Schaeffer's Trading Floor Blog

Analyst Downgrades: Apollo Group, Sunoco, and NVIDIA

Analysts downwardly revised their ratings on APOL, SUN, and NVDA

by 9/7/2012 9:19 AM
Stocks quoted in this article:

Analysts are weighing in today on private education provider Apollo Group Inc (NASDAQ:APOL - 30.39), petroleum refiner Sunoco, Inc. (NYSE:SUN - 47.67), and graphic chip maker NVIDIA Corporation (NASDAQ:NVDA - 13.73). Here's a quick roundup of today's bearish brokerage notes.

  • APOL -- which has swallowed a loss of roughly 44% so far this year -- was cut to "sell" from "hold" at Deutsche Bank earlier this morning. The equity has also underperformed the broader S&P 500 Index (SPX) by about 15 percentage points during the last 60 sessions. Given this technical weakness, it's no surprise that skeptics have been converging on the stock. Short interest on APOL ramped up by more than 14% during the past month, and now accounts for over 14% of the security's float. It would take 10 days to buy back these shorted shares, at the equity's average pace of trading.

  • SUN was downgraded to "neutral" from "buy" at Citigroup ahead of the opening bell, which could chip away at the stock's year-over-year gain of close to 53%. Nevertheless, traders have been showing an affinity for calls over puts, as the stock sports a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 258.76. In other words, calls bought to open have outpaced puts by a margin of nearly 259 to one during the past couple of weeks. This ratio is just two percentage points shy of a yearly peak, conveying that traders have been snatching up calls over puts at a near annual-high pace.

  • Down more than 2% in pre-market trading, NVDA was lowered to "hold" from "buy" at Cantor Fitzgerald today, after it was revealed that Amazon.com, Inc. (NASDAQ:AMZN) used processors made by Texas Instruments Incorporated (NASDAQ:TXN) for its new Kindle Fire tablets instead of NVDA's Tegra 3 chip. Although the stock is down about 3% on a year-over-year basis, near-term calls more than double puts, according to the security's Schaeffer's put/call open interest ratio (SOIR) of 0.44. This ratio arrives in the 31st annual percentile, denoting a healthier-than-usual appetite for calls over puts among short-term speculators.

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