Schaeffer's Trading Floor Blog

Analyst Downgrades: J.C. Penney Company, Inc., Best Buy Co., Inc., and Alcatel Lucent SA (ADR)

Analysts downwardly revised their ratings on JCP, BBY, and ALU

by 1/16/2014 9:18 AM
Stocks quoted in this article:

Analysts are weighing in today on department store J.C. Penney Company, Inc. (NYSE:JCP), electronics retailer Best Buy Co., Inc. (NYSE:BBY), and telecommunications concern Alcatel Lucent SA (ADR) (NYSE:ALU). Here's a quick roundup of today's bearish brokerage notes.

  • JCP's cost-cutting plan, involving the closure of 33 underperforming stores and the elimination of at least 2,000 jobs, did not sit well with the analysts at J.P. Morgan Securities and UBS, who subsequently lowered their price targets by $2 each to $6 and to $5, respectively. For comparison, the average 12-month price target for J.C. Penney Company, Inc. -- which has already lost 23.4% this year -- is $9.39, about 34% higher than the shares' current price of $7.01. Meanwhile, 15 of the 18 covering analysts have dished out "hold" or worse ratings on JCP.

  • BBY's weak holiday sales report led Stifel to lower its price target by $18 to $30, while the shares have slid 29.6% in pre-market action to trade at $26.45. Prior to the announcement, option traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) were very bullish toward Best Buy Co., Inc., which boasted a year-over-year gain of 156.1% before today's early plunge. During the past 50 sessions at these exchanges, the stock racked up a call/put volume ratio of 1.68, which is just 4 percentage points shy of a 12-month peak. This data demonstrates the high demand for BBY calls over puts of late.

  • Evercore downgraded ALU to "equal weight" from "overweight" this morning. The equity has been a technical powerhouse over the past year, tacking on roughly 165% to perch at $4.37. Meanwhile, in the options pits, the stock sports a Schaeffer's put/call open interest ratio (SOIR) of 0.66, ranking in the 90th annual percentile. This means short-term option traders have rarely been more put-heavy toward Alcatel Lucent SA (ADR), relative to the past 12 months.

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