Schaeffer's Trading Floor Blog

Analyst Downgrades: MasterCard, Under Armour, and Cliffs Natural Resources

Analysts downwardly revised their ratings on MA, UA, and CLF

by 2/1/2013 9:08 AM
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Analysts are weighing in today on credit card giant MasterCard Inc (NYSE:MA - 518.40), athletic apparel guru Under Armour Inc (NYSE:UA - 50.87), and mining concern Cliffs Natural Resources Inc (NYSE:CLF - 37.31). Here's a quick roundup of today's bearish brokerage notes.

  • Despite revealing better-than-expected quarterly earnings on Thursday, MA was downgraded to "market perform" from "outperform" at Wells Fargo this morning. (KBW and FBR, however, raised their price targets for the security.) Meanwhile, the stock -- which has surged nearly 36% during the past 12 months -- is seeing plenty of near-term put action. Schaeffer's put/call open interest ratio (SOIR) for MA stands at 1.19, indicating puts outpace calls among the front three-months' series of options. This ratio registers in the 72nd annual percentile, reflecting a healthier-than-usual appetite for short-term puts over calls.

  • Although UA reported fourth-quarter earnings yesterday that topped consensus bottom-line estimates, analysts at Canaccord Genuity trimmed the equity's price target to $68 from $70 today. The stock boasts a 52-week gain of more than 31%, yet bearish speculation on UA remains alive and well. Short interest on the stock rose by 5% during the most recent reporting period, and now accounts for more than 16% of the security's available float. In fact, it would take nearly seven sessions to unwind these bearish bets, at UA's average daily trading volume.

  • Down about 49% on a year-over-year basis, CLF saw its price target reduced to $52 from $55 at CIBC ahead of the opening bell. However, call buyers appear to be undaunted by this technical weakness. 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 2.84 for CLF, signaling calls bought to open have nearly tripled puts during the past couple of weeks. This ratio is just 1 percentage point shy of a yearly peak, meaning traders have been snapping up calls over puts at a near annual-high clip.

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