Analyst Downgrades: McDonald's, Century Aluminum

Analysts downwardly revised their ratings on McDonald's Corporation (MCD), Exxon Mobil Corporation (XOM), and Century Aluminum Co (CENX)

Mar 5, 2015 at 9:20 AM
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Analysts are weighing in today on fast food giant McDonald's Corporation (NYSE:MCD), as well as commodity concerns Exxon Mobil Corporation (NYSE:XOM) and Century Aluminum Co (NASDAQ:CENX). Here's a quick roundup of today's bearish brokerage notes on MCD, XOM, and CENX.

  • MCD is pointed modestly lower ahead of the bell, after Piper Jaffray downgraded the stock to "neutral" from "overweight." While McDonald's Corporation has made strides on the charts recently, the stock continues to struggle around the century mark, closing at $100.25 on Wednesday. Plus, the security's 14-day Relative Strength Index (RSI) is now docked at 71 -- in overbought territory, suggesting a short-term pullback could be in the cards. Meanwhile, short-term option premiums are historically inflated ahead of MCD's February sales report, due on Monday. The equity's Schaeffer's Volatility Index (SVI) of 22% stands higher than 72% of all other readings from the past year.

  • Ahead of the bell, fellow blue chip XOM is flirting with breakeven at $87.18, as speculators digest a mixed round of analyst attention. While Evercore ISI downgraded Exxon Mobil Corporation to "hold" and Credit Suisse reiterated an "underperform" opinion, the latter brokerage firm hiked its price target by $3 to $85. On the charts, XOM has surrendered 5.7% in 2015, and explored annual lows as recently as late January. Off the charts, the company yesterday said it's in talks to restructure its oil agreements with Iraq, and outlined its long-term spending and production plans. On the sentiment side, most analysts are skeptical, with 11 out of 14 doling out "hold" or worse ratings.

  • Finally, CENX gapped 16.6% lower yesterday, settling at an eight-month low of $16.51, due to a BofA-Merrill Lynch downgrade of the stock and sector peer Alcoa Inc (NYSE:AA). Century Aluminum Co is poised to extend its slump today -- the equity is pointed 2.2% lower in electronic trading -- after Morgan Stanley downgraded the shares to "equal weight" from "overweight," and cut its price target to $18. Likewise, Deutsche Bank chimed in, slicing its price target to $27 from $32, but maintaining a "buy" endorsement. CENX has already shed close to one-third of its value in 2015, and has underperformed the broader S&P 500 Index (SPX) by roughly 38 percentage points during the past three months. As such, short sellers are piling on, with short interest soaring 17.9% during the past two reporting periods. These bearish bets now account for more than 10% of CENX's total float, representing six sessions' worth of pent-up buying demand, at the stock's average pace of trading.

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