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Marathon Oil Slips on Downgrade

MRO cut to 'hold' by Goldman Sachs

by 11/15/2011 10:30:29 AM
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Before the opening bell sounded this morning, Goldman Sachs cut its rating for Marathon Oil Corporation (MRO - 27.45) to "neutral" from "buy."

There could be additional negative notes in store for the oil and gas concern. According to Zacks, there are seven "strong buys" and one "buy," compared to nine "holds" and not a single "sell" in sight.

Furthermore, the consensus 12-month price target -- as calculated by Thomson Reuters -- sits at $34.44, which represents a 24.5% premium to Monday's close of $27.67.

Elsewhere on Wall Street, it looks like relatively few traders are betting on the stock to fall. Short interest for MRO fell 13.2% during the past month. These bearish bets now account for just 1.6% of the security's float, pointing to a rather scant supply of sideline cash.

Yet, options traders seem to have adopted a pessimistic stance on MRO, as evidenced by the stock's 10-day put/call volume ratio of 0.90 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks above 92% of all other readings taken during the past 12 months, suggesting that traders on these exchanges have initiated bearish bets over bullish at a faster clip than usual over the past two weeks.

Likewise, MRO's Schaeffer's put/call open interest ratio (SOIR) of 0.78 lands just eight percentage points from a pessimistic peak, indicating that short-term options traders have been more bearishly aligned only 8% of the time during the past year.

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