Schaeffer's Trading Floor Blog

Analyst Downgrades: Facebook, Amgen, and Automatic Data Processing

Analysts downwardly revised their ratings on FB, AMGN, and ADP

by 9/12/2012 9:04 AM
Stocks quoted in this article:

Analysts are weighing in today on social networking website Facebook Inc (NASDAQ:FB - 19.43), biotechnology company Amgen, Inc. (NASDAQ:AMGN - 83.94), and business solutions provider Automatic Data Processing, Inc. (NASDAQ:ADP - 58.84). Here's a quick roundup of today's bearish brokerage notes.

  • FB was slapped with a price-target cut to $25 from $40 at Needham this morning, which could chip away at the equity's month-to-date gain of approximately 8%. What's more, the stock has lagged the broader S&P 500 Index (SPX) by nearly 42 percentage points during the past three months. Meanwhile, skeptics have been flocking toward the security in droves lately, as short interest on FB soared by more than 55% during the past two reporting periods. These shorted shares currently account for a respectable 6.7% of the equity's available float.

  • Despite a year-over-year advance of nearly 53%, AMGN was cut to "neutral" from "outperform" at Baird ahead of the open. Short-term speculators don't appear to have high expectations for the equity, either, which sports a Schaeffer's put/call open interest ratio (SOIR) of 1.12 -- implying that puts outstrip calls among options scheduled to expire in the next three months. This ratio ranks in the 85th percentile of its annual range, meaning near-term traders have been more put-heavy toward the security just 15% of the time during the past 12 months.

  • Jefferies lowered ADP to "underperform" from "hold" earlier this morning, even though the stock has added around 21% during the past year. Nevertheless, put players have bought to open nearly two puts for every call during the past few months, as reflected by ADP's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.97. In fact, this ratio is just four percentage points away from a yearly peak, signaling that speculators have been snatching up puts over calls at a near annual-high clip.

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