The Airline Stock Soaring After Analyst Upgrade

Near-term options traders haven't been more call-heavy on FTR stock this year

Managing Editor
Nov 1, 2017 at 3:22 PM
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Stocks are trading mixed this afternoon, as traders digest the latest Fed announcement. Airline concern American Airlines Group Inc (NASDAQ:AAL), biotech bluebird bio Inc (NASDAQ:BLUE), and telecom services company Frontier Communications Corp (NASDAQ:FTR) stocks are on the move. Here's a quick look at what's moving shares of AAL, BLUE, and FTR.

American Airlines Higher on J.P. Morgan Upgrade

J.P. Morgan Securities upgraded AAL stock to "overweight" from "neutral," and raised its price target to $65 from $53 -- in uncharted territory -- driving the airliner's shares up 2% to $47.66. At the same time, the analyst downgraded no fewer than four other airline stocks. American Airlines stock has rallied nearly 20% in the past year, with pullbacks contained by its 200- and 320-day moving averages. The stock could fly even higher, with Thanksgiving travel around the corner and expected to hit a record high.

Not everyone has boarded American Airlines' bullish bandwagon. Half of the 16 analysts following the stock consider it a "hold" or worse. And while short interest fell 20% in the last reporting period, it would take a week to buy back the remaining shorted AAL shares, at the stock's average daily trading volume.

Bluebird Stock Soars After Earnings

Shares of BLUE are higher this afternoon, after the firm reported stronger-than-expected third-quarter revenue. Bluebird stock is fresh off of a two-year high of $161.82, and at last check was up 6% at $148.10. Year-over-year, the biotech stock has more than tripled.

The stock's short interest has been on the decline, dropping 42% in the last two reporting periods. But with 11.22% of BLUE's float still sold short, there's more room for short covering. At the equity's average pace of trading, it would take more than five days to repurchase the remaining pessimistic positions.

Frontier Makes Nasdaq's Worst Stocks List

FTR stock is among the worst on the Nasdaq, down 24% at $9.23, and just off a record low of $8.82. The company reported lackluster quarterly earnings and cut some full-year profit metrics, fueling negative analyst attention. UBS cut its price target on Frontier stock to $13 from $15, and Raymond James cut its target to $30 from $45.

A handful of options traders are likely kicking rocks. FTR's Schaeffer's put/call open interest ratio (SOIR) of 0.34 sits at the lowest percentile of its annual range, and implies that near-term options traders have not been more call-biased in the past 52 weeks.


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