Schaeffer's Trading Floor Blog

Analyst Downgrades: Broadcom Corporation (BRCM), Cree, Inc. (CREE), and EMC Corporation (EMC)

Analysts downwardly revised their ratings on BRCM, CREE, and EMC

by 10/23/2013 9:45 AM
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Analysts are weighing in today on semiconductor name Broadcom Corporation (NASDAQ:BRCM), LED specialist Cree, Inc. (NASDAQ:CREE), and IT services provider EMC Corporation (NYSE:EMC). Here's a quick roundup of today's bearish brokerage notes.

  • While BRCM reported third-quarter earnings results that beat expectations, the company holds a cautious outlook for the fourth quarter, as its restructuring plan continues. As such, the stock has been hit hard with a bunch of bearish brokerage notes. Both Bernstein and Stifel decreased their respective price targets by $6 to $30, while Wedbush downgraded BRCM to "neutral" from "outperform." Furthermore, Broadcom Corporation also saw its price target drop at Credit Suisse, Morgan Stanley, Deutsche Bank, and a number of other brokerage firms. On the charts, BRCM seems to have bad luck following its earnings reports of late, considering the stock has fallen 21.5% since unveiling its second-quarter results three months ago. Elsewhere, there is still plenty of room for more downgrades and/or price-target cuts for BRCM in the near future, which could drive the stock even lower. Right now, 23 of the 33 covering analysts maintain "buy" or better endorsements, while the average 12-month price target of $32.59 stands high above BRCM's current price of $25.00.

  • Although CREE -- which is perched at $60.50 -- has tacked on an impressive 78% since the start of 2013, the company's weaker-than-expected fiscal first-quarter revenue and second-quarter outlook led Wedbush to slash its price target by $6 to $77, and Stephens to downgrade the equity to "underweight" from "equal weight." Plus, Piper Jaffray and Canaccord Genuity also cut their respective price targets for CREE, while Needham lowered its rating to "hold" from "buy." Meanwhile, short interest grew by 6.2% in the latest reporting period, and now accounts for 9% of Cree, Inc.'s float -- which represents more than seven sessions' of pent-up buying demand, at the equity's average pace of trading.

  • EMC announced a decline in profit for the third quarter yesterday, spurring both Barclays and Lazard to each reduce their price targets for the stock by $2 to $26 and $30, respectively. Technically, EMC Corporation has lost 11.6% in the past month to trade at $23.36. In the options pits, EMC sports a Schaeffer's put/call open interest ratio (SOIR) of 1.55, which shows that puts outnumber calls by more than 3-to-2 among options expiring within three months. This ratio ranks in the highest percentile of its annual range, meaning short-term EMC traders are more put-heavy now than they have been at anytime throughout the last year.

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