Mizuho Takes a Hatchet to Mallinckrodt Target; American Airlines Cuts Outlook

Morgan Stanley expects Whiting Petroleum stock to trade near record lows

by Patrick Martin |

Published on Sep 13, 2017 at 10:16 AM

Analysts are weighing in on oil-and-gas issue Whiting Petroleum Corp (NYSE:WLL), healthcare firm Mallinckrodt PLC (NYSE:MNK), and airline stock American Airlines Group Inc (NASDAQ:AAL). Here's a quick roundup of today's bearish brokerage notes on shares of WLL, MNK, and AAL.

Whiting Petroleum Stock Shrugs Off Morgan Stanley Downgrade

Whiting Petroleum stock has turned 1% higher to trade at $4.48, shrugging off earlier losses, even after Morgan Stanley cut its rating on the stock to "underweight" from "equal weight," while also issuing a price-target cut to $3.50 from $5. The new price target is just a stone's throw from WLL's February 2016 record low of $3.55. Whiting Petroleum stock has had a rough year, shedding 62% year-to-date, ushered lower by its descending 10-week moving average.

In the options pits, there has been a healthier-than-usual preference for puts over calls. WLL sports a 10-day put/call volume ratio of 0.73 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks 2 percentage points from a 52-week high.

Analyst Hits MNK Stock With Downgrade, Steep Price-Target Cut

Mallinckrodt stock is down 4% to trade at $34.99, after Mizuho downgraded the pharma stock to "neutral" from "buy," while slashing its price target by $30 to $40. Analysts cited sector competition and the company's recent court decision on a patent case as factors for the downgrade. MNK has shed over 51% year-over-year, and recently fell to a record low of $34.51 last Friday.

MNK stock continues to be heavily shorted. While short interest has increased by only 2% during the last reporting period, the 18 million shares of MNK sold short accounts for 19% of the stock's total available float. This represents nine times the stock's average daily trading volume.  

AAL's Lowered Outlook Leads to Bearish Analyst Attention

American Airlines, amid a flurry of hurricane-related cancellations and increased fuel prices, lowered its current-quarter outlook for revenue per available seat mile. As a result, Cowen and Company and Deutsche Bank reduced their price targets on the airline stock to $55 and $53, respectively. The stock, which is currently up 1.4% at $46.96, is trading a hair above year-to-date breakeven, but its pullback from two-year highs found support atop its 320-day moving average. AAL is now facing off against its 200-day moving average. Despite AAL's recent technical struggles, analyst sentiment remains bullishly skewed. Of the 15 brokerages covering AAL stock, seven rate it a "strong buy."
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