Schaeffer's Trading Floor Blog

Analyst Downgrades: Microsoft Corporation (MSFT), VIVUS, Inc. (VVUS), and H&R Block, Inc.

Analysts downwardly revised their ratings on MSFT, VVUS, and HRB

by 9/4/2013 9:25 AM
Stocks quoted in this article:

Analysts are weighing in today on computer software giant Microsoft Corporation (NASDAQ:MSFT), biopharmaceutical company VIVUS, Inc. (NASDAQ:VVUS), and tax titan H&R Block, Inc. (NYSE:HRB). Here's a quick roundup of today's bearish brokerage notes.

  • MSFT has dropped 4.6% to trade at $31.88 since news hit the Street that the computer software giant is purchasing Nokia Corporation's (ADR) (NYSE:NOK) phone business . Stepping back, the stock has suffered a 10.4% loss -- most of which was earnings induced -- in the past three months, and now sits just 4.9% higher on a year-over-year basis. In this regard, BMO slashed its price target for MSFT to $35 from $37 in pre-market action, while Morgan Stanley lowered its rating to "equal weight" from "overweight." Meanwhile, in MSFT's options pits, calls more than double puts among options expiring in three months or less, according to the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.48. This ratio ranks just 11 percentage points from an annual nadir, indicating Microsoft Corporation's short-term traders have rarely been more call-heavy throughout the last year.

  • Lazard downgraded its rating for VVUS to "sell" from "neutral," following the announcement of CEO Anthony P. Zook's health-related resignation. On the charts, VVUS has tumbled 41.6% over the past year to its current price of $12.90. What's more, the stock has fallen 13.9% in the last month alone, and has underperformed the broader S&P 500 Index (SPX) by 11.6 percentage points in the same time frame. Needless to say, VVUS remains plagued by pessimism, as short interest accounts for a whopping 38.3% of the stock's available float. In the event of an extended rally, it would take nearly 14 sessions to cover these bearish bets, at VIVUS, Inc.'s average pace of trading.

  • While HRB sports a year-over-year gain of 69%, the stock's earnings (reported last night) failed to hit analysts' bottom-line expectations, spurring Oppenheimer to slice its price target to $30 from $32 ahead of today's session. In addition, Wedbush cut its price target by $2 to $34. Elsewhere, the brokerage bunch maintains an optimistic outlook. From the five analysts weighing in, HRB has received three "strong buy" endorsements, compared to two tepid "holds." Furthermore, the stock's consensus 12-month price target of $33.86 -- which stands in record-high territory -- represents expected upside of 21.4% from H&R Block, Inc.'s current price of $27.88.

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