Schaeffer's Trading Floor Blog

Analyst Downgrades: Groupon Inc, Merck & Co., Inc., and eBay Inc

Analysts downwardly revised their ratings on GRPN, MRK, and EBAY

by 5/7/2014 9:40 AM
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Analysts are weighing in today on mass discount provider Groupon Inc (NASDAQ:GRPN), pharmaceutical giant Merck & Co., Inc. (NYSE:MRK), and online auction platform eBay Inc (NASDAQ:EBAY). Here's a quick roundup of today's bearish brokerage notes.

  • GRPN is down 12.3% at $5.89, bringing its year-to-date deficit to 50.6%, after the company posted a gloomy second-quarter earnings forecast last night. Subsequently, a number of brokerage firms downwardly adjusted their positions on the stock, including Deutsche Bank, which cut its price target by $4 to $8, and Northland, which lowered its rating to "market perform" from "outperform." (Piper Jaffray, on the other hand, upped its price target by $1.) Heading into the quarterly announcement, short-term option traders were more put-biased than usual toward Groupon Inc, as the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.71 ranks higher than 81% of comparable readings from the past year.

  • MRK -- after yesterday reporting it is selling its consumer products unit to Bayer AG -- received a downgrade to "equal weight" from "overweight" at Morgan Stanley. (Meanwhile, J.P. Morgan Securities and Jefferies overnight each upped their price targets on the stock. After falling 2.6% yesterday, MRK is 0.8% lower at $56.65 this morning, and its year-to-date gain remains at 13.2%. Nevertheless, the brokerage bunch is divided on Merck & Co. Inc., with seven handing out "buy" or better endorsements, and seven maintaining tepid "hold" suggestions. Meanwhile, the average 12-month price target among analysts comes in at $59.17, representing a slim premium to the shares' current perch.

  • EBAY -- which has lost about 14.5% over the past two months to trade at $50.72 -- saw its rating dropped to "neutral" from "buy" at SunTrust this morning. In the options pits, short-term call open interest on eBay Inc (compared to put open interest) is much heavier than usual, ahead of the company's annual shareholder meeting next Tuesday morning, May 13. This is evidenced by the fact that the equity's SOIR of 0.38 ranks lower than 94% of similar readings taken during the past 12 months.

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