Schaeffer's Trading Floor Blog

Analyst Downgrades: Bed Bath & Beyond Inc., Tidewater Inc., and Assured Guaranty Ltd.

Analysts downwardly revised their ratings on BBBY, TDW, and AGO

by 7/7/2014 9:45 AM
Stocks quoted in this article:

Analysts are weighing in today on home goods retailer Bed Bath & Beyond Inc. (NASDAQ:BBBY), offshore vessel provider Tidewater Inc. (NYSE:TDW), and financial firm Assured Guaranty Ltd. (NYSE:AGO). Here's a quick roundup of today's bearish brokerage notes.

  • BofA-Merrill Lynch downgraded BBBY to "underperform" from "neutral," just hours before the retailer -- hosting its annual shareholder meeting today -- unveiled a new $2 billion share repurchase program, to be completed during fiscal 2016. On the charts, BBBY -- which kicked off the session with a loss of 0.4% at $59.08 -- has surrendered more than 26% in 2014, and underperformed the broader S&P 500 Index (SPX) by 18 percentage points during the past three months. Nevertheless, there's still plenty of room on the bearish bandwagon. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day call/put volume ratio of 1.72 rests just 8 percentage points from a 12-month high. In other words, option buyers have picked up Bed Bath & Beyond Inc. calls over puts at a much faster-than-usual clip during the past few weeks.

  • TDW was downgraded to "underweight" from "overweight" at Morgan Stanley ahead of the bell. In addition, the brokerage firm cut its price target on the shares to $50 from $59. The bearish analyst attention is relatively rare for Tidewater Inc., which boasts eight "strong buys" and one "buy" rating, with not a single "sell" in sight. Plus, the average 12-month price target stands at $60.90, representing a premium of 15.3% to TDW's current price of $52.80. Should the shares steepen their year-to-date slump of more than 11%, additional downgrades and/or price-target cuts could exacerbate selling pressure on the security.

  • Finally, UBS cut its price target on AGO by $3 to $28. On the charts, Assured Guaranty Ltd. has underperformed the SPX by nearly 15 percentage points during the past two months, and kicked off today's session with a 0.2% loss at $23.16. In light of the stock's recent slide, its 14-day Relative Strength Index (RSI) has fallen to 29 -- in oversold territory, suggesting a rebound could be in the cards. In the options pits, short-term speculators remain confident. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.73 stands in the bottom third of its annual range, implying that near-term traders are more call-heavy than usual right now.

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