressuring quick-service restaurant operators such as Sonic." Sonic Corporation shares were last seen down 7.4% at $25.41, and have fallen on hard times since hitting a record high of $36.34 in early April. Meanwhile, options traders have been gambling on extended losses recently. SONC's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 12.86 is just 1 percentage point from a 12-month peak.
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