Schaeffer's Trading Floor Blog

Analyst Downgrades: Citigroup Inc, Bank of America Corp, and Lululemon Athletica inc.

Analysts downwardly revised their ratings on C, BAC, and LULU

by 3/24/2014 9:33 AM
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Analysts are weighing in today on prominent financial firms Citigroup Inc (NYSE:C) and Bank of America Corp (NYSE:BAC), and yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU). Here's a quick roundup of today's bearish brokerage notes.

  • C -- which maintains a year-to-date loss of nearly 4% at $50.08 -- received a price-target cut to $53 from $55 at Atlantic Equities this morning. In the options pits, meanwhile, short-term speculators are seemingly bullish toward the stock. Schaeffer's put/call open interest ratio (SOIR) for Citigroup Inc comes in at 0.47, which ranks lower than 85% of comparable readings taken within the last 12 months. In other words, short-term C option traders are more call-biased than usual right now. Should the equity continue to lag on the charts, some of these bullish bettors may hit the exits, which could create more pressure on the shares.

  • Atlantic Equities also weighed in on BAC this morning, dropping its price target to $18.50 from $20, and downgrading the shares to "neutral" from "overweight." Over the past six months, Bank of America Corp shares have advanced more than 24% to perch at $17.52, so it comes as no surprise the stock sports a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.81, which ranks 7 percentage points from a 12-month peak. This means option players have bought to open calls over puts at a near-annual-high pace during the past two weeks.

  • LULU -- which reports fourth-quarter earnings Thursday morning -- saw its price target decreased to $48 from $50, and to $54 from $55, at Mizuho and Wedbush, respectively, today. Since the turn of the year, Lululemon Athletica inc. has shed 19.3% to trade at $47.83, yet activity in the stock's options pits has been bullishly skewed of late. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.04 ranks in the 80th annual percentile, demonstrating a higher-than-usual demand for long calls, relative to long puts, during the past two weeks. However, short interest represents nearly seven sessions' worth of pent-up buying demand, at LULU's average pace of trading, suggesting some of those calls may have been purchased as hedges.

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