Schaeffer's Trading Floor Blog

Analyst Downgrades: Apple Inc. (AAPL), Lululemon Athletica inc. (LULU), and Under Armour Inc (UA)

Analysts downwardly revised their ratings on AAPL, LULU, and UA

by 9/13/2013 9:42 AM
Stocks quoted in this article:

Analysts are weighing in today on tech giant Apple Inc. (NASDAQ:AAPL), along with athletic apparel gurus Lululemon Athletica inc. (NASDAQ:LULU) and Under Armour Inc (NYSE:UA). Here's a quick roundup of today's bearish brokerage notes.

  • AAPL has been in the news since unveiling the new iPhone 5S and 5C earlier this week. For example, the tech giant made headlines yesterday when activist investor Carl Icahn increased his stake in the company, after the shares dipped more than 5% in Wednesday's session. This morning, Jefferies became the latest firm to downgrade its position on AAPL this week, slashing its price target for the stock to $425 from $450. Elsewhere, the majority of the brokerage bunch is holding on to its bullish outlook on AAPL, which has suffered a more than 30% loss year-over-year. From the 38 analysts weighing in, the stock has received 28 "buy" or better endorsements, compared to 10 "holds" and not a single "sell" or worse suggestion. Furthermore, AAPL's consensus 12-month price target of $539 represents expected upside of 14% to its current price of $472.69. This leaves the door wide open for more downgrades and/or price-target cuts, which could pressure Apple Inc.'s shares further south.

  • Despite yesterday's stronger-than-expected earnings report, LULU offered up a dreary forecast for the current quarter, which led its shares to drop 5.4% to its current trading level at $65.29. As such, Canaccord Genuity and Stifel sliced their price targets for the stock to $85 from $87, and to $80 from $85, respectively. (Credit Suisse, meanwhile, raised its rating to "outperform" from "neutral.") Technically speaking, yesterday's dive on the charts was nothing new for LULU, which has fallen 10.4% in the last month, and has underperformed the broader S&P 500 Index (SPX) by 6.1 percentage points in the same time frame. On the sentiment front, short interest grew 10.9% during the past two reporting periods, and now accounts for a lofty 16.1% of Lululemon Athletica inc.'s available float. At the stock's average pace of trading, it would take more than two weeks to cover these shorted shares, in the event of an extended rally.

  • Finally, UA has been unstoppable on the charts since the beginning of 2013. Specifically, the stock has tacked on more than 66% year-to-date, and outperformed the SPX by 33.9 percentage points in the past 40 sessions. What's more, UA reached a new record peak of $81.64 in Wednesday's session, before settling in at its current perch of $80.59. Still, Credit Suisse lowered its rating for the stock to "neutral" from "outperform" this morning. Meanwhile, in the options pits, short-term traders are skeptical toward UA, which sports a Schaeffer's put/call open interest ratio (SOIR) of 1.64. This ratio ranks just 9 percentage points from an annual high, indicating puts have been heavily preferred over calls among options expiring in the next three months. Given Under Armour Inc's strong technical backdrop, such a heavy amount of put open interest could translate into options-related support further down the road, as these bearish bets start to unwind.

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