Schaeffer's Trading Floor Blog

Analyst Downgrades: Harley-Davidson, Inc. (HOG), Ariad Pharmaceuticals, Inc., and Marathon Oil Corporation

Analysts downwardly revised their ratings on HOG, ARIA, and MRO

by 10/21/2013 9:35 AM
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Analysts are weighing in today on motorcycle name Harley-Davidson, Inc. (NYSE:HOG), oncology concern Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), and international energy giant Marathon Oil Corporation (NYSE:MRO). Here's a quick roundup of today's bearish brokerage notes.

  • BMO slashed its price target for HOG to $72 from $74 earlier today. Meanwhile, ahead of tomorrow morning's quarterly earnings report, the stock is up roughly 50% on a year-over-year basis -- currently sitting at $65.95, just 1.3% shy of its six-year high of $66.59, tagged on Oct. 16. Despite such performance on the charts, short interest grew 12.5% over the last two reporting periods, and now accounts for a healthy 4% of HOG's available float. This represents about two week's worth of pent-up buying demand, meaning Harley-Davidson, Inc. may end up benefiting from a short-squeeze scenario, should the stock see any additional earnings-induced upside.

  • Oppenheimer jumped on the bearish bandwagon for AIRA last night, as the company continues to deal with cancer-drug-trial upsets. Specifically, the brokerage firm lowered its rating for the stock to "perform" from "outperform," after a class action lawsuit was filed against Ariad Pharmaceuticals, Inc. Friday evening. Since the close on Oct. 8, the stock has plummeted about 84% to trade at $2.75. Furthermore, ARIA may be in for additional headwinds, as there is still plenty of room for more downgrades and/or price-target cuts. Seven of the 14 covering analysts maintain "buy" or better endorsements, and the average 12-month price target of $7.53 continues to tower over the stock's current perch.

  • Finally, ISI Group downgraded MRO -- which has dropped 6.4% to trade at $35.03 over the past three months -- to "neutral" from "buy" ahead of today's opening bell. Despite the stock's recent losses, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than four MRO calls for every put during the last two weeks. The resulting 10-day call/put volume ratio of 4.20 ranks in the 61st percentile of its annual range, meaning Marathon Oil Corporation calls are being picked up over puts at a faster-than-usual pace.

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