Analyst Downgrades: Zulily, Lululemon Athletica, FireEye

Analysts issued bearish brokerage notes on ZU, LULU, and FEYE

Karee Venema
Nov 5, 2014 at 9:29 AM
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Analysts are downwardly revising their ratings on retailers Zulily Inc (NASDAQ:ZU) and Lululemon Athletica inc. (NASDAQ:LULU), as well as virtual security firm FireEye Inc (NASDAQ:FEYE). Here's a closer look at today's bearish brokerage notes on ZU, LULU, and FEYE.

  • ZU is bracing for a 14% drop out of the gate, after its disappointing turn in the earnings confessional was met with no fewer than four price-target cuts. Most pessimistic among the bunch was CRT Capital, which cut its price target by $5 to $36 -- in line with Tuesday's closing price of $35.96. The brokerage firm did maintain its "buy" rating, however, echoing the general consensus of those analysts currently covering the stock. In fact, Zulily Inc has seven "strong buy" recommendations, versus two "holds" and not a single "sell." Plus, the consensus 12-month price target of $44.36 stands at a 23.4% premium to current trading levels. Should the security extend its post-earnings swoon, another round of bearish brokerage notes could pressure the shares lower.

  • J.P. Morgan Securities was quick to weigh in on LULU, after the company announced the newest member to its executive ranks last night. Specifically, the brokerage firm slashed its price target by $6 to $40, and underscored its lukewarm "neutral" rating. Year-to-date, the shares have shed roughly 30% to linger at $41.52, yet option traders have taken a glass-half-full approach in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 50-day call/put volume ratio of 1.92 ranks in the bullishly skewed 69th percentile of its annual range. Additionally, LULU's Schaeffer's put/call open interest ratio (SOIR) of 0.73 ranks lower than 64% of comparable readings taken in the past 52 weeks, meaning near-term traders are more call-biased than usual. If Lululemon Athletica inc. continues to make its way down the charts, an unwinding of the hedges related to these bullish bets could create additional headwinds for the shares.

  • A weaker-than-expected revenue outlook and subsequent round of bearish brokerage notes has FEYE down more than 15% ahead of the bell. Among specific analysts chiming in were Cowen and Company, which reduced its outlook to "market perform" and cut its price target to $35 from $45, and Citigroup, which slashed its target price by $8 to $30, and reiterated its "neutral" rating. Additional downgrades and/or price-target cuts -- or a capitulation in the options pits -- could be on the horizon for a stock that's already down 21.5% year-to-date. At present, two-thirds of covering analysts maintain a "strong buy" recommendation toward FireEye Inc, while the consensus 12-month price target of $42.25 stands at a 23.4% premium to the security's present price of $34.25.

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