Schaeffer's Trading Floor Blog

Analyst Downgrades: Microsoft, JPMorgan Chase, and Wells Fargo

Analysts downwardly revised their ratings on MSFT, JPM, and WFC

by 1/4/2013 9:27 AM
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Analysts are weighing in today on software giant Microsoft Corporation (NASDAQ:MSFT - 27.25), and financial services firms JPMorgan Chase & Co. (NYSE:JPM - 44.57) and Wells Fargo & Company (NYSE:WFC - 34.76). Here's a quick roundup of today's bearish brokerage notes.

  • Down roughly 2% on a year-over-year basis, MSFT was lowered to "hold" from "buy" at Argus ahead of the opening bell. Nevertheless, most of the covering analysts maintain high expectations for the security. MSFT boasts 16 "strong buys" and four "buy" endorsements, compared to 10 lukewarm "holds," and zero "sell" suggestions. What's more, Thomson Reuters shows an average 12-month price target of $34.44 for the stock, representing expected upside of about 26.4% from Thursday's closing price of $27.25.

  • As JPM prepares to report fourth-quarter earnings on Jan. 16, the stock was cut to "buy" from "conviction buy" at Goldman Sachs this morning. The security has gained nearly 25% during the past year, which could explain the bevy of call buying in recent weeks. JPM's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio stands at 2.04, indicating traders have bought to open more than two calls for every put during the last 10 sessions. This ratio arrives in the 88th annual percentile, denoting a healthier-than-usual appetite for calls over puts.

  • Also on deck to reveal quarterly earnings this month is WFC, which also received a downgrade to "neutral" from "buy" at Goldman Sachs today. The equity -- which has trailed the broader S&P 500 Index (SPX) on a relative-strength basis during the past three months -- appears to be a favorite with short-term bears lately. Schaeffer's put/call open interest ratio (SOIR) for WFC sits at 1.16, which ranks in the 82nd percentile of its annual range. In other words, near-term options players have been more put-heavy toward the stock just 18% of the time over the last 12 months.

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