Schaeffer's Trading Floor Blog

Analyst Downgrades: Cisco Systems, Zillow, and Express Scripts

Analysts downwardly revised their ratings on CSCO, Z, and ESRX

by 11/6/2012 9:17 AM
Stocks quoted in this article:

Analysts are weighing in today on tech concern Cisco Systems, Inc. (NASDAQ:CSCO - 17.40), real estate website Zillow Inc (NASDAQ:Z - 34.37), and pharmaceutical stock Express Scripts Holding Company (NASDAQ:ESRX - 62.88). Here's a quick roundup of today's bearish brokerage notes.

  • With quarterly earnings rapidly approaching, CSCO received a price-target cut to $23 from $24 at MKM Partners this morning. The security has surrendered nearly 4% in 2012, while also lagging the broader S&P 500 Index (SPX) by almost 10 percentage points during the past two months. Nevertheless, call buying has been quite prevalent on the security lately. The stock's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio checks in at 3.22, conveying calls bought to open have more than tripled puts during the past month.

  • Down more than 18% in pre-market action, Z was slapped with downward price-target adjustments at Barclays ($35 from $45) and Benchmark ($40 from $44) today, after projecting fourth-quarter revenue that fell short of analysts' expectations. The stock is up almost 53% year-to-date, yet skeptics continue to swarm Z. Short interest on the equity spiked by more than 15% during the past month, and now accounts for a whopping 43% of the security's float. It would take more than six days to cover these shorted shares, at stock's average daily trading volume.

  • Also off about 12% ahead of the open is ESRX, which was downgraded to "hold" from "buy" and saw its price target lowered to $56 from $70 at Jefferies this morning, after the company warned that Wall Street's 2013 forecast was too aggressive. The equity has added close to 41% so far this year, and near-term bulls have taken notice. Schaeffer's put/call open interest ratio (SOIR) for ESRX stands at 0.67, with calls comfortably outstripping puts among the front three-months' series of options. This ratio is docked in the 23rd percentile of its annual range, reflecting a stronger-than-usual preference for short-term calls over puts.

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