Schaeffer's Trading Floor Blog

Analyst Downgrades: Coinstar, Skullcandy, and The Gap

Analysts downwardly revised their ratings on CSTR, SKUL, and GPS

by 2/8/2013 9:20 AM
Stocks quoted in this article:

Analysts are weighing in today on automated kiosk provider Coinstar, Inc. (NASDAQ:CSTR - 52.10), audio accessories manufacturer Skullcandy Inc (NASDAQ:SKUL - 6.61), and apparel retailer The Gap Inc. (NYSE:GPS - 32.23). Here's a quick roundup of today's bearish brokerage notes.

  • CSTR saw its price target slashed to $65 from $85 at Benchmark this morning, after reporting a 27% drop in fourth-quarter earnings following Thursday's close, while also issuing a weaker-than-expected first-quarter outlook. Elsewhere, the security -- which has shed about 9% during the past 52 weeks -- seems to be popular among the skeptics lately. In fact, short interest on the stock surged by more than 10% over the last two reporting periods. These bearish bets now account for a formidable 47% of the equity's available float, or the equivalent of almost 12 days' worth of pent-up buying demand, at CSTR's average pace of trading.

  • Down nearly 56% on a year-over year basis, SKUL was downgraded to "hold" from "buy" at Keybanc today, while analysts at Jefferies reduced their price target to $5 from $6. Furthermore, Roth Capital revised its opinion to "neutral" from "buy." The downbeat attention comes on the heels of the company forecasting lackluster earnings for 2012 yesterday, while also announcing the departure of CEO Jeremy Andrus. Nevertheless, sentiment in the near-term options pits appears upbeat. The stock's Schaeffer's put/call open interest ratio (SOIR) sits at 0.52, with calls nearly doubling puts among the front three-months' series of options. This ratio ranks in the 26th annual percentile, indicating short-term traders have been more call-heavy toward SKUL just over one-fourth of the time during the last 12 months.

  • GPS -- which has gained close to 51% during the last 12 months -- received a price-target cut to $36 from $38 at Wedbush Securities ahead of the open, despite Thursday's upbeat sales data. Meanwhile, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 8.35 for GPS, conveying traders have bought to open more than eight calls for every put over the past couple of weeks. This ratio ranks higher than 86% of similar annual readings, reflecting a stronger-than-usual preference for bullish bets over bearish.

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