Schaeffer's Trading Floor Blog
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Analysts are weighing in today on banking giant Bank of America Corp (NYSE:BAC), Internet marketplace eBay Inc (NASDAQ:EBAY), and IT services provider International Business Machines Corp. (NYSE:IBM). Here's a quick roundup of today's bearish brokerage notes.

  • While BAC reported worse-than-forecast revenue in the third quarter yesterday, its bottom-line results still beat analysts' expectations, leading to a mixed bag of brokerage notes this morning. On the bearish side, Raymond James downgraded the stock to "outperform" from "strong buy," and KBW cut its price target by $1 to $15.50. On the other hand, BAC scored price-target hikes at UBS and Barclays. Over the past year, Bank of America Corp has gained 53.5% to perch at $14.51, yet 15 of the 22 covering analysts give the stock a "hold" or worse rating. Likewise, the average 12-month price target of $15.08 is just a stone's throw away from BAC's current price. This leaves the door wide open for a potential round of upgrades and/or price-target hikes, which could give the shares an additional boost. Meanwhile, in BAC's options pits, activity was bullishly skewed heading into yesterday's earnings report.

  • EBAY said its profit for the third quarter increased by 15%, but gave a cautious forecast for the current quarter, spurring a batch of bearish brokerage notes in pre-market trading. Specifically, both Canaccord Genuity and J.P. Morgan Securities slashed their price targets by $4 to $60 and $56, respectively. Meanwhile, RBC and JMP Securities shaved $5 off their respective price targets, while Evercore and Susquehanna both dropped theirs by $6. On top of that, EBAY received even more price-target cuts at Stifel, Macquarie, and Cantor Fitzgerald. On the charts, the stock sits at a three-month deficit of 12.3% to trade at $50.82, yet short-term traders were heavily call-biased leading into yesterday's quarterly announcement. eBay, Inc sports a Schaeffer's put/call open interest ratio (SOIR) of 0.43, with calls more than doubling puts among options expiring within three months. This ratio ranks just 7 percentage points from an annual low, indicating short-term traders have rarely been this call-heavy toward EBAY during the past year.

  • While IBM's third-quarter earnings topped analysts' expectations, revenue fell short, prompting Jefferies and BMO to decrease their price targets for the stock by $20 to $190 from $195, respectively, and UBS to lower its rating to "neutral" from "buy." Likewise, the stock received price-target cuts from RBC, J.P. Morgan Securities, Credit Suisse, Barclays, SocGen, Evercore, Stifel, and CLSA. Over the past six months, International Business Machines Corp. has fallen nearly 17% to trade at $174.57, and puts have been the options of choice of late. In fact, IBM's International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) 10-day put/call volume ratio of 1.02 ranks in the 71st percentile of its annual range, meaning puts have been bought to open over calls at a faster-than-usual pace during the last two weeks.

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