Analyst Downgrades: L Brands Inc, Urban Outfitters, Inc., and Take-Two Interactive Software, Inc.

Analysts downwardly revised their ratings and price targets on L Brands Inc (NYSE:LB), Urban Outfitters, Inc. (NASDAQ:URBN), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

Karee Venema

May 19, 2016 at 10:03 AM

Analysts are weighing in on retail stocks L Brands Inc (NYSE:LB) and Urban Outfitters, Inc. (NASDAQ:URBN), as well as game maker Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Here's a quick roundup of today's bearish brokerage notes on LB, URBN, and TTWO.

Echoing a recent trend among retailers, LB is down 2% at $62.51 -- and fresh off a new annual low of $60.00 -- after the firm reported lower-than-expected first-quarter revenue and offered up a dreary full-year forecast. What's more, Baird cut its rating to "neutral" and its price target to $66, saying, "Near-term visibility is greatly reduced amid a multi-front sales slowdown, leadership changes, significant shifts in promotional strategy." The stock also saw its price target cut at Deutsche Bank (to $76) and UBS (to $68). Year-to-date, the shares of L Brands Inc have now shed 33%. Short-term options traders, meanwhile, are more put-heavy than usual, per LB's Schaeffer's put/call open interest ratio (SOIR) of 1.55 -- in the 81st percentile of its annual range.

URBN, however, is following in the footsteps of its fellow teen retailer -- up 11.8% at $27.50, after the company posted solid results for the first quarter. In fact, not even price-target cuts from Mizuho (to $28), Wedbush (to $30), Stifel (to $32), and Baird (to $34) are slowing the stock down. Longer term, shares of Urban Outfitters, Inc. are off 21% from their April 4 year-to-date high of $34.77, and short sellers have been piling on. In fact, short interest surged 23% in the most recent reporting period, and now accounts for a healthy 9.4% of URBN's available float. It would take more than six sessions to cover all of these bearish bets, at the equity's average daily pace of trading.

Analysts are reacting to TTWO's mixed earnings report, with the company's fiscal fourth-quarter results exceeding estimates, but its current-quarter forecast falling short. Baird, for example, cut its price target to $37, as did Ascendiant Capital (to $42), Jefferies (to $45), Mizuho (to $40), and Credit Suisse (to $37). Macquarie, MKM Partners, and Wedbush, however, all boosted their price targets. After plunging 7.3% at the open, TTWO has since bounced off its 200-day moving average to trade 2% higher at $36.36. This positive price action just echoes the equity's longer-term trajectory, with TTWO up 31.5% year-over-year. Short sellers are likely smarting over this bullish reversal, considering 15.9% of Take-Two Interactive Software, Inc.'s float is sold short. What's more, at the stock's average pace of trading, it would take almost two weeks to cover these shorted shares.

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