Analyst Downgrades: Herbalife, RetailMeNot, Nokia

Analysts downwardly revised their ratings on HLF, SALE, and NOK

by Andrea Kramer

Published on Nov 4, 2014 at 9:15 AM
Updated on Jul 2, 2020 at 1:39 PM

Analysts are weighing in today on nutritional supplements provider Herbalife Ltd. (NYSE:HLF), digital coupon concern RetailMeNot Inc (NASDAQ:SALE), and Finnish mobile broadband firm Nokia Corporation (ADR) (NYSE:NOK). Here's a quick roundup of today's bearish brokerage notes on HLF, SALE, and NOK.

  • HLF is in danger of a 13% drop out of the gate, after the firm reported lackluster quarterly earnings and slashed its full-year guidance. As a result, SunTrust Robinson downgraded HLF to "neutral" and cut its price target to $55, while Canaccord Genuity trimmed its price target to $60 from $73 and maintained a "buy" rating. There are likely quite a few traders cheering Herbalife Ltd.'s earnings miss, considering 47.5% of the stock's float is sold short. Meanwhile, additional price-target cuts could be on the horizon, as the consensus 12-month price target of $88 represents a premium of 57.4% to HLF's closing price of $55.90 on Monday.

  • SALE is bracing for a 23.3% drop at the opening bell, after issuing weaker-than-expected earnings projections and announcing the resignation of Chief Financial Officer Douglas Jeffries. The shares of SALE are already 29.1% lower year-to-date, landing at $20.40 on Monday, and RBC is gambling on even more downside, cutting its price target to $19 from $24 (but maintaining a "sector perform" recommendation). Credit Suisse, Wunderlich, and Jefferies also downwardly revised their targets, to $28, $32, and $33, respectively, though the latter two kept their "buy" suggestions. Options traders are likely disappointed in RetailMeNot Inc's earnings reaction; on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 10-day call/put volume ratio of 34.29 -- in the 96th percentile of its annual range. In other words, traders were buying to open SALE calls over puts at a near annual-high clip during the past two weeks.

  • Finally, NOK is set to dip 1.5%, after Bernstein downgraded the shares to "underperform" from "market perform," and cut its price target to $6.42 from $7.21. From a longer-term perspective, NOK has added 3.1% in 2014, with recent pullbacks contained by its 200-day moving average. In fact, Nokia Corporation (ADR) has outperformed the broader S&P 500 Index (SPX) during the past three months. Nevertheless, the stock's Schaeffer's put/call open interest ratio (SOIR) sits at 1.16 -- just 2 percentage points from a 12-month high, implying that near-term options traders have rarely been more put-heavy during the past year. Should NOK resume its steady journey higher, an unwinding of pessimism in the options pits could add fuel to the equity's fire.

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