Schaeffer's Trading Floor Blog

Analyst Downgrades: Moody's Corporation, Exelon Corporation, and U.S. Bancorp

Analysts lowered their ratings on MCO, EXC, and USB

by 5/6/2013 9:13 AM
Stocks quoted in this article:

Analysts are shifting their opinions on ratings company Moody's Corporation (NYSE:MCO), energy concern Exelon Corporation (NYSE:EXC), and financial-services heavyweight U.S. Bancorp (NYSE:USB). Here's a quick roundup of today's bearish brokerage notes.

  • Raymond James lowered its outlook on Moody's Corporation this morning to "outperform" from "strong buy," even as the stock has rallied nearly 61% year-over-year to $62.75. The stock is currently perched well north of the average 12-month price target among analysts (which stands at $54.56), and just five analysts follow the shares, three of whom think MCO deserves a "hold" rating. Meanwhile, more than 6% of the equity's available float has been sold short. At MCO's average pace of trading, it would take these short sellers nearly two weeks to exit their positions, laying the groundwork for a potential short squeeze.

  • Exelon Corporation was downgraded to "neutral" from "buy" at ISI Group today, as it sits at $35.81, a 7% drop from last year at this time. While the analyst community is skeptical of the stock's prospects -- 14 of 17 covering analysts name the stock a "hold" -- the options crowd has been more upbeat. Schaeffer's put/call open interest ratio (SOIR) for EXC stands at 0.40, just 10 percentage points shy of an annual nadir. In other words, short-term option players have shown an atypical preference for calls of late.

  • As part of its focus on the banking sector, Susquehanna reduced its price target on U.S. Bancorp to $39 from $40. The stock -- up just 2.6% in 2013 to $32.77 -- has nonetheless been targeted by bullish speculators. During the last 50 trading days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), calls have been purchased to open over puts by a margin of nearly 3-to-1. The resultant call/put volume ratio of 2.84 is higher than 90% of the past year's worth of similar readings.

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