Schaeffer's Trading Floor Blog

Analyst Downgrades: Carnival Corporation, FedEx Corporation, and Coach, Inc.

Analysts downwardly revised their ratings on CCL, FDX, and COH

by 5/21/2013 9:25 AM
Stocks quoted in this article:

Analysts are weighing in today on cruise concern Carnival Corporation (NYSE:CCL), package delivery service FedEx Corporation (NYSE:FDX), and fine accessories designer Coach, Inc. (NYSE:COH). Here's a quick roundup of today's bearish brokerage notes.

  • Off about 4% so far this year to trade at $35.32, CCL was hammered with bearish attention this morning, after the firm last night cut its full-year guidance for the second time in less than three months. Wells Fargo and William Blair both lowered the stock to "market perform" from "outperform," while UBS and Nomura also issued downgrades and/or price-target reductions. However, despite Carnival Corporation's sluggish price action, there's relatively little skepticism toward the stock. Short interest now accounts for less than 2% of the equity's available float. From a contrarian perspective, the security is unlikely to benefit from any future short-covering activity. Ahead of the bell, CCL is down nearly 6%.

  • FDX -- which has shed nearly 8% from its March high at $109.66 -- saw its price target lowered to $125 from $129 at Deutsche Bank in pre-market activity. Nevertheless, the sentiment scales have been bullishly tipped toward FedEx Corporation of late. In fact, the stock sports 15 "strong buys" and one "buy" endorsement, compared to five "holds" and not a single "sell" recommendation. Meanwhile, Thomson Reuters shows an average 12-month price target of $114.58 for the security, reflecting expected upside of about 13.2% to yesterday's closing price of $101.18. In other words, FDX could be vulnerable to further downgrades and/or price-target cuts, which could exacerbate the equity's technical troubles.

  • COH was cut to "equal weight" from "overweight" at Morgan Stanley ahead of the open, which could chip away at the equity's year-to-date advance of more than 7%. The stock -- presently priced at $59.53 -- has also outpaced the broader S&P 500 Index (SPX) by about 15 percentage points during the past three months, which may be attracting short-term bulls. Schaeffer's put/call open interest ratio (SOIR) for Coach, Inc. checks in at 0.87, conveying calls outstrip puts among options with a shelf-life of three months or less. This ratio ranks lower than all other readings collected within the past year, meaning near-term options players are more bullishly aligned toward the stock now than at any other time during the last 12 months.

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