Morgan Stanley Thinks this Blue Chip Stock Will Bounce

The chart looks bullish for UTX

Jun 15, 2018 at 9:11 AM
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United Technologies Corporation (NYSE:UTX) is trading slightly lower before the open despite a bull note out of Morgan Stanley. An analyst there resumed coverage on the Dow component with an "overweight" rating and $160 price target, well above yesterday's close of $126.94. A closer look at the charts suggests this bullish call on UTX stock may have some substance.

Shares of the aerospace giant have recently been consolidating just below their year-to-date breakeven mark, but are holding above the $123-126 area. This region is home to a 10% retreat from the equity's January record high and contains the 200-day moving average. It also acted as resistance in the second half of 2017. So all in all, UTX's chart is suggesting technical support could be in place for the stock.

utx stock price

As for the sentiment picture on the blue chip, most other analysts share Morgan Stanley's upbeat outlook. Nine of the 12 in coverage say the security is a buy, and the average 12-month price target is $147.63. A number of options traders are also bullish on United Technologies, since peak open interest sits at the August 125 call, and almost all of these contracts were bought to open.

For anyone considering speculating on UTX with options, now is seemingly a good time to do it. The stock has a Schaeffer's Volatility Index (SVI) of 15%, ranking in just the 16th annual percentile, revealing unusually low volatility expectations priced into short-term options.


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