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Analyst Downgrades: Molycorp Inc, Transocean LTD, and SunEdison Inc

Analysts downwardly revised their ratings on MCP, RIG, and SUNE

by 5/9/2014 9:28 AM
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Analysts are weighing in today on rare earths issue Molycorp Inc (NYSE:MCP), offshore drilling concern Transocean LTD (NYSE:RIG), and silicon wafer supplier SunEdison Inc (NYSE:SUNE). Here's a quick roundup of today's bearish brokerage notes.

  • MCP was downgraded to "underweight" from "neutral" at J.P. Morgan Securities overnight. The stock touched a record low of $3.55 during Thursday's session, as investors abandoned ship in the wake of a disappointing earnings report. MCP is no stranger to skepticism, though. Just one out of five analysts offers up a "buy" endorsement, and short interest accounts for almost 38% of the stock's total available float. In fact, it would take roughly 19 sessions to buy back all of these bearish bets, at Molycorp Inc's average daily trading volume. After closing at $3.71 yesterday, the shares of MCP could be headed for even lower lows, down 3.5% in pre-market action.

  • RIG was hit with a trio of price-target cuts this morning, as analysts weigh in after Wednesday night's first-quarter earnings report. Specifically, Howard Weil, BMO, and Jefferies cut their price targets to $50, $34, and $41, respectively. (Cowen and Company, meanwhile, upped its price target to $46.) While RIG initially ticked higher after earnings, the stock ultimately resolved to the downside yesterday, settling at $41.47. Most analysts are already in the bears' corner, with RIG sporting 17 "hold" or worse recommendations, compared to four "strong buys." Meanwhile, the stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 0.98, just 4 percentage points from an annual high. In other words, option buyers have picked up Transocean LTD puts over calls at a much faster-than-usual clip during the past two weeks.

  • Finally, SUNE sank 6.6% to settle at $17.11 yesterday, after the firm confessed to a wider-than-anticipated quarterly loss. Against this backdrop, Needham this morning cut its price target on the stock to $22 from $23. The recent crop of option bears is likely cheering SUNE's swoon, as the security's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.49 stands higher than 93% of all comparable readings from the past year. In the same vein, short interest surged 16.4% during the most past two reporting periods, and now accounts for nearly one-quarter of SunEdison Inc's total float.

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