Schaeffer's Trading Floor Blog

Analyst Downgrades: Hewlett-Packard, Amarin, and Red Hat

Analysts downwardly revised their ratings on HPQ, AMRN, and RHT

by 12/18/2012 9:07 AM
Stocks quoted in this article:

Analysts are weighing in today on tech concern Hewlett-Packard Company (NYSE:HPQ - 14.21), biopharmaceutical company Amarin Corporation plc (ADR) (NASDAQ:AMRN - 8.75), and software solutions provider Red Hat, Inc. (NYSE:RHT - 51.30). Here's a quick roundup of today's bearish brokerage notes.

  • Down nearly 45% so far this year, HPQ was downgraded to "sell" from "hold" at Topeka Capital Markets this morning. Given the stock's technical weakness, it's no surprise that most of the covering analysts maintain an air of caution toward HPQ. Only one has deemed the security worthy of a "strong buy" endorsement, compared to 16 lukewarm "holds," and seven "sell" or worse suggestions. Even more telling, Thomson Reuters shows an average 12-month price target of $13.53 for the equity, representing a discount to Monday's closing price of $14.21.

  • Despite a year-over-year gain of more than 40%, AMRN was hit with price-target cuts at Lazard (to $13 from $16) and Wedbush (to $10 from $15) ahead of the opening bell. Meanwhile, the stock has been seeing plenty of call action in the options pits. Data pulled from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 20-day call/put volume ratio of 2.94 for AMRN. Or in simpler terms, calls bought to open have nearly tripled puts during the past month.

  • RHT -- which is on deck to reveal quarterly earnings this Thursday -- saw its price target reduced to $63 from $65 at Susquehanna today. The stock has climbed more than 24% in 2012, which could explain the bevy of short-term call activity. The security's Schaeffer's put/call open interest ratio (SOIR) sits at 0.36, with calls nearly tripling puts among options with a shelf life of three months or less. This ratio hovers just two percentage points above a yearly low, signaling near-term options traders have rarely been more bullishly aligned toward the equity during the last 12 months.

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