Schaeffer's Trading Floor Blog

Analyst Downgrades: Michael Kors Holdings Ltd, ITT Educational Services, Inc., and D.R. Horton, Inc.

Analysts downwardly revised their ratings on KORS, DHI, and ESI

by 8/5/2014 9:16 AM
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Analysts are weighing in today on retailer Michael Kors Holdings Ltd (NYSE:KORS), for-profit education issue ITT Educational Services, Inc. (NYSE:ESI), and homebuilder D.R. Horton, Inc. (NYSE:DHI). Here's a quick roundup of today's bearish brokerage notes on KORS, ESI, and DHI.

  • KORS plunged nearly 6% yesterday to close at $77.01 -- falling into the red on a year-to-date basis -- following a poorly received current-quarter forecast. The brokerage bunch was quick to respond, with Janney, Barclays, and Nomura all cutting their respective price targets for the security. Barclays has the lowest expectations -- slashing its price target by $4 to $78, and reiterating its "underweight" rating. Additional bearish brokerage notes could be on the horizon for Michael Kors Holdings Ltd, considering the consensus 12-month price target of $104.63 stands at a steep 36% premium to current trading levels, and in territory yet to be charted by the stock.

  • ESI gapped lower yesterday, after the company announced it will no longer be selling some of its properties to College Portfolio Buyer LLC. The stock is poised to bounce back in today's session, even though reports that the company's CEO is resigning were met with a downgrade to "market perform" from "outperform" at William Blair. Year-to-date, the shares have surrendered roughly 77% to trade at $7.72, so it's no surprise to see nearly three-quarters of ITT Educational Services, Inc.'s float sold short.

  • Thanks to a late-July earnings-induced bearish gap, shares of DHI are trading at $20.58 -- near their lowest levels of the year. Against this backdrop, Susquehanna reduced its price target for the stock to $19 from $23, and more bearish brokerage notes could be in the pipeline. Specifically, half of the analysts covering the stock maintain a "buy" or "strong buy" recommendation toward DHI, while the average 12-month price target of $24.13 stands at a 17% premium to current trading levels. Should D.R. Horton, Inc. extend its nearly 8% year-to-date loss, a re-evaluation of ratings from these bullish analysts could translate into a fresh wave of selling pressure.

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