Schaeffer's Trading Floor Blog

Analyst Downgrades: Hillshire Brands Co, Splunk Inc, and Express, Inc.

Analysts downwardly revised their ratings on HSH, SPLK, and EXPR

by 5/30/2014 9:38 AM
Stocks quoted in this article:

Analysts are weighing in today on food manufacturer Hillshire Brands Co (NYSE:HSH), software concern Splunk Inc (NASDAQ:SPLK), and specialty apparel retailer Express, Inc. (NYSE:EXPR). Here's a quick roundup of today's bearish brokerage notes.

  • HSH -- which is up 42.5% so far this week to trade at $52.76, after notching a record high of $52.93 in yesterday's session -- received a downgrade to "market perform" from "overweight" at Bernstein this morning. Responsible the equity's impressive price action is a bidding war between Tyson Foods, Inc. (NYSE:TSN) and Pilgrim's Pride Corporation (NASDAQ:PPC), after the former threw its hat in the ring yesterday morning. Also impressive, short interest on Hillshire Brands Co shot up 209.1% during the most recent reporting period, bringing the total number of shares sold short to 4.6 million. However, the bearish bets still only account for 4% of the stock's available float.

  • Last night, SPLK reported a widened earnings loss for the first quarter, causing the shares to tumble 7.9% out of the gate today to $46.11. Furthermore, no fewer than six brokerage firms downwardly adjusted their positions on the equity. For example, UBS and FBR slashed their price targets to $56 from $100, and to $80 from $120, respectively, this morning. In the sessions leading up to the quarterly event, option traders had been placing bullish bets over bearish at a faster-than-usual clip, according to Splunk Inc's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 6.52, which ranks in the top 13% of its annual range.

  • Likewise, EXPR posted lackluster first-quarter earnings results last night, and cut its full-year guidance, which sent the shares plunging 11.7% out of today's gate to trade at $12.04. Not surprisingly, the equity also received a significant number of bearish brokerage notes, including price-target cuts to $16 from $18 at both Goldman Sachs and Brean this morning. Meanwhile, in the options pits, Express, Inc. boasts a Schaeffer's put/call open interest ratio (SOIR) of 0.53, which ranks in the bottom one-third of its 12-month range. In other words, short-term speculators are more call-heavy than usual toward the stock right now.
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