Analyst Downgrades: Alibaba Group, AOL, and Qualys

Analysts downwardly revised their ratings on Alibaba Group Holding Ltd (NYSE:BABA), AOL, Inc. (NYSE:AOL), and Qualys Inc (NASDAQ:QLYS)

May 5, 2015 at 9:50 AM
facebook twitter linkedin

Analysts are weighing in today on e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA), Internet provider AOL, Inc. (NYSE:AOL), and cybersecurity firm Qualys Inc (NASDAQ:QLYS). Here's a quick roundup of today's bearish brokerage notes on BABA, AOL, and QLYS. 

  • Evercore ISI decreased its price target on BABA by $10 to $105 (but reaffirmed its "buy" opinion), sending the shares about 1.8% lower to $79.19 -- and earlier to an all-time low of $78.83. On the charts, Alibaba Group Holding Ltd has been unimpressive so far in 2015, with the shares down 24%. Despite this lackluster price action, options traders have kept the faith --  over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.18 BABA calls have been bought to open for every put. Short sellers have been hitting the bricks ahead of Thursday's earnings release, though, as short interest declined by 11.8% over the last reporting period. It now accounts for 5.5% of BABA's float. 

  • The shares of AOL are roughly 3.7% lower at $39.30, after Goldman Sachs downgraded the stock to "sell," and cut its price target by $6 to $38, saying it is concerned about AOL's relative ad underperformance over the long term. Technically speaking, the shares of AOL, Inc. are now poised to end below their 10-day and 20-day moving averages for the first time since mid-April, but could find support in the $39 region. Traders in the options pits have been favoring puts over calls ahead of the company's earnings release Friday morning, as AOL's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.45 is higher than 73% of all similar readings from the past year. Elsewhere, the brokerage bunch is divided on the equity, with 45% of covering analysts rating it a "strong buy," and the remaining 55% doling out "hold" or "sell" ratings. 
  • QLYS issued disappointing current-quarter and full-year guidance, prompting the shares to drop a staggering 25.5% to $41.15. In response, J.P. Morgan Securities and RBC cut their price targets on the security to $43 and $38, respectively, with both firms reiterating the equivalent of "neutral" ratings. On the other hand, Baird raised its rating to "outperform" from "neutral." Prior to today's bear gap, Qualys Inc was a technical juggernaut, with the shares up over 188% year-over-year. What's more, the shares hit an all-time high of $55.47 just yesterday. Accordingly, calls have been prominent in the options pits, as 5.15 QLYS calls have been bought to open for every put over the last 10 days at the ISE, CBOE, and PHLX. 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners