Analyst Downgrades: Amazon.com, Inc., Microsoft Corporation, and Pandora Media Inc

Analysts issued bearish notes on AMZN, MSFT, and P

by Karee Venema

Published on Oct 24, 2014 at 9:30 AM
Updated on Apr 20, 2015 at 5:32 PM

Analysts are downwardly revising their ratings on e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN), software specialist Microsoft Corporation (NASDAQ:MSFT), and streaming issue Pandora Media Inc (NYSE:P). Here's a quick look at today's bearish brokerage notes on AMZN, MSFT, and P.

  • AMZN is bracing for a 10% drop right out of the gate, after last night's third-quarter earnings miss was met with a round of bearish brokerage notes. Among those weighing in on the stock was UBS, which slashed its price target to $315 from $360. Additionally, Janney cut its rating on the stock to "neutral" from "buy," reduced its fair value on AMZN to $315 from $400, and lowered its 2015 revenue growth outlook for the company to 18% from 22%. Ahead of today's session, the security was already struggling, down 21.5% year-to-date to trade at $313.18, yet 68% of covering analysts maintain a "buy" or "strong buy" recommendation toward the shares. Should Amazon.com, Inc. (NASDAQ:AMZN) continue to spiral, an additional round of downwardly revised ratings could translate into more selling pressure for the shares.

  • MSFT, meanwhile, is pointed nearly 5% higher ahead of the bell, as last night's stronger-than-forecast fiscal first-quarter earnings results overshadow a price-target cut to $53 from $54 at RBC -- although the brokerage firm did underscore its "outperform" rating. (Not all analysts took the skeptical route, with MSFT receiving at least three price-target hikes, including one to $55 from $50 at Credit Suisse.) Today's projected price move is just more of the same for a stock that's up 20.3% year-to-date to trade at $45.02, yet option traders have been extremely bearish toward the shares in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MSFT's 10-day put/call volume ratio of 0.97 ranks 8 percentage points from a 52-week peak. As Microsoft Corporation continues to gain ground on the charts, an unwinding of the hedges related to these bearish bets could help propel the shares higher.

  • It's not looking too hot for P this morning -- to the dismay of short-term option bulls -- with the shares down almost 7% ahead of the bell, after a smaller-than-expected rise in listener growth in the third quarter prompted no fewer than nine price-target cuts. CRT Capital, for example, cut its price target to $26 from $32, and underlined its "fair value" rating. Raymond James, meanwhile, reduced its price target to $28 from $31, but maintained its "outperform" recommendation. On the charts, Pandora Media Inc has surrendered nearly 43% since hitting an all-time high of $40.44 on March 5, with the shares last seen at $23.12. However, the consensus 12-month price target of $34.31 stands at a 48% premium to current trading levels, leaving the door wide open for another round of price-target reductions, which could create headwinds for the shares down the road.

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