Analyst Downgrades: Micron, Keurig, and King Digital

Analysts downwardly revised their ratings on Micron Technology, Inc. (MU), Keurig Green Mountain Inc (NASDAQ:GMCR), and King Digital Entertainment PLC (KING)

May 15, 2015 at 9:27 AM

Analysts are weighing in today on semiconductor firm Micron Technology, Inc. (NASDAQ:MU), coffee behemoth Keurig Green Mountain Inc (NASDAQ:GMCR), and Candy Crush parent King Digital Entertainment PLC (NYSE:KING). Here's a quick roundup of today's bearish brokerage notes on MU, GMCR, and KING.

Nomura cut its price target on MU to $25 from $28 and reiterated its "neutral" rating, sending the shares 1% lower ahead of the bell. The price-target cut comes as little surprise, considering the shares of Micron Technology, Inc. are down 23.8% year-to-date to close Thursday at $26.69. Furthermore, the stock is trading well below its 80-day moving average, which has served as a ceiling for most of 2015. However, options traders have shown a preference for calls over puts lately; over the last 50 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.63 MU calls have been bought to open for every put. The brokerage bunch is optimistic on the security as well, with roughly 81% of covering analysts rating it a "buy" or "strong buy." Should MU extend its slump, more bearish analyst attention could exacerbate selling pressure on the stock.

GMCR said its new cold brewing coffee machine, "Keurig Kold," will not be released in all of its retail stores until 2016 -- later than investors expected -- sending the shares 6.8% lower in pre-market trading. In response, UBS slashed its price target on Keurig Green Mountain Inc to $114 from $120, but underscored its "buy" rating. Technically speaking, GMCR has been trending downwards, with the shares shedding 22.2% year-to-date to close yesterday at $103.07. Furthermore, the company lowered its full-year forecast just last week, sending the stock to an annual low of $95.02. Accordingly, puts have been prominent in the options pits, as GMCR's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.92 is higher than 79% of all comparable readings from the past year.

Despite reporting a first-quarter earnings beat, the shares of KING were last seen 7.8% lower in electronic trading, after the company's projected current-quarter gross bookings fell short of estimates. Reacting were no fewer than three brokerage firms, which all lowered their price-targets on the equity. Specifically, Stifel cut its target to $19, Deutsche Bank decreased its target to $16, and Wedbush slashed its target to $21. On the charts, KING has been underwhelming, with the shares down more than 20% from their March 2014 IPO. Not surprisingly, options traders have shown a preference for puts lately, as King Digital Entertainment plc's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.43 stands in the 91st annual percentile. Meanwhile, short interest declined by 20.3% over the last two reporting periods, but still accounts for a lofty 22.1% of the stock's available float. It would take these bettors approximately 14 sessions to cover their positions, at average trading volumes.

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