Schaeffer's Trading Floor Blog

Analyst Downgrades: Cisco Systems, Inc. (CSCO), Micron Technology, Inc. (MU), and Intel Corporation (INTC)

Analysts downwardly revised their ratings on CSCO, MU, and INTC

by 8/15/2013 9:54 AM
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Analysts are weighing in today on tech concern Cisco Systems, Inc. (NASDAQ:CSCO), and semiconductor names Micron Technology, Inc. (NASDAQ:MU) and Intel Corporation (NASDAQ:INTC). Here's a quick roundup of today's bearish brokerage notes.

  • Though CSCO's earnings report was slightly stronger than expected, the tech concern announced plans to reduce its workforce by 5%, ultimately causing its shares to plunge more than 7% at the open to $24.51 in pre-market action. With this in mind, Barclays, MKM Partners, and Wedbush slashed their price targets for the stock. (Nomura and Sterne Agee, meanwhile, upped their price targets.) Stepping back, CSCO sports a year-over-year gain of 52%, and tagged a new three-year high of $26.49 just last week. In the options pits, CSCO's Schaeffer's put/call open interest ratio (SOIR) sits at 0.42, with calls outnumbering puts by a margin of nearly 5-to-2 among options expiring in three months or less. This ratio ranks just 4 percentage points from an annual nadir, indicating Cisco Systems, Inc.'s short-term speculators have rarely been more call-heavy throughout the last year.

  • Ignoring MU's climb to a new six-year high of $15.07 yesterday, Baird lowered its rating for the stock to "neutral" from "outperform." Technically speaking, MU has tacked on a whopping 133.8% year-to-date to trade at $14.82, and has outperformed the broader S&P 500 Index (SPX) by 30.7 percentage points during the past three months. Still, skepticism is on the rise among MU's shareholders. Specifically, short interest increased by 8.2% in the last reporting period, bringing the total number of shares sold short to 85.4 million. Consequently, short interest now accounts for 8.3% of Micron Technology, Inc.'s available float -- signaling a healthy amount of sideline cash, in the event of an extended rally.

  • Finally, INTC -- docked at $22.57 -- saw its rating downgraded to "neutral" from "outperform," and its price target sliced to $23 from $26, at Baird this morning. On the charts, INTC is down 14% year-over-year, but still boasts a year-to-date gain of 9.5%. With that being said, calls have still been the options of choice among INTC traders of late. In fact, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open almost three INTC calls for every put during the past two weeks. The resulting 10-day call/put volume ratio of 2.75 ranks higher than 94% of all other readings taken over the last year, conveying Intel Corporation calls are being picked up over puts at a near-annual-high rate.

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