Schaeffer's Trading Floor Blog

Analyst Downgrades: Coinstar, Caterpillar, and Deckers Outdoor

Analysts downwardly revised their ratings on CSTR, CAT, and DECK

by 10/26/2012 9:18 AM
Stocks quoted in this article:

Analysts are weighing in today on automated kiosk provider Coinstar, Inc. (NASDAQ:CSTR - 43.23), construction equipment manufacturer Caterpillar Inc. (NYSE:CAT - 83.53), and footwear designer Deckers Outdoor Corp (NASDAQ:DECK - 35.49). Here's a quick roundup of today's bearish brokerage notes.

  • CSTR -- which has shaved off more than 6% ahead of the open -- saw its price target slashed to $66 from $88 at Wedbush today, after revealing disappointing quarterly earnings results and lowering its full-year guidance. The equity has surrendered more than 18% during the last 12 months -- a decline that hasn't gone unnoticed by skeptics. Although short interest on the stock fell by nearly 10% during the most recent reporting period, these pessimistic bets still account for a staggering 31% of CSTR's available float. It would take more than 12 days to unwind these shorted shares, at the security's average daily trading volume.

  • CAT was downgraded to "buy" from "conviction buy" at Goldman Sachs this morning, which could exacerbate the stock's year-over-year decline of more than 13%. Despite this technical weakness, call buyers are still gravitating toward the equity. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 50-day call/put volume ratio of 1.28 for CAT, confirming calls bought to open have outstripped puts during the past few months. This ratio is just eight percentage points shy of a yearly peak, meaning traders have rarely picked up calls over puts at a faster clip during the last 12 months.

  • Down more than 18% in pre-market action, DECK was also hit with some bearish attention today, thanks to weaker-than-anticipated third-quarter revenue, along with a downwardly revised current-quarter forecast. The security was cut to "neutral" from "positive" at Susquehanna, and to "sector perform" from "outperform" at RBC, while Canaccord Genuity lowered its price target to $37 from $39. The equity has shed roughly 67% during the past year, yet near-term calls nearly double puts, as evidenced by DECK's Schaeffer's put/call open interest ratio (SOIR) of 0.59. This ratio is docked in the 19th annual percentile, indicating short-term traders have been more bullishly aligned toward the security less than one-fifth of the time over the past year.

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