Analyst Downgrades: Xoom, Virgin America, and Domino's

Analysts downwardly revised their ratings on XOOM, VA, and DPZ

Jan 6, 2015 at 9:22 AM
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Analysts are weighing in today on money transfer firm Xoom Corp (NASDAQ:XOOM), Wall Street freshman Virgin America Inc (NASDAQ:VA), and delivery chain Domino's Pizza, Inc. (NYSE:DPZ). Here's a quick roundup of today's bearish brokerage notes on XOOM, VA, and DPZ.

  • XOOM is bracing for a 5% drop out of the gate, after the firm's fundamental folly was met with a round of mostly downbeat analyst attention. Specifically, the company announced the immediate resignation of its chief financial officer after it was discovered nearly $31 million was fraudulently moved to overseas accounts. As a result, Needham, Buckingham, and Monness Crespi Hardt each cut their respective price targets, with the latter of the three downgrading the stock to "neutral" from "buy." Stifel, meanwhile, started XOOM with a "buy" rating and a $25 price target -- representing expected upside of 48% to last night's close at $16.89. Heading into today's session, Xoom Corp was already staring at a 39% year-over-year deficit, and short sellers have been upping the bearish ante of late. Over the last two reporting periods, short interest surged 32.7%, and now accounts for 14.6% of the security's available float.

  • Buckingham weighed in on a number of airline names this morning, and for VA, this meant a downgrade to "neutral" from "buy." This negative analyst note is relatively rare for a stock that's surged more than 54% since going public in mid-November. In fact, 80% of brokerage firms covering Virgin America Inc maintain a "strong buy" recommendation, with not a single "sell" rating to be found. Plus, the average 12-month price target of $46.71 stands not only at a healthy 12% premium to last night's close at $41.68, but in territory yet to be charted by the Nasdaq newcomer.

  • DPZ received mixed attention from Jefferies overnight, with the brokerage firm slashing its rating on the stock to "hold" from "buy," but raising its price target to $101 from $93 -- uncharted waters for the equity. On the charts, DPZ has spent the past five months enjoying a lift higher from its 40-day moving average -- resulting in a gain of roughly 34% -- however, there is plenty of skepticism to be found. For starters, it would take one week to cover all of Domino's Pizza, Inc.'s shorted shares, at average daily trading volumes. Plus, the consensus 12-month price target of $91.36 stands at a discount to the stock's current price at $95.47. Should the security continue with its upward trajectory, a round of short covering and/or additional price-target hikes could add fuel to its fire. On the fundamental front, the company will host its annual investor day next Wednesday, Jan. 14.


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