Analyst Downgrades: Automatic Data Processing, Inc., UnitedHealth Group Incorporated, and Vivint Solar, Inc

Analysts downwardly revised their ratings on ADP, UNH, and VSLR

by Karee Venema

Published on Jan 7, 2015 at 9:20 AM
Updated on Apr 20, 2015 at 5:10 PM

Analysts are weighing in today on management solutions specialist Automatic Data Processing (NASDAQ:ADP), blue chip UnitedHealth Group Inc. (NYSE:UNH), and alternative energy issue Vivint Solar Inc (NYSE:VSLR). Here's a quick roundup of today's bearish brokerage notes on ADP, UNH, and VSLR.

  • Credit Suisse cut its outlook on ADP to "neutral" from "outperform," echoing the majority of analysts covering the stock. On the charts, the shares rallied 17.6% last year, but have started 2015 on a lackluster note -- shedding 1% to trade at $82.54. Should the security resume its longer-term uptrend, an unwinding of skepticism in the options pits could create tailwinds. 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 of 2.87 ranks 5 percentage points from an annual bearish peak. Separately, Automatic Data Processing said today private-sector jobs rose by a better-than-expected 241,000 last month.

  • Goldman Sachs lowered its rating on UNH to "neutral" from "buy," and reduced its price target by $4 to $109. Technically speaking, the shares have tacked on more than 29% over the past 52 weeks, and more recently, have enjoyed a lift from their 40-day moving average since mid-October. At last night's close, the stock settled at $98.92 -- just shy of this trendline -- but appears poised to reclaim its perch north of here in today's trading. Meanwhile, short-term speculators have shown a preference for puts over calls on UnitedHealth Group Inc., as evidenced by the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.86, which ranks in the 90th percentile of its annual range.

  • Goldman Sachs also weighed in on VSLR, cutting its price target on the stock to $18 from $20. However, the brokerage firm did underscore its "buy" rating, mirroring the majority of analysts currently following Vivint Solar Inc. Overall, sentiment has been upbeat toward the equity, despite VSLR shedding half of its value since going public in early October. In the options pits, traders at the ISE, CBOE, and PHLX have bought to open nine calls for each put over the past 10 sessions. Elsewhere, the equity's consensus 12-month price target of $20.20 stands at a 138% premium to last night's close at $8.49 -- and rests in territory yet to be charted by VSLR. Should the equity continue to struggle, a capitulation by option bulls and/or an additional round of bearish brokerage notes could translate into a fresh wave of selling pressure.

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