Analyst Downgrades: Transocean Ltd., Yahoo! Inc., and Freeport-McMoRan Inc.

Analysts downwardly revised their ratings on Transocean LTD (RIG), Yahoo! Inc. (YHOO), and Freeport-McMoRan Inc (FCX)

by Karee Venema

Published on Feb 26, 2015 at 9:25 AM
Updated on Apr 20, 2015 at 5:32 PM

Analysts are weighing in today on oil-and-gas issue Transocean LTD (NYSE:RIG), search engine giant Yahoo! Inc. (NASDAQ:YHOO), and mining magnate Freeport-McMoRan Inc (NYSE:FCX). Here's a quick roundup of today's bearish brokerage notes on RIG, YHOO, and FCX.

  • RIG said last night that declining demand in the fourth quarter prompted the firm to write down the value of its contract drilling business by $992 million -- and record a per-share loss of $2.04. Prior to the report, Moody's downgraded the stock's roughly $9 billion in credit to "junk." Traders are seemingly brushing all of this off, however, with shares of RIG up nearly 3% in electronic trading. Today's projected price move runs counter to the equity's longer-term trajectory, with RIG staring at a 62.7% year-over-year deficit. Should Transocean LTD resume its downtrend, another round of bearish brokerage attention could be forthcoming. At present, the security's consensus 12-month price target of $22.73 represents expected upside of 41.7% to Wednesday's settlement at $16.04.

  • YHOO got hit with price-target cuts from Nomura (to $55) and CRT Capital (to $61), with both brokerage firms reiterating their respective "buy" ratings. Technically speaking, the stock has had a slow start to the year, down 12% at $44.43. Additionally, over the past two months, the equity has lagged the broader S&P 500 Index (SPX) by 13 percentage points. Should the shares continue to underperform, more downwardly revised analyst notes could be on the horizon. Currently, 71% of covering analysts maintain a "buy" or better recommendation, with not a single "sell" to be found. Plus, the average 12-month price target of $58.52 stands at a 32% premium to last night's closing price -- and in territory not charted by Yahoo! Inc. since September 2000.

  • Deutsche Bank reduced its price target on FCX to $30 from $36 -- but underscored its "buy" rating -- although this still represents expected upside of nearly 40% to Wednesday's close at $21.50. On the charts, the stock has been gaining ground since bottoming at a five-year low of $16.43 in late January, up 30.9%. However, the security remains a long-term laggard, and over the past 52 weeks, has surrendered nearly 36% of its value. Options traders have been betting on more downside at breakneck speed in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Freeport-McMoRan Inc's 10-day put/call volume ratio of 1.45 ranks in the 97th annual percentile. In other words, puts have been bought to open over calls at a faster clip just 3% of the time within the past year.

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