Analyst Downgrades: Netflix, Microsoft, and FXCM

Analysts downwardly revised their ratings on Netflix, Inc. (NFLX), Microsoft Corporation (MSFT), and FXCM Inc (FXCM)

Josh Selway

Mar 16, 2015 at 9:46 AM

Analysts are weighing in today on streaming video giant Netflix, Inc. (NASDAQ:NFLX), tech concern Microsoft Corporation (NASDAQ:MSFT), and monetary exchange platform FXCM Inc (NYSE:FXCM). Here's a quick roundup of today's bearish brokerage notes on NFLX, MSFT, and FXCM.

NFLX is hurting this morning, after Evercore ISI slashed its price target on the shares by $70 to $380 and lowered its outlook to "sell" from "hold," citing stronger competition and a growing need for investment. As a result, the equity is off 2.9% this morning at $425.65 -- a change of pace for a stock that's outperformed the S&P 500 Index (SPX) by 33 percentage points over the past three months. Short-term speculators have had their eyes on puts, as Netflix, Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 1.40 is higher than 94% of all similar readings from the past year. In other words, short-term options traders are more put-skewed than normal.

MSFT is up 0.2 this morning at $41.48, despite UBS' price-target cut to $49 from $52 (though it reiterated a "buy" rating). Since gapping lower in late January following a poorly received earnings report, the shares have dropped over 12%. In the options pits, speculators have remained stubbornly bullish, as Microsoft Corporation's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.10 is only 4 percentage points from an annual high. This tells us calls have been bought to open over puts at a faster-than-usual rate in recent months. If the security can't turn things around on the charts, a reversal of speculator sentiment could pressure it lower.

FXCM has fallen 8.5% this morning to $2.36, due to a round of bearish analyst attention. Specifically, KBW cut the equity to "underperform" from "market perform" -- citing a wider-than-estimated customer deficit and lackluster February activity -- while Credit Suisse slashed its price target to $2.60 from $3.75. The shares have gotten annihilated this year, losing roughly 86% of their value. Analysts have taken a skeptical stance toward FXCM Inc. All five covering brokerage firms rate the equity a "hold" or worse.

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