Schaeffer's Trading Floor Blog

Analyst Downgrades: Facebook Inc (FB), Expedia Inc, and VMware, Inc.

Analysts downwardly revised their ratings on FB, EXPE, and VMW

by 7/11/2013 9:17 AM
Stocks quoted in this article:

Analysts are weighing in today on social networking site Facebook Inc (NASDAQ:FB), online travel company Expedia Inc (NASDAQ:EXPE), and IT services provider VMware, Inc. (NYSE:VMW). Here's a quick roundup of today's bearish brokerage notes.

  • Another day, another tepid initiation for FB -- this time at Susquehanna, where analysts started coverage of the stock with a "neutral" rating. Facebook Inc has shed roughly 17% on a year-over-year basis, yet the brokerage bunch remains optimistic toward the security. The equity boasts 21 "strong buys" and two "buy" endorsements, compared to four "holds" and not a single "sell" suggestion. What's more, Thomson Reuters shows an average 12-month price target of $32.80 for the shares, which denotes expected upside of more than 27% from yesterday's closing price of $25.80. In other words, a round of downgrades and/or price-target cuts could be in the cards for FB.

  • EXPE -- which has advanced less than 3% so far this year to trade at $63.22 -- was also initiated at Susquehanna with a "neutral" recommendation this morning. Despite the stock's sluggish price action, sentiment in the near-term options pits has been optimistically skewed. Schaeffer's put/call open interest ratio (SOIR) for Expedia Inc sits at 0.53, with calls almost doubling puts among options expiring in the next three months. This ratio ranks in the 19th annual percentile, reflecting a stronger-than-usual preference for near-term calls over puts. This heavy accumulation of bullish bets -- particularly within the July series of calls -- could end up translating into options-related resistance down the road.

  • Down close to 29% year-to-date to hover at $67.14, VMW received a price-target cut to $75 from $82 at Jefferies today. Meanwhile, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 3.39 for VMware, Inc., indicating calls bought to open have more than tripled puts during the past two weeks. This ratio is just 8 percentage points shy of a yearly peak, meaning traders have been picking up calls over puts at a near annual-high pace. Again, an unwinding of these call positions -- especially at the overhead July 72.50 strike -- could end up acting as a headwind for VMW, as expiration approaches.

permanent link
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.