Analyst Downgrades: Cree, Inc., Yelp Inc, and VMware, Inc.

Analysts issued bearish notes on CREE, YELP, and VMW

Karee Venema

Oct 22, 2014 at 9:36 AM

Analysts are downwardly revising their ratings on semiconductor stock Cree, Inc. (NASDAQ:CREE), business review site Yelp Inc (NYSE:YELP), and IT issue VMware, Inc. (NYSE:VMW). Here's a quick roundup of today's bearish brokerage notes on CREE, YELP, and VMW.

CREE dropped 10% right out of the gate -- and to a new annual low of $29.49 -- after its fiscal first-quarter earnings miss and lower-than-expected current-quarter revenue guidance prompted a round of bearish attention from the brokerage crowd. Included in the bunch was a downgrade to "neutral" from "buy" and price-target cut to $31 from $44 at D.A. Davidson, and a price-target reduction to $28 from $42 -- and tepid "neutral" rating -- at Susquehanna. On the charts, CREE has shed 52% year-to-date to trade at $29.77, and should the stock's technical struggles continue, another round of downgrades and/or price-target cuts could apply additional pressure. In fact, four out of 14 covering analysts maintain a "strong buy" rating on the shares, and the equity's consensus 12-month price target of $41.65 sits at a 26% premium to current trading levels.

Brean Capital initiated coverage of YELP with a lukewarm "hold" rating and price target of $68.78, ahead of the company's third-quarter earnings report, which is due out after tonight's close. Technically speaking, YELP has made some big moves to both the upside and downside in 2014, but after all is said and done, the stock is sitting on a modest 3.4% year-to-date gain to trade at $71.28. On the sentiment front, option traders have been upping the bearish ante in the weeks leading up to Yelp Inc's quarterly announcement. The equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.94 ranks just 12 percentage points from a 52-week peak.

VMW is down nearly 8% at the open -- following last night's close at $88.19 -- after offering up a disappointing outlook for fourth-quarter revenue. The news prompted a round of bearish brokerage notes, including a downgrade to "neutral" from "buy" at Nomura, and a price-target cut to $86 from $96 at Susquehanna. Today's price move could come as music to the ears of one group of traders; specifically, short sellers. More than 26% of VMware, Inc.'s float is sold short, and would take about 13 sessions to cover, at the security's average daily pace of trading.

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