Schaeffer's Trading Floor Blog

Analyst Downgrades: Wells Fargo & Co, Transocean LTD, and CarMax, Inc

Analysts downwardly revised their ratings on WFC, RIG, and KMX

by 6/14/2013 9:18 AM
Stocks quoted in this article:

Analysts are weighing in today on financial services firm Wells Fargo & Co (NYSE:WFC), oil and gas concern Transocean LTD (NYSE:RIG), and used car retailer CarMax, Inc (NYSE:KMX). Here's a quick roundup of today's bearish brokerage notes.

  • WFC -- which has climbed nearly 28% during the past year to trade at $40.94 -- was downgraded to "neutral" from "buy" at Sterne Agee today. The brokerage firm noted that the company's "earnings growth is clearly moderating into '14 exacerbated by the stubbornly low rate environment and normalizing mortgage banking revenues." (However, Jefferies upped its price target to $44 from $42.) Meanwhile, the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.88 ranks higher than 76% of similar annual readings, meaning traders have been picking up Wells Fargo & Co puts relative to calls at an accelerated clip.

  • RIG saw its price target trimmed to $55 from $56 at Susquehanna ahead of the opening bell, which could potentially chip away at the stock's 2013 advance of about 9%. Elsewhere, skepticism has been growing toward Transocean LTD, which is presently perched at $48.74. In fact, short interest surged by close to 37% during the past two reporting periods. However, there is still plenty of room in the security's pessimistic camp, as these bearish bets make up just over 1% of RIG's available float. It would take less than a day to buy back these shorted shares, at the equity's average pace of trading.

  • Despite a year-over-year gain of almost 72% to explore the $46.99 area, KMX received a price-target cut to $56 from $58 at Nomura this morning. The stock has also bested the broader S&P 500 Index (SPX) by about 9 percentage points during the past three months, yet near-term traders remain bearishly biased toward CarMax, Inc. The security's Schaeffer's put/call open interest ratio (SOIR) checks in at 1.12, confirming puts outstrip calls among the front three-months' series of options. This glut of put open interest -- particularly within the June series of contracts -- could end up translating into options-related support in the short term.

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