Analyst Downgrades: Bed Bath & Beyond, Five Below

Analysts downwardly revised their ratings on Bed Bath & Beyond Inc (BBBY), Five Below Inc (FIVE), and Foot Locker, Inc. (FL)

Jan 9, 2015 at 9:39 AM
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Analysts are weighing in today on retailers Bed Bath & Beyond Inc. (NASDAQ:BBBY), Five Below Inc (NASDAQ:FIVE), and Foot Locker, Inc. (NYSE:FL). Here's a quick roundup of today's bearish brokerage notes on BBBY, FIVE, and FL.

  • BBBY is 5.6% lower this morning to $75.04, after the company's fiscal third-quarter revenue miss was met with a mixed batch of brokerage notes. While Nomura and Raymond James both upped their price targets (to $76 and $88, respectively), Canaccord Genuity cut its target price by $3 to $88, while underscoring the "buy" rating it established just one week ago. Technically speaking, Bed Bath & Beyond Inc. has been moving steadily higher since hitting an annual low of $54.96 in late June, resulting in a 37% gain. What's more, BBBY notched a fresh 52-week peak of $79.64 yesterday, before settling at $79.45. In spite of this, skepticism in the options pits was building ahead of last night's quarterly results. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.82 ranks in the bearishly skewed 84th annual percentile.

  • FIVE was slapped with no fewer than five price-target cuts after the retailer said it expects fourth-quarter profit and revenue to land at the lower end of its forecast. The most dismal outlook came from Buckingham Research, which slashed its target price by $3 to $37 -- and reiterated its tepid "neutral" rating -- representing expected downside of 15.2% to last night's close at $43.63. Against this backdrop, Five Below Inc plunged 15.5% out of the gate to $37 -- and into the red on a year-over-year basis. This is certain to please short sellers, who have been piling up on their bearish bets of late. Over the past two reporting periods, short interest rose nearly 4%, and now accounts for more than a quarter of the equity's available float.

  • Credit Suisse lowered its outlook on FL to "neutral" from "outperform," sending the shares down 1.9% at the open. This negative outlook is a bit surprising, considering Foot Locker, Inc. has rallied almost 38% over the past 12 months, and tagged an all-time high of $59.19 in late November before easing back to its current perch at $56.29. Additionally, it runs counter to the general consensus witnessed among the brokerage bunch -- nine out of 14 analysts offer up "strong buys" -- as well as the optimism seen in the options pits. In fact, the security's 10-day ISE/CBOE/PHLX call/put volume ratio of 9.34 ranks in the 89th percentile of its annual range. In other words, calls have been bought to open over puts with more rapidity just 11% of the time within the past year.
 

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