Analyst Downgrades: AK Steel Holding Corporation, Open Text Corporation, and VMware, Inc.

Analysts downwardly revised their ratings on AK Steel Holding Corporation (AKS), Open Text Corporation (USA) (OTEX), and VMware, Inc. (VMW)

by Alex Eppstein

Published on Jan 28, 2015 at 9:29 AM
Updated on Apr 20, 2015 at 5:32 PM

Analysts are weighing in today on metal manufacturer AK Steel Holding Corporation (NYSE:AKS), software developer Open Text Corporation (USA) (NASDAQ:OTEX), and virtualization specialist VMware, Inc. (NYSE:VMW). Here's a quick roundup of today's bearish brokerage notes on AKS, OTEX, and VMW.

  • AKS reported better-than-expected fourth-quarter earnings yesterday, but was nonetheless hit with a pair of price-target cuts from BMO (to $5) and Jefferies (to $4.75), with both firms reiterating the equivalent of a "hold" rating. Ahead of the bell, the shares are sitting nearly 3% higher, poised to extend yesterday's advance. Longer term, this represents a change of pace for AKS, considering the stock has shed more than two-fifths of its value in the last year to land at $4.25. If AK Steel Holding Corporation starts to make some headway on the charts, there's plenty of sideline cash to fuel a run higher. Specifically, 26.5% of AKS' float is sold short, which would take one week to buy back, at its typical daily trading levels.

  • OTEX issued mostly disappointing fiscal second-quarter results last night -- highlighted by weaker-than-anticipated sales. The brokerage bunch responded with a trio of price-target reductions, from BMO (to $57), Credit Suisse (to $60), and National Bank Financial (to $60), with the latter pair downgrading the shares to the equivalent of a "hold" rating. However, Susquehanna boosted its price target on Open Text Corporation by $2 to $52. In electronic trading, the stock is sitting 5.5% below breakeven, threatening to take it south of year-to-date breakeven. Longer term, however, the shares have rallied more than 21% year-over-year to perch at $59.59. This technical tenacity has prompted a rush of bullish options betting on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Across those exchanges, OTEX's 50-day call/put volume ratio of 2.33 ranks in the 95th annual percentile.

  • After issuing lackluster guidance, VMW was hit with no fewer than 10 price-target cuts -- the severest of which came from Cantor, which lowered its target to $82 from $88. On the flip side, Piper Jaffray boosted its price target by $5 to $74, but maintained its "underweight" opinion. It's been a rough year for VMware, Inc., which has dropped 15% in the last 12 months to rest at $80.61. Understandably, options traders are in the bears' corner, per VMW's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.08 -- which sits just 1 percentage point from a 52-week peak. Ahead of the open, the stock is down 2.9%.

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