Analyst Downgrades: Chipotle Mexican Grill, Zynga, IBM

Analysts issued bearish notes on CMG, ZNGA, and IBM

Oct 21, 2014 at 9:29 AM
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Analysts are downwardly revising their ratings today on burrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG), social gaming specialist Zynga Inc (NASDAQ:ZNGA), and blue-chip tech giant International Business Machines Corp. (NYSE:IBM). Here's a quick look at today's bearish brokerage notes on CMG, ZNGA, and IBM.

  • CMG is poised to open 4.6% lower today, paring its 2014 gain of 22.6%, after the fast-casual restaurant operator predicted slowing sales trends for 2015. Analysts are weighing in on Chipotle Mexican Grill, Inc. this morning, with price-target cuts rolling in from four different firms -- including a decrease to $660 from $680 at Wunderlich. On the other hand, CMG has also racked up three price-target hikes, though Jefferies' upwardly revised target of $630 represents a considerable discount to the stock's Monday close at $653.03. Ahead of CMG's quarterly results, options traders were loading up on puts; the equity's Schaeffer's put/call open interest ratio (SOIR) stands at 1.31, with puts outnumbering calls among options set to expire within three months. This ratio arrives in the 62nd percentile of its annual range, indicating a stronger-than-usual skew toward near-term puts.

  • Benchmark cut its price target on ZNGA to $2.54 from $2.83, and backed a middling "hold" rating on the Tech 2.0 name. Zynga Inc is down nearly 40% year-to-date, and there's room for additional negative notes from analysts. Currently, the average 12-month price target for ZNGA stands at $3.54, representing a 54.6% premium to yesterday's close at $2.29. For the past couple of weeks, the stock has spent most of its time bouncing between $2.20 and $2.40, but ZNGA's upcoming earnings report on the evening of Thursday, Nov. 6, could provide a catalyst for its next big move.

  • On the heels of its major earnings disappointment, IBM was downgraded to "hold" from "buy" at Evercore, with the firm simultaneously dropping its price target to $180 from $210. Meanwhile, at least eight other brokers lowered their price targets for International Business Machines Corp., with a Credit Suisse cut to $125 representing the lowest forecast. IBM finished Monday's session down more than 7% at $169.10, bringing its year-to-date loss to 9.8%. The silver lining for Big Blue is that there's already a healthy amount of skepticism on display from analysts, which means a wave of additional downgrades is relatively unlikely. Already, only 25% of brokerage firms following IBM recommend buying it.

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