Schaeffer's Trading Floor Blog

Analyst Downgrades: United Parcel Service, Facebook, and Teva Pharmaceutical Industries

Analysts downwardly revised their ratings on UPS, FB, and TEVA

by 10/16/2012 9:08 AM
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Analysts are weighing in today on package delivery company United Parcel Service, Inc. (NYSE:UPS - 72.59), social networking website Facebook Inc (NASDAQ:FB - 19.52), and travel website Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA - 39.45). Here's a quick roundup of today's bearish brokerage notes.

  • As UPS prepares to report third-quarter earnings on Oct. 23, the equity was downgraded to "neutral" from "outperform" at Baird in pre-market activity. With a year-over-year gain of roughly 7%, it stands to reason that calls are preferred over puts among the near-term options crowd. In fact, the equity's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.60, conveying calls almost double puts among the front three-months' series of options. This ratio registers in the 10th percentile of its annual range, meaning short-term traders have rarely been more call-heavy toward UPS during the past year.

  • With quarterly earnings rapidly approaching, FB saw its price target cut to $27 from $31.50 at Nomura, and to $21 from $28 at Macquarie today. The security has surrendered nearly 10% so far this month, but the majority of analysts covering FB seem to maintain an upbeat outlook toward the stock. The equity currently sports 15 "strong buys" and two "buy" recommendations, compared to 12 "holds" and one "strong sell" suggestion. What's more, despite this morning's downward price-target adjustments, Thomson Reuters still shows an average 12-month price target of $29.29 -- representing expected upside of about 50% to Monday's closing price of $19.52.

  • Canaccord Genuity lowered its price target for TEVA to $50 from $52 this morning, which could exacerbate the equity's year-to-date loss of more than 2%. Over in the options pits, calls reign supreme, as evidenced by the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.09. In other words, calls bought to open have more than quadrupled puts during the past few months. This ratio is just six percentage points shy of a bullish peak, signaling traders have been snapping up calls over puts at a near annual-high clip.

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