Schaeffer's Trading Floor Blog

Analyst Downgrades: SolarCity Corp, El Pollo LoCo Holdings Inc, and Sprint Corporation

Analysts downwardly revised their ratings on SCTY, LOCO, and S

by 8/19/2014 9:25 AM
Stocks quoted in this article:

Analysts are weighing in today on alternative energy issue SolarCity Corp (NASDAQ:SCTY), restaurant operator El Pollo LoCo Holdings Inc (NASDAQ:LOCO), and telecom titan Sprint Corporation (NYSE:S). Here's a quick roundup of today's bearish brokerage notes on SCTY, LOCO, and S.

  • SCTY -- which settled Monday at $72.05 -- is pointed 1% lower ahead of the bell, after Baird downgraded the stock to "neutral" from "outperform." The stock has outperformed the broader S&P 500 Index (SPX) by more than 33 percentage points during the past three months, yet option traders have been purchasing puts over calls at a near-annual-high clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.81 stands higher than 94% of all other readings from the past year. However, with SolarCity Corp sitting on a year-to-date gain of 26.8%, it's possible the puts are being purchased by shareholders looking to lock in gains.

  • LOCO is bracing for a 6% drop out of the gate today, after settling at $33.20 on Monday. Analysts are waxing pessimistic on the Wall Street freshman, with Morgan Stanley initiating coverage with an "underweight" rating, and Baird offering a "neutral" rating and tepid $32 price target. Likewise, Stifel and Jefferies both launched coverage with "hold" ratings, and the latter's price target of $30 represents a discount to El Pollo LoCo Holdings Inc's current price. (William Blair was the black sheep, starting LOCO at "outperform.") Since its late-July IPO, the stock has advanced nearly 75%.

  • Finally, S is flirting with breakeven at $5.62, despite a price-target cut to $4 from $7 at Jefferies. Furthermore, the brokerage firm underscored its "underperform" rating on S, which has shed 47.7% in 2014, primarily in the wake of its abandoned bid for T-Mobile US Inc (NYSE:TMUS). Helping to offset today's negative analyst attention, however, is Sprint Corporation's new pricing plan, which goes into effect on Friday.

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