Schaeffer's Trading Floor Blog

Analyst Downgrades: Costco Wholesale Corporation, Humana Inc, and Staples, Inc.

Analysts downwardly revised their ratings on COST, HUM, and SPLS

by 3/7/2014 9:27 AM
Stocks quoted in this article:

Analysts are weighing in today on grocery chain Costco Wholesale Corporation (NASDAQ:COST), health insurance name Humana Inc (NYSE:HUM), and office supplies retailer Staples, Inc. (NASDAQ:SPLS). Here's a quick roundup of today's bearish brokerage notes.

  • COST -- which yesterday posted a bigger-than-expected profit decline for the fiscal second quarter -- received a price-target cut to $104 from $105 at Jefferies this morning. Heading into the quarterly event, short-term option players were extremely call-biased on Costco Wholesale Corporation, which has shed 4.8% year-to-date to trade at $113.26. In fact, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.55 ranks lower than all comparable readings from the past year, demonstrating annual-high levels of call activity among short-term speculators.

  • Though HUM has gained 15.3% over the past month to perch at $111.47, Jefferies downgraded the stock to "hold" from "buy" this morning. Elsewhere, investors have upped the bearish ante on Humana Inc, as well. Short interest climbed 21.2% over the last two reporting periods, bringing the total number of shares sold short to more than 8 million. This is equivalent to a healthy 5.2% of the equity's available float.

  • SPLS shares plummeted 15.3% in yesterday's session to $11.35 -- their lowest settlement since January 2013 -- following the company's disappointing fourth-quarter earnings report. Subsequently, UBS and J.P. Morgan Securities both slashed their price targets to $12 from $16 and $15, respectively. Plus, Jefferies lowered its price target to $11 from $14. In the options pits, speculators were bearish leading up to Staples, Inc.'s quarterly announcement. The equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 6.46 ranks in the 88th annual percentile, meaning puts have been bought to open over calls at a faster-than-usual pace during the past two weeks.

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