Analyst Downgrades: Alibaba Group, Zillow, NuVasive

Analysts downwardly revised their ratings on Alibaba Group Holding Ltd (BABA), Zillow Group Inc (Z), and NuVasive, Inc. (NUVA)

Apr 15, 2015 at 9:35 AM
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Analysts are weighing in on China-based e-commerce concern Alibaba Group Holding Ltd (NYSE:BABA), online real estate issue Zillow Group Inc (NASDAQ:Z), and medical equipment manufacturer NuVasive, Inc. (NASDAQ:NUVA). Here's a quick roundup of today's bearish brokerage notes on BABA, Z, and NUVA.

  • BABA said it is consolidating its healthcare and online pharmacy operations in a $2.5 billion deal, as it looks to expand its presence in the booming online industry. Separately, rival JD.Com Inc (ADR) (NASDAQ:JD) announced the launch of JD Worldwide in an effort to compete with BABA's Tmall International. In the midst of these developments, Pacific Crest downwardly revised its price target on BABA to $101 from $116, although this still represents expected upside of 18.9% to the equity's current perch at $84.98. Technically speaking, it's been a struggle for BABA, which has shed more than 18% in 2015, amid pressure from its 50-day moving average. However, optimism remains high both in and out of the options arena . In fact, Alibaba Group Holding Ltd's average 12-month price target of $108.84 rests in territory not charted since late December, meaning more price-target cuts could be on the horizon, should the stock continue to struggle.

  • Tuesday was a volatile day for shares of Z. At its intraday low, the stock was down nearly 13% -- after the firm offered up a dreary forecast -- before paring these losses to 1.4%. Despite Z's ability to power back, a number of brokerage firms reduced their price targets on the equity, including Benchmark (to $125) and JMP Securities (to $121). Considering the shares settled Tuesday at $92.28, these still represent upbeat outlooks for Zillow Group Inc. On the sentiment front, short interest accounts for more than 28% of the equity's available float, representing 12.3 times Z's average daily pace of trading. Should the shares continue to bounce from support atop their year-over-year breakeven mark -- located at $94.04 -- a capitulation from some of the weaker bearish hands could help buoy Z.

  • Canaccord Genuity lowered its rating on NUVA to "hold" from "buy," and cut its price target to $49 from $54. As such, the shares are down 1.8% out of the gate to trade at $44.24. Since hitting a six-year high of $51.23 in early January, NUVA has shed 13.6%, and more recently encountered a stern layer of resistance from its 40-day moving average. Meanwhile, in the options pits, short-term speculators are more call-heavy than usual, per NuVasive, Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 0.35, which ranks lower than 88% of similar readings taken in the past year. In the front-month series, specifically -- which expires at this Friday's close -- peak call open interest can currently be found at the April 50 strike.

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