Schaeffer's Trading Floor Blog

Analyst Downgrades: Clearwire, Rackspace Hosting, and Cliffs Natural Resources

Analysts downwardly revised their ratings on CLWR, RAX, and CLF

by 2/13/2013 9:21 AM
Stocks quoted in this article:

Analysts are weighing in today on wireless broadband provider Clearwire Corporation (NASDAQ:CLWR - 3.18), cloud computing firm Rackspace Hosting, Inc. (NYSE:RAX - 74.98), and mining issue Cliffs Natural Resources Inc (NYSE:CLF - 36.61). Here's a quick roundup of today's bearish brokerage notes.

  • CLWR was downgraded to "underperform" from "market perform" at Raymond James ahead of the open, after reporting a wider-than-expected fourth-quarter loss post-close yesterday. (Jefferies, however, boosted its price target to $3.15 from $2.) The stock has gained nearly 39% during the last 12 months, which hasn't gone unnoticed by call buyers. In fact, data 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 11.07 for CLWR, confirming traders have bought to open more than 11 calls for every put during the past month.

  • Down almost 11% in pre-market trading, RAX was cut to "hold" from "buy" at Stifel Nicolaus today, after revealing quarterly revenue that fell short of analysts' projections on Tuesday. Adding insult to injury, Evercore Partners and JMP Securities issued downward price-target adjustments. Meanwhile, near-term traders seem to share this pessimistic attitude toward the stock. Schaeffer's put/call open interest ratio (SOIR) for RAX sits at 1.44, signaling puts outnumber calls among options with a shelf-life of three months or less. This ratio arrives in the 72nd annual percentile, reflecting a stronger-than-usual preference for short-term puts over calls.

  • Off about 13.5% ahead of the open, CLF is also feeling the earnings sting this morning. The security received downgrades at Deutsche Bank (to "hold" from "buy") and Citigroup (to "neutral" from "buy") following a poorly received fourth-quarter earnings report. The company also announced it will slash its dividend by 76%. However, the stock is no stranger to skepticism, as short interest on CLF climbed by nearly 9% during the last two reporting periods. These bearish bets now account for a hefty 19% of the security's available float -- or the equivalent of more than four days' worth of pent-up buying pressure, at CLF's average pace of trading.

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