Schaeffer's Trading Floor Blog

Analyst Downgrades: BlackBerry Ltd, Linn Energy LCC (LINE), and LeapFrog Enterprises, Inc.

Analysts downwardly revised their ratings on BBRY, LINE, and LF

by 11/5/2013 9:58 AM
Stocks quoted in this article:

Analysts are weighing in today on smartphone maker BlackBerry Ltd (NASDAQ:BBRY), oil and natural gas name Linn Energy LCC (NASDAQ:LINE), and children's education concern LeapFrog Enterprises, Inc. (NYSE:LF). Here's a quick roundup of today's bearish brokerage notes.

  • BBRY plunged into annual-low territory yesterday, and is now facing a year-to-date deficit of 44.2% to trade at $6.78, after news hit the Street that the struggling smartphone maker removed itself from the buyout block, and CEO Thorsten Heins will be stepping down from his position. As such, CIBC downgraded the stock to "sector underperform" from "sector outperform," and dropped its price target to $5 from $12. Likewise, Paradigm Capital and Jefferies slashed their own price targets. (Meanwhile, Deutsche Bank raised its rating on BBRY to "hold" from "sell.") Ahead of yesterday's poorly received news, options traders were slightly more bullish than usual toward the equity. BlackBerry Ltd's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.15 ranks in the 57th percentile of its annual range, indicating calls have been to open over puts at a slightly accelerated pace during the past two weeks.

  • Goldman Sachs lowered its rating on LINE to "neutral" from "buy," after the company upped its offer for Denver-based Berry Petroleum Company (NYSE:BRY). Following yesterday morning's announcement, LINE jumped 3.2%, but has pared a portion of these gains today to trade at $31.54. Elsewhere, the equity sports a Schaeffer's put/call open interest ratio (SOIR) of 0.77, which ranks just 6 percentage points above an annual low. In other words, short-term traders have rarely been more call-focused on Linn Energy LLC throughout the past year.

  • After last night forecasting a "weak retail climate" and issuing "growing concern surrounding this holiday season," LF has shed about 9.9% today to trade at $7.82, and both Suntrust and Monness Crespi lowered their respective ratings to "neutral" from "buy." Meanwhile, short interest grew 8% during the last two reporting periods, and now accounts for 31.1% of LF's available float. Elsewhere, the average 12-month price target of $12.14 represents a lofty premium of 55% from the equity's current perch. Given today's plunge, the door is wide open for a potential round of price-target cuts in the near term, which could send the shares further south.

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