Schaeffer's Trading Floor Blog

Analyst Downgrades: Carnival Corporation, Dean Foods Co, and Leap Wireless International, Inc.

Analysts downwardly revised their ratings on CCL, DF, and LEAP

by 5/30/2013 9:25 AM
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Analysts are weighing in today on cruise concern Carnival Corporation (NYSE:CCL), food and beverage company Dean Foods Co (NYSE:DF), and wireless services provider Leap Wireless International, Inc. (NASDAQ:LEAP). Here's a quick roundup of today's bearish brokerage notes.

  • Down about 10% so far this year to hover at $33.10, CCL was downgraded to "underperform" from "neutral" at Exane BNP Paribas in pre-market action. This comes on the heels of last Thursday's price-target cut at Jefferies. Carnival Corporation has also lagged the broader S&P 500 Index (SPX) by close to 15 percentage points during the past three months, yet call buyers remain undaunted. In fact, the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 0.90 ranks higher than 91% of similar annual readings. Or, in simpler terms, traders have snapped up calls over puts at a faster clip just 9% of the time during the past year.

  • DF -- which sports a 2013 gain of roughly 37% to trade at $10.49 -- was cut to "market perform" from "outperform," and saw its price target slashed to $11 from $22 at BMO this morning. Meanwhile, sentiment among the short-term options crowd has been bearishly skewed of late. Schaeffer's put/call open interest ratio (SOIR) for Dean Foods Co checks in at 1.11, with puts outstripping calls among options scheduled to expire within the next three months. This ratio registers in the 63rd percentile of its annual range, signaling near-term options players are more put-heavy toward the stock than usual.

  • Last but not least, analysts at BMO initiated coverage of LEAP with an "underperform" recommendation and a price target of $3 today, a move that could steepen the stock's year-to-date loss of more than 14%. Elsewhere, although short interest on Leap Wireless International, Inc. -- currently perched at $5.70 -- has declined by 6.6% during the past two reporting periods, these bearish bets still represent a hefty 34.5% of the equity's available float. In fact, it would take 14 sessions to buy back these shorted shares, at the security's average daily trading volume.

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