Schaeffer's Trading Floor Blog

Analyst Downgrades: The Coca-Cola Company, Johnson & Johnson, and McDonald's Corporation

Analysts lowered their ratings on KO, JNJ, and MCD

by 7/17/2013 9:33 AM
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Analysts have lowered their opinions of soft-drink giant The Coca-Cola Company (NYSE:KO), pharmaceutical heavyweight Johnson & Johnson (NYSE:JNJ), and Big Mac creator McDonald's Corporation (NYSE:MCD). Here's a quick roundup of today's bearish brokerage notes.

  • The Coca-Cola Company has been treading water over the past year, up just 3.6% during the last 52 weeks to sit at $40.23. Bernstein responded to this inertia by cutting its 12-month price target on the beverage name, to $46 from $47. Still, KO is well-liked among analysts. Currently, 15 analysts follow the shares, 10 of whom offer up ratings of "buy" or better. Additionally, there are five "hold" ratings and not a single "sell." Also, the consensus 12-month price target matches Bernstein's new outlook of $46, which is still 14.3% north of the stock's current price.

  • On the heels of its quarterly earnings report, Johnson & Johnson has earned lots of attention from Wall Street. Although no fewer than three firms lifted their price-targets on the Dow component, Deutsche Bank lowered its rating to "hold" from "buy." The shares have had a strong year, outperforming the S&P 500 Index (SPX) in terms of relative strength and gaining nearly 29% to rest at $90.40. The stock has nevertheless been a target of bearish options speculators. During the last 20 trading days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), investors have purchased to open 105 JNJ puts for every 100 calls.

  • McDonald's Corporation was greeted with a downgrade this morning; Janney lowered its outlook to "neutral" from "buy," observing that estimates for near- and intermediate-term same-store sales in the U.S. seem inflated. MCD shares are currently sitting just north of the century mark at $100.88, up a scant 9.8% during the last 12 months, but options players are decidedly call focused. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.72 currently stands 2 percentage points shy of an annual low. In other words, MCD call open interest for short-term options -- relative to put open interest -- has rarely been more dominant during the last year.

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