Analyst Upgrades: Rite Aid, Expedia, Reynolds American

Analysts upwardly revised their ratings on Rite Aid Corporation (RAD), Expedia Inc (EXPE), and Reynolds American, Inc. (RAI)

Josh Selway

May 27, 2015 at 9:10 AM

RAD
EXPE
LONG
RAI
LO

Analysts are weighing in today on drugstore chain Rite Aid Corporation (NYSE:RAD), online travel concern Expedia Inc (NASDAQ:EXPE), and tobacco giant Reynolds American, Inc. (NYSE:RAI). Here's a quick roundup of today's bullish brokerage notes on RAD, EXPE, and RAI.

With its close at $8.63 yesterday, RAD is sitting on a 14.8% lead in 2015. The shares are poised to add to their gains, pointed 1% higher in electronic trading, after Mizuho initiated coverage on the stock with a "buy" rating and $10 price target -- marking 15-year-high territory. Option traders are likely pleased, as call buying has been popular in the equity's options pits. During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Rite Aid Corporation has accumulated a call/put volume ratio of 19.54, which lands in the 90th percentile of its annual range.

Ahead of the open, EXPE is modestly higher, thanks to a $10 price-target hike to $120 at Cantor -- representing expected upside of 8.5% to Tuesday's finish at $110.64, and territory never before explored. So far in 2015, Expedia Inc has gained almost 30%, while touching a record high of $115 last Friday, after the company sold its stake in eLong, Inc. (NASDAQ:LONG). Still, EXPE's Schaeffer's put/call volume ratio (SOIR) stands at 2.04, meaning put open interest more than doubles call open interest when looking at contracts that expire in the next three months. Additionally, this reading is higher than all others from the past year, revealing the stock's short-term speculators to be more put-skewed than normal.

Cowen and Company raised its outlook on RAI to "outperform," naming the stock its top pick in the U.S. tobacco industry. This comes after the company's planned purchase of fellow cigarette maker Lorillard Inc. (NYSE:LO) won antitrust approval from the Federal Trade Commission. RAI is pointed 2% higher in pre-market trading, putting it in position to potentially take out the all-time high of $77.68 it hit on May 15. There's potential for a short-covering rally to propel Reynolds American, Inc. higher, too. Short sellers control over 18 million shares, which would take almost six sessions to repurchase, at the equity's average daily trading pace. RAI settled at $75.43 yesterday.

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