Analyst Downgrades: Ford Motor Company, Caterpillar Inc., and BP plc (ADR)

Analysts downwardly revised their ratings on F, CAT, and BP

by Karee Venema

Published on Jan 5, 2015 at 9:16 AM
Updated on Apr 20, 2015 at 5:32 PM

Analysts are weighing in today on automaker Ford Motor Company (NYSE:F), construction concern Caterpillar Inc. (NYSE:CAT), and oil-and-gas issue BP plc (ADR) (NYSE:BP). Here's a quick roundup of today's bearish brokerage notes on F, CAT, and BP.

  • Ahead of today's monthly sales report -- and an appearance at this week's Consumer Electronics Show -- F was slapped with a downgrade to "neutral" from "buy" at Citigroup. This negative brokerage note isn't too surprising, considering F has shed 4% since running headlong into resistance at its 200-day moving average in early December, and closed last Friday at $15.36. Should the shares continue to struggle, another round of bearish brokerage notes could be on the horizon. Currently, 43% of analysts covering Ford Motor Company maintain a "buy" or better rating, while the consensus 12-month price target of $17.21 sits in territory not charted since early September.

  • J.P. Morgan Securities weighed in on CAT, cutting its rating to "underweight" from "neutral," and slashing its price target by $15 to $80. This gloomy outlook follows a lackluster year for Caterpillar Inc., which has tacked on just 2.3% over the past 52 weeks to trade at $91.88. Meanwhile, sentiment among option traders has also been shifting toward the skeptical side. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio has jumped to 2.45 from 0.58 over the past two weeks. What's more, the current ratio ranks in the 89th annual percentile, meaning puts have been bought to open over calls at a near-annual-high clip.

  • BP is bracing for a nearly 4% plunge out of the gate, amid crude oil's extended rout. Adding additional pressure to the shares is a price-target cut to 455p from 485p at Citigroup. However, the brokerage firm did underscore its "buy" rating, despite the stock's 20.4% year-over-year deficit. On the sentiment front, option players have shown a preference for calls over puts in recent months, as evidenced by the equity's 50-day ISE/CBOE/PHLX call/put volume ratio of 3.32, which ranks higher than 80% of similar readings taken in the past year. Echoing this call-skewed bias is BP's Schaeffer's put/call open interest ratio (SOIR) of 0.65, which rests in the 16th annual percentile. In other words, short-term speculators are more call-heavy than usual toward BP plc (ADR).

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