Schaeffer's Trading Floor Blog

Analyst Downgrades: Wells Fargo, Intel, and Safeway

Analysts downwardly revised their ratings on WFC, INTC, and SWY

by 10/2/2012 9:06 AM
Stocks quoted in this article:

Analysts are weighing in today on banking concern Wells Fargo & Company (NYSE:WFC - 34.70), semiconductor stock Intel Corporation (NASDAQ:INTC - 22.75), and food and drug retailer Safeway Inc. (NYSE:SWY - 16.10). Here's a quick roundup of today's bearish brokerage notes.

  • With quarterly earnings looming on the horizon, WFC was downgraded to "hold" from "buy" at Deutsche Bank ahead of the opening bell. Nevertheless, the equity has climbed roughly 50% during the past year, a strong move that may be attracting call players. The stock currently sports a 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.47, confirming that traders have bought to open 147 calls for every 100 puts during the past month.

  • INTC -- who is also scheduled to step up to the earnings plate later this month -- saw its price target cut to $21 from $24 at BMO this morning and to $24 from $26 at FBR. These reduced expectations could exacerbate the stock's year-to-date decline of more than 6%. Meanwhile, near-term puts slightly outstrip calls, as evidenced by the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.06. This ratio ranks higher than 82% of other such readings taken during the past year, meaning short-term traders have been more put-heavy toward the stock just 18% of the time during the past year.

  • Ahead of unveiling third-quarter earnings on Oct. 11, SWY was cut to "underperform" from "neutral" at Credit Suisse in pre-market activity. The security has shed more than 23% so far this year, so it stands to reason that skeptics have been converging on the stock. Short interest on SWY ramped up by close to 17% during the past month, and now represents a hefty 31% of the equity's available float. In fact, it would take almost two weeks to buy back these shorted shares, at the security's average pace of trading.

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