The Catalyst Behind Goldman's Bullish Call on Tobacco

By Emma Gilkey / September 28, 2017 / www.schaeffersresearch.com / Article Link

Analysts are weighing in on pharmaceutical products specialist Abbott Laboratories (NYSE:ABT), social media powerhouse Facebook Inc (NASDAQ:FB), and tobacco giant Philip Morris International Inc. (NYSE:PM). Here's a quick roundup of today's bullish brokerage notes on shares of ABT, FB, and PM.

FDA Approval Sparks Bullish Notes for ABT

Barclays raised its price target on ABT to $60 from $57, alongside Wells Fargo, which raised its price target to $64 from $57. These bullish notes follow last night's FDA approval of Abbott's Freestyle Libre Flash glucose monitoring system. ABT stock opened more than 4% higher this morning, setting a new record high of $54.77 out of the gate.

Amid ABT's recent rally to new highs, options players have been loading up on plunge protection. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 10-day put/call ratio of 1.01, which ranks in the 81st percentile of its annual range. This suggests puts have been purchased over calls at a faster-than-usual clip over the past couple of weeks.

Deutsche Bank Raises FB Outlook on Ad Optimism

As the social media site takes on an increasingly high-profile role in congressional Russia probes, Deutsche Bank raised its FB price target to $220 from $215, and simultaneously upped its forecast for third-quarter and full-year ad revenue growth.At last check, FB is up 0.2% at $167.93, extending this week's bounce from its 80-day moving average.

Most analysts are already quite optimistic towards Facebook shares. Among the 24 brokerage firms following FB, 23 maintain "buy" or better ratings.

Goldman Predicts Forex Tailwinds for PM

Goldman Sachs added Philip Morris to its conviction list, with a "buy" rating and a price-target hike to $135 from $133. In a note to clients, analyst Judy Hong said the U.S. dollar's recent softening against key rivals is expected to be "a modest tailwind" for PM and a number of other multinational staples companies in 2018.

PM is up 0.3% at $111.96 this morning, moving higher after a recent meet-up with its 40-week moving average. However, options traders are looking for the tobacco stock to pull back. At the ISE, CBOE, and PHLX, PM has racked up a 10-day put/call volume ratio of 2.73, which ranks in the 92nd percentile of its annual range. In other words, speculators have rarely shown a stronger preference for bearish bets over bullish.

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