Schaeffer's Trading Floor Blog

Analyst Downgrades: Facebook Inc (FB), International Business Machines Corp., and QUALCOMM, Inc.

Analysts downwardly revised their ratings on FB, IBM, and QCOM

by 7/15/2013 9:19 AM
Stocks quoted in this article:

Analysts are weighing in today on social networking site Facebook Inc (NASDAQ:FB), along with tech concerns International Business Machines Corp. (NYSE:IBM) and QUALCOMM, Inc. (NASDAQ:QCOM). Here's a quick roundup of today's bearish brokerage notes.

  • Off roughly 16% on a year-over-year basis, FB saw its price target lowered to $33 from $36 at Pivotal Research in pre-market activity. However, the sentiment scales among the analyst crowd remain bullishly tipped toward Facebook Inc. The stock boasts 21 "strong buys" and two "buy" endorsements, versus four "holds" and not a single "sell" suggestion. Furthermore, the equity's consensus 12-month price target of $32.36 reflects expected upside of nearly 25% from Friday's closing price of $25.91. This leaves the door wide open for further downgrades and/or price-target cuts, which could exacerbate the security's technical troubles.

  • IBM -- which has tacked on just 0.3% so far this year to linger in the $192.07 neighborhood -- was slapped with a pair of price-target cuts at Jefferies (to $210 from $225) and BMO (to $215 from $220) today. Nevertheless, International Business Machines Corp. -- which is due to report quarterly earnings after this Wednesday's close -- remains popular with near-term call players. The stock's Schaeffer's put/call open interest ratio (SOIR) sits at 0.90, with calls outweighing puts among the front three-months' series of options. This ratio is just 2 percentage points above a yearly nadir, meaning short-term traders have rarely been more call-heavy toward IBM during the past 52 weeks.

  • QCOM was downgraded to "neutral" from "buy" at Lazard today, which could chip away at the stock's year-to-date advance of just 0.3%. QUALCOMM, Inc. -- currently priced at $62.02 -- has also trailed the broader S&P 500 Index (SPX) by close to 11 percentage points during the past three months, yet bullish bettors remain undaunted. In fact, the security's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.94 confirms calls bought to open have almost doubled puts during the past month. This bevy of bullish bets -- particularly within the August series of calls -- could end up translating into options-related resistance down the road.

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