Herbalife, Shake Shack, Applied Optoelectronics Upgraded

Herbalife, Shake Shack, and Applied Optoelectronics stocks are on analysts' bullish radar today

Karee Venema
May 5, 2017 at 9:29 AM
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Analysts are weighing in on nutritional supplements specialist Herbalife Ltd. (NYSE:HLF), fast-food name Shake Shack Inc (NYSE:SHAK), and fiber optics stock Applied Optoelectronics Inc (NASDAQ:AAOI). Here's a quick roundup of today's bullish brokerage notes on shares of HLF, SHAK, and AAOI.

Herbalife Earnings Reaction Likely to Catch Ackman Off Guard

HLF stock is trading 7.1% higher ahead of the bell, after Herbalife's earnings beat and upwardly revised guidance. Also helping boost the shares is a price-target hike to $105 at Pivotal Research -- uncharted territory -- which cited the "massive beat." SunTrust Robinson also raised its price target to $67 from $58. Today's projected price move would be more of the same for HLF shares, which have surged 29.2% year-to-date, based on last night's close at $62.20. Nevertheless, the stock is heavily shorted -- most notably by activity investor Bill Ackman -- with more than half of HLF's float represented by these bearish bets, or 44.9 times the equity's average pace of trading. This translates into ample sideline cash available to help fuel Herbalife Ltd.'s fire.

Shake Shack Stock Upgraded to "Buy" After Earnings

Shake Shack's unexpected drop in same-store sales wasn't enough to spook Buckingham Research -- which upgraded the stock to "buy" from "neutral" -- saying SHAK stock had found a floor. Nevertheless, Barclays, Cowen, and Jefferies all lowered their price targets on SHAK. After closing last night at $33.12, shares of Shake Shack Inc are up 2.8% in electronic trading, on track to pare their 7.5% year-to-date deficit. SHAK options traders were hoping for a post-earnings slump, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PLX), the stock's 10-day put/call volume ratio of 2.08 ranks 6 percentage points from a 52-week peak. In other words, puts have been bought to open over calls at a near-annual-high clip.

Cowen Calls Applied Optoelectronics Stock Underappreciated

AAOI stock saw its price target raised to $94 from $75 at Cowen, which called the shares "significantly underappreciated and undervalued," and said it sees a "highly compelling risk-reward" scenario. Raymond James also increased its price target on AAOI to $100 from $74, with both prices sitting well above the stock's March 27 record peak of $60.19. These bullish brokerage notes follow Applied Optoelectronics Inc's in-line earnings report and better-than-expected current-quarter revenue forecast. Against this backdrop, AAOI shares are set to jump 9.6% at the open, after settling last night at $46.81. Longer term, AAOI stock has nearly doubled in value year-to-date, thanks in part to a mid-April bull gap. Not surprisingly, most analysts are already upbeat toward, AAII, with five of six maintaining a "strong buy" recommendation.


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