Schaeffer's Trading Floor Blog

Analyst Downgrades: Barnes & Noble, Leap Wireless, and Vodafone

Analysts downwardly revised their ratings on BKS, LEAP, and VOD

by 8/15/2012 9:23 AM
Stocks quoted in this article:

Analysts are weighing in today on bookseller Barnes & Noble, Inc. (NYSE:BKS - 13.31), wireless communications carrier Leap Wireless International, Inc. (NASDAQ:LEAP - 5.59), and mobile phone giant Vodafone Group Plc (ADR) (NASDAQ:VOD - 29.97). Here's a quick roundup of today's bearish brokerage notes.

  • With quarterly earnings looming on the horizon, BKS was downgraded to "hold" from "buy" at Stifel Nicolaus earlier this morning. Even though the stock has swallowed a loss of more than 8% during the past year -- and has trailed the broader S&P 500 Index (SPX) by more than 27 percentage points over the past three months -- calls still outweigh puts. In fact, the security's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX (PHLX) call/put volume ratio rests at 1.36, indicating that traders have bought to open 136 calls for every 100 puts during the past few months.

  • After posting weaker-than-expected second-quarter earnings last week, and getting hammered by analysts as a result, LEAP received yet another price-target cut to $6 from $8 at Bernstein today. Although the stock sits on a year-over-year loss of more than 40%, calls are still the options of choice. The Schaeffer's put/call open interest ratio (SOIR) checks in at 0.28, conveying that calls more than triple puts among options scheduled to expire in three months. This ratio hovers just four percentage points above an annual nadir, signaling that short-term options players have rarely been more bullishly aligned toward the stock during the past year.

  • VOD, which has eked out a 7% advance so far this year -- and has outperformed the broader SPX on a relative-strength basis during the past 60 sessions -- was lowered to "neutral" from "buy" at Bank of America-Merrill Lynch ahead of the open. Nevertheless, a number of speculators are firmly entrenched in the stock's bullish camp. Data from the ISE/CBOE/PHLX shows a 10-day call/put volume ratio of 5.19, indicating that calls bought to open have outpaced puts by a margin of more than five to one during the past two weeks. This ratio registers in the 85th percentile of its annual range, signaling that traders have been snapping up calls over puts at a faster-than-usual pace.

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