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Analyst Downgrades: Microsoft, Chesapeake Energy, and Hertz Global

Analysts downwardly revised their ratings on MSFT, CHK, and HTZ

by 1/10/2013 9:12 AM
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Analysts are weighing in today on software behemoth Microsoft Corporation (NASDAQ:MSFT - 26.70), gas and oil issue Chesapeake Energy Corporation (NYSE:CHK - 17.08), and car rental service Hertz Global Holdings, Inc. (NYSE:HTZ - 17.49). Here's a quick roundup of today's bearish brokerage notes.

  • With quarterly earnings looming on the horizon, MSFT was downgraded to "equal weight" from "overweight" at Morgan Stanley this morning. The stock has trailed the broader S&P 500 Index (SPX) by close to 11 percentage points over the last two months, yet most of the covering analysts have high expectations for MSFT. The security currently boasts 15 "strong buys" and four "buy" endorsements, compared to 11 "holds," and zero "sell" suggestions. This leaves the door open for future downgrades, which could pressure the equity lower.

  • CHK -- which has shed more than 24% during the past year -- was cut to "neutral" from "buy," and saw its price target reduced to $19 from $26 at Suntrust Robinson today. Despite this technical weakness, the security is seeing plenty of short-term call activity. Schaeffer's put/call open interest ratio (SOIR) for CHK sits at 0.73, confirming calls outpace puts among the front three-months' series of options. This ratio hovers just five percentage points above an annual nadir, reflecting a much stronger-than-usual preference for near-term calls over puts.

  • Down almost 2% in pre-market trading, HTZ was lowered to "underweight" from "overweight," and received a price-target cut to $17 from $18 at Morgan Stanley last night. Meanwhile, the equity -- which has climbed nearly 36% on a year-over-year basis -- has seen plenty of call action lately. In fact, the security's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio checks in at 17.59, indicating traders have bought to open nearly 18 calls for every put during the past month.

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