Schaeffer's Trading Floor Blog

Analyst Downgrades: Tesla Motors Inc, KB Home, and Valeant Pharmaceuticals

Analysts downwardly revised their ratings on TSLA, KBH, and VRX

by 6/28/2013 9:26 AM
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Analysts are weighing in today on electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA), homebuilder KB Home (NYSE:KBH), and drug concern Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Here's a quick roundup of today's bearish brokerage notes.

  • Although TSLA has more than tripled in value this year to trade at $109.25, analysts at Wedbush Securities initiated coverage of the stock with a tepid "neutral" rating ahead of the opening bell. Meanwhile, sentiment in the short-term options pits is also bearishly slanted. Schaeffer's put/call open interest ratio (SOIR) for Tesla Motors Inc checks in at 1.80, indicating puts nearly double calls among the front three-months' series of options. In fact, this ratio is just 2 percentage points shy of a yearly peak, signaling near-term speculators have rarely been more put-focused on the security during the past year.

  • KBH -- which has climbed more than 126% during the past 12 months -- was slapped with a price-target cut to $25 from $29 at RBC today, despite revealing a narrower-than-anticipated quarterly loss on Thursday morning. This downbeat attitude from the brokerage bunch is par for the course, though. Only three firms have deemed KB Home worthy of a "buy" or better rating, versus 12 "holds" and two "sell" or worse suggestions. What's more, the stock's average 12-month price target of $20.58 denoted a premium of just 4.5% from Thursday's closing price of $19.70. A reversal in sentiment among the analyst crowd could help push the shares even higher.

  • Finally, VRX saw its price target lowered to $110 from $112 at Canaccord Genuity this morning, even though the stock has surged about 97% on a year-over-year basis to explore the $86.15 area. Elsewhere, the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio sits at 3.07, conveying calls bought to open have more than tripled puts during the past 10 weeks. This ratio ranks higher than 70% of similar 52-week readings, meaning speculators have been picking up calls over puts at an accelerated clip in recent months.

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