Schaeffer's Trading Floor Blog

Analyst Downgrades: Microsoft Corporation, Broadcom Corporation (BRCM), and Fifth Third Bancorp (FITB)

Analysts downwardly revised their ratings on MSFT, BRCM, and FITB

by 8/13/2013 10:07 AM
Stocks quoted in this article:

Analysts are weighing in today on tech giant Microsoft Corporation (NASDAQ:MSFT), semiconductor concern Broadcom Corporation (NASDAQ:BRCM), and financial institution Fifth Third Bancorp (NASDAQ:FITB). Here's a quick roundup of today's bearish brokerage notes.

  • MSFT saw its rating downgraded to "hold" from "buy" at Stifel Nicolaus in pre-market action. Technically speaking, MSFT has gained 23% year-to-date to its current price of $32.87. Still, in the last month alone, the stock has dropped 7.9%, and has underperformed the broader S&P 500 Index (SPX) by more than 10 percentage points. Regardless, activity in MSFT's options pits has been bullishly skewed. In fact, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.45 ranks higher than just 1% of other such readings taken over the last year. This means call open interest among options with a shelf-life of three months or less, relative to put open interest, is at a near-annual acme.

  • After BRCM tagged a multi-year low in yesterday's session, Morgan Stanely became one of many to downwardly revise its outlook on the stock of late. Specifically, the firm slashed its price target to $34 from $36. On a year-over-year basis, BRCM has fallen 25.8%, and was last seen hovering around $26.06. What's more, the stock has underperformed the SPX by 31.5 percentage points during the last three months. Still, BRCM sports a SOIR of 0.32, with calls outnumbering puts by roughly 3-to-1 among options expiring in three months or less. This ratio ranks lower than all other readings from the past year, indicating BRCM's short-term speculators are more call-heavy now than they've been at any other time throughout the last 12 months. Should Broadcom Corporation continue its downward trajectory, this heap of call open interest -- particularly in the soon-to-expire August series -- could end up translating into options-related resistance in the near term, as these bullish bets start to unwind.

  • Credit Suisse lowered its rating for FITB -- perched at $19.27 -- to "neutral" from "outperform" ahead of today's opening bell. On the charts, FITB has climbed 26.8% since the beginning of the year. On top of that, the stock reached a new four-year high of $19.79 on July 26, and has since been flirting with this mark. Against this backdrop, calls have been the options of choice among FITB traders of late. Specifically, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than 23 calls for every put during the past two weeks. The resulting 10-day call/put volume ratio of 23.34 ranks higher than 99% of all other readings taken throughout the year, conveying Fifth Third Bancorp calls are being picked up over puts at a near-annual-high rate.

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