Schaeffer's Trading Floor Blog

Analyst Downgrades: Microsoft Corporation (MSFT), Titan Machinery Inc., and Family Dollar Stores, Inc.

Analysts downwardly revised their ratings on MSFT, TITN, and FDO

by 4/11/2013 9:27 AM
Stocks quoted in this article:

Analysts are weighing in today on software giant Microsoft Corporation (NASDAQ:MSFT), construction equipment firm Titan Machinery Inc. (NASDAQ:TITN), and discount retailer Family Dollar Stores, Inc. (NYSE:FDO). Here's a quick roundup of today's bearish brokerage notes.

  • MSFT -- which sits below breakeven on a year-over-year basis to trade at $30.28 -- was downgraded to "sell" from "neutral" at Goldman Sachs this morning, following yesterday's lackluster first-quarter PC shipment data. (Adding insult to injury, Nomura and BGC Partners also lowered their recommendations for the stock.) Meanwhile, Microsoft Corporation has seen plenty of short-term call activity lately, as evidenced by the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.62. In fact, this bullishly skewed ratio ranks in the 25th annual percentile, indicating near-term traders have been more call-heavy toward MSFT just one-fourth of the time during the past year. This heavy accumulation of call open interest -- particularly in the April series of options -- could end up translating into options-related resistance.

  • Down more than 9% year-to-date to hover at $22.45, TITN was slapped with a price-target cut to $30 from $36.25 at M Partners in pre-market action, after reporting weaker-than-expected fourth-quarter earnings and first-quarter guidance on Wednesday. The stock has also trailed the broader S&P 500 Index (SPX) by close to 29 percentage points during the past two months, which could explain the pessimism surrounding Titan Machinery Inc. Short interest ramped up by more than 3% during the most recent reporting period, and now these bearish bets make up a hefty 26% of the security's available float. In fact, it would take more than 22 days to buy back these shorted shares, at the equity's average daily trading volume.

  • FDO is also feeling an earnings-related sting today, as yesterday's softer-than-anticipated quarterly results prompted Goldman Sachs to cut the stock to "neutral" from "buy." Meanwhile, Citigroup and Wedbush Securities issued price-target cuts -- all of which could steepen the equity's 2013 loss of close to 5%. Despite this sluggishness on the charts, the stock -- which is trading at $60.44 --seems to be a favorite among call players on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The stock's 20-day call/put volume ratio checks in at 3.07, signaling calls bought to open have more than tripled puts during the past four weeks.

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