Analyst Downgrades: eBay, Transocean, and Guess?

Analysts downwardly revised their ratings on eBay Inc (EBAY), Transocean LTD (RIG), and Guess?, Inc. (GES)

Mar 19, 2015 at 9:40 AM
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Analysts are weighing in today on online auctioneer eBay Inc (NASDAQ:EBAY), offshore drilling concern Transocean LTD (NYSE:RIG), and apparel company Guess?, Inc. (NYSE:GES). Here's a quick roundup of today's bearish brokerage notes on EBAY, RIG, and GES.

  • EBAY is off 1.4% out of the gate at $57.59, after Piper Jaffray cut its outlook on the equity to "underweight" from "neutral," and dropped its price target to $49 from $55, as it expects competition to hurt the company's PayPal unit over the next few years. However, the shares have performed well lately, adding 24.3% since their annual low of $46.34 on Oct. 16 -- and they just hit an all-time high of $60.93 earlier this month. Still, options traders remain skeptical, as eBay Inc's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.66 ranks higher than 80% of readings from the past year. This means puts have been bought to open over calls at a faster-than-normal rate.

  • Cowen and Company and RBC each cut their price targets on RIG by $1, to $12 and $16, respectively, after the company provided a downbeat update on its fleet, which included plans to scrap 16 floaters. This is just the latest fundamental folly for the offshore driller. Today, the security is 4.6% lower at $14.55, which isn't unusual, since Transocean LTD has lost 68% since hitting an annual high of $46.12 on June 23. In the face of these struggles, speculators haven't been afraid to place bearish bets. RIG's 10-day put/call volume ratio at the ISE, CBOE, and PHLX comes in at 5.25 -- an annual high. Elsewhere, not one of the 16 analysts covering the shares deem them worthy of a "buy" rating.

  • GES is up 9.6% this morning at $18.35, after the company posted better-than-expected profits for its fiscal fourth quarter. However, the company outlined an underwhelming 2015, which prompted four brokerage firms to lower their price targets on the stock, including Topeka, which cut its price target to $17 from $18. In the past three months, Guess?, Inc. has underperformed the S&P 500 Index (SPX) by 16 percentage points. Even so, near-term speculators remain call-skewed. Specifically, GES' Schaeffer's put/call open interest ratio (SOIR) of 0.47 is lower than 99% of all readings from the past year, meaning short-term calls have rarely been more popular. A reversal of speculator behavior could weigh on the security going forward.

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