Schaeffer's Trading Floor Blog

Analyst Downgrades: Applied Materials, Dell, and SINA

Analysts downwardly revised their ratings on AMAT, DELL, and SINA

by 8/16/2012 9:14 AM
Stocks quoted in this article:

Analysts are weighing in today on semiconductor stock Applied Materials, Inc. (NASDAQ:AMAT - 11.80), computer giant Dell Inc. (NASDAQ:DELL - 12.21), and online media firm SINA Corporation (USA) (NASDAQ:SINA - 50.90). Here's a quick roundup of today's bearish brokerage notes.

  • After reporting a 54% drop in profit for the fiscal third quarter, AMAT was downgraded to "negative" from "neutral" at Susquehanna earlier this morning, while RBC lowered its price target to $15 from $17. Before today's earnings-related price action shakes out, the stock was sitting on a year-to-date gain of more than 10%, which could've attracted near-term options bulls. The Schaeffer's put/call open interest ratio (SOIR) stands at 0.55, indicating that calls almost double puts among options expiring in the next three months. This ratio registers in the 35th percentile of its annual range, reflecting a healthier-than-usual appetite for calls over puts among the short-term crowd.

  • As DELL prepares to take its turn in the earnings confessional next week, the stock was slapped with a price-target cut to $17 from $18 at Stifel Nicolaus before the market open. With a year-to-date decline of approximately 17%, it stands to reason that puts would outpace calls. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day put/call volume ratio of 10.97, conveying that traders have bought to open nearly 11 puts for every call during the past two weeks. This ratio is just one percentage point shy of a yearly peak, meaning speculators have been snapping up puts over calls an a near annual-high pace.

  • SINA -- which has swallowed a 52-week loss of more than 45% -- was cut to "hold" from "buy" and had its price target slashed to $56 from $82 at Jefferies in pre-market action. The bearish brokerage note came after the company reported a surge in quarterly profits, but warned of weaker earnings for the remainder of 2012. The stock has also trailed the broader S&P 500 Index (SPX) by about 10 percentage points during the past three months, so it's no surprise that bearish speculation has ramped up lately. Short interest on the equity spiked by more than 9% during the past two reporting periods, and now accounts for over 11% of the security's float.

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