Schaeffer's Trading Floor Blog

Analyst Downgrades: eBay Inc, Dick's Sporting Goods Inc, and Target Corporation

Analysts downwardly revised their ratings on EBAY, DKS, and TGT

by 6/24/2014 9:23 AM
Stocks quoted in this article:

Analysts are weighing in today on e-commerce concern eBay Inc (NASDAQ:EBAY), as well as retailers Dick's Sporting Goods Inc (NYSE:DKS) and Target Corporation (NYSE:TGT). Here's a quick roundup of today's bearish brokerage notes.

  • Topeka Capital trimmed its price target on EBAY to $54 from $60 this morning. Separately, eBay Inc named former International Business Machines Corp. (NYSE:IBM) exec Craig Hayman the new head of eBay Enterprise. From a sentiment standpoint, short sellers have been ramping up their bearish betting on EBAY, with short interest rocketing 28.5% higher during the past two reporting periods. Meanwhile, on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.41 ranks in the top quartile of its annual range, pointing to a healthier-than-usual appetite for bearish bets over bullish during the past 10 weeks. Should EBAY resume its longer-term uptrend, a short squeeze or a mass exodus of option bears could add fuel to the stock's fire. Heading into today's session, EBAY was trading at $49.39.

  • DKS was started with a tepid "equal weight" rating at Morgan Stanley this morning. The stock has shed nearly 23% in 2014 -- mostly due to a post-earnings bear gap in mid-May -- and settled at $44.78 on Monday. Against this backdrop, option players have growing increasingly pessimistic, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.26 stands higher than two-thirds of all other readings from the past year. What's more, short-term option buyers can pick up contracts at a relative discount. Dick's Sporting Goods Inc sports a Schaeffer's Volatility Index (SVI) of 19% -- just 2 percentage points from an annual low.

  • Finally, Morgan Stanley also weighed in on TGT, launching coverage with an "underweight" opinion. Target Corporation is no stranger to skepticism, though, as just five out of 20 analysts offer up "strong buy" opinions, compared to 12 "holds" and three "sell" or worse ratings. Nevertheless, option buyers remain optimistic, as the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.46 ranks in the 86th percentile of its annual range, hinting at accelerated call buying (relative to put buying) during the past couple of weeks. Plus, the security's SVI of 14% rests just 6 percentage points from a 12-month low, implying that TGT's front-month options are attractively priced right now, from a historical standpoint. Ahead of the bell, Target Corporation shares -- which finished at $58.42 on Monday -- are pointed 0.7% lower.

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