Schaeffer's Trading Floor Blog

Analyst Downgrades: KeyCorp, Arch Coal, and Pacific Sunwear

Analysts lowered their ratings on KEY, ACI, and PSUN

by 10/29/2012 11:38 AM
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Even with most of Wall Street closed for business due to the approach of Hurricane Sandy, some analysts have been busy announcing ratings changes. This morning, brokers changed their opinions on regional bank KeyCorp (NYSE:KEY - 8.39), energy concern Arch Coal Inc (NYSE:ACI - 8.09), and teen apparel retailer Pacific Sunwear of California, Inc. (NASDAQ:PSUN - 1.72). Here's a quick peek at today's bearish brokerage notes.

  • KEY was hit with a price-target cut this morning, as Bernstein lowered its outlook to $8 from $9, while keeping its rating at "perform." This new target is below the stock's current perch and south of the analysts' average 12-month price estimate of $9.48. Although the stock has gained 14.5% in the last 12 months, option players are exhibiting signs of caution as well of late. During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the total number of puts bought to open has exceeded calls by a margin of more than three to two. The resultant put/call volume ratio of 1.54 is higher than 85% of the past year's readings, suggesting bearish speculation is running at an above-average pace.

  • There were some mixed reviews for ACI today. First, BMO upped its price target to $7 from $4. While the headline reads "raises," note that the new price target is still below the stock's current price and that BMO maintains an "underperform" rating on the shares. Next, CRT Capital lowered its rating on the stock to "sell" from "fair value." It's not surprising to see this skepticism, as the shares have dropped more than 44% in 2012 alone. Short interest now represents nearly 24% of the equity's float after popping 11.4% higher during the last two weeks.

  • And finally, PSUN was lowered to "neutral" from "buy" at B. Riley this morning. The firm also reduced its price target to $1.90 from $3.50, citing concern over slowing sales. PSUN shares are up 24.6% during the last 52 weeks but are virtually flat on a year-to-date basis. Analysts are largely skeptical, as there are two "strong buy" ratings on the retailer compared to eight "holds" and one "strong sell."

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