Schaeffer's Trading Floor Blog

Analyst Downgrades: Wells Fargo & Co (WFC), JPMorgan Chase & Co, and Expedia Inc (EXPE)

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

by 10/14/2013 9:43 AM
Stocks quoted in this article:

Analysts are weighing in today on financial services firms Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co (NYSE:JPM), along with online travel company Expedia Inc (NASDAQ:EXPE). Here's a quick roundup of today's bearish brokerage notes.

  • WFC's third-quarter profit increased by a better-than-expected 13% -- according to Friday's earnings report -- yet Wall Street expressed concern as to whether the lender can continue this growth in light of a recent drop-off in mortgage activity. Over the weekend, Jefferies, KBW, and Bernstein reduced their price targets for the stock by $1 to $47, $49, and $45, respectively. Meanwhile, ahead of the company's earnings report, the brokerage bunch, for the most part, was already pessimistic toward Wells Fargo & Co -- which sports a year-to-date gain of 21.3%. From the 24 analysts weighing in, WFC received 14 "hold" or worse suggestions, compared to 10 "buy" or better recommendations. However, the average 12-month price target of $46.04 represents expected upside to the equity's current price of $41.48 -- leaving the door wide open for more rounds of price-target cuts, which could send WFC's shares lower.

  • JPM reported its first quarterly loss since 2004 on Friday, leading Bernstein to slice its price target for the stock to $60 from $62. Meanwhile, Citigroup raised its price target by $4 to $66. Over the past 60 sessions, JPMorgan Chase & Co has underperformed the broader S&P 500 Index (SPX) by 7.1 percentage points, yet the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.65 ranks just 1 percentage point from an annual low. In other words, given JPM's recent downturn -- the security has dropped 5.3% in three months to trade at $52.02 -- and its poor earnings report, this heavy accumulation of call open interest could end up translating into options-related resistance in the near term, as traders unwind their bullish bets.

  • EXPE -- which sits at a three-month deficit of 24.2% -- was downgraded to "hold" from "buy" at Deutsche Bank this morning. Elsewhere, Wall Street remains skeptical toward the stock, ahead of its tentative earnings report at the end of the month. Short interest on Expedia Inc grew by 23.7% in the last two reporting periods, and now accounts for a lofty 12.5% of the equity's available float. Plus, EXPE maintains 11 "hold" ratings, compared to just six "strong buys." At last check, the security was down 6.4% to trade at $48.40.

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