Schaeffer's Trading Floor Blog

Analyst Downgrades: Anheuser-Busch, Netflix, and Baidu

Analysts downwardly revised their ratings on BUD, NFLX, and BIDU

by 10/24/2012 9:19 AM
Stocks quoted in this article:

Analysts are weighing in today on brewing company Anheuser-Busch InBev NV (ADR) (NYSE:BUD - 86.09), DVD subscription service Netflix, Inc. (NASDAQ:NFLX - 68.22), and Chinese Internet search engine Baidu.com, Inc. (ADR) (NASDAQ:BIDU - 114.99). Here's a quick roundup of today's bearish brokerage notes.

  • As BUD prepares to report quarterly earnings on Oct. 31, the equity was downgraded to "sell" from "neutral" at Goldman Sachs today, after Mexican brewer Grupo Modelo -- which is being acquired by BUD -- revealed a 9% drop in third-quarter profits. The security has gained close to 57% during the past year, but that hasn't fazed short-term put players. BUD's Schaeffer's put/call open interest ratio (SOIR) checks in at 1.16, indicating puts outstrip calls among options expiring in the next three months. This ratio is just eight percentage points shy of a yearly peak, meaning near-term traders have rarely been more put-heavy toward the stock during the past year.

  • Down about 16% in pre-market trading, NFLX received a slew of bearish brokerage notes after reporting slower-than-expected subscriber growth for the third quarter, and slashing its full-year subscriber estimates. BMO lowered its price target to $65 from $87, while Barclays, Janney Captial, and Jefferies also handed out price-target cuts. With the stock down about 12% on a year-over-year basis, it's no surprise that skeptics have been zeroing in on NFLX. Short interest currently accounts for a hefty 29% of the security's float. It would take roughly four days to buy back these shorted shares, at equity's average pace of trading.

  • With quarterly earnings looming on the horizon, BIDU saw its price target scaled back to $151 from $153 at Barclays this morning -- a move that could exacerbate the equity's 52-week decline of about 10%. Nevertheless, calls remain the options of choice among options buyers, as evidenced by the stock's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.34. In other words, traders have bought to open 134 calls for every 100 puts during the last four weeks.

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