Analyst Downgrades: NVIDIA, Microchip, Sprouts Farmers Market

Analysts downwardly revised their ratings on NVIDIA Corporation (NASDAQ:NVDA), Microchip Technology Inc. (NASDAQ:MCHP), and Sprouts Farmers Market Inc (NASDAQ:SFM)

May 8, 2015 at 9:30 AM
facebook twitter linkedin

Analysts are weighing in today on chipmakers NVIDIA Corporation (NASDAQ:NVDA) and Microchip Technology Inc. (NASDAQ:MCHP), as well as organic grocer Sprouts Farmers Market Inc (NASDAQ:SFM). Here's a quick roundup of today's bearish brokerage notes on NVDA, MCHP, and SFM. 

  • NVDA woke up to no fewer than six price-target revisions, after the firm released worse-than-expected current-quarter guidance (subscription required). Drilling down, the sole hike came from JMP Securities, which raised its price target by $1 to $28 while keeping its "market outperform" rating, while the biggest cuts came from Roth (to $22) and Morgan Stanley (to $18). Additionally, Roth downgraded its opinion on NVIDIA Corporation to "neutral." At last check, the shares of NVDA were 4.4% lower in pre-market trading, but could find a foothold in the $21 region -- a former area of resistance that contained NVDA's late-March pullback. Yesterday, the shares closed at $22.49. Looking to the options pits, traders have favored puts over calls lately, as NVDA's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.66 is higher than 99% of all similar readings from the past year. This skepticism is echoed among the brokerage bunch, as 61% of covering analysts rate the stock a "hold" or worse..
  • The shares of MCHP are 5.8% higher in electronic trading, after the company announced it is purchasing competitor Micrel, Incorporated (NASDAQ:MCRL) for approximately $839 million. Furthermore, Microchip Technology Inc. released fiscal fourth-quarter earnings that surpassed analysts' estimates. Nevertheless, Morgan Stanley lowered its price target to $50 from $53 while keeping its "equal weight" rating (though J.P. Morgan Securities hiked its price target to $52 from $50). On the charts, MCHP has taken a step back recently, with the shares down 9.6% from their March 2 all-time high of $52.44 to close yesterday at $47.41. However, today's pop will likely push the shares above their 40-day moving average, which has served as resistance since late March. Puts have been prominent in the options pits, as MCHP's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.59 stands in the 80th percentile of its annual range. 
  • SFM released weaker-than-expected first-quarter earnings and revealed lower 2015 guidance, sending the shares 8.9% lower ahead of the bell. In response, no fewer than six brokerage firms lowered their price targets on the equity, with the most dramatic cuts coming from Oppenheimer (to $32) and Deutsche Bank (to $27). Technically speaking, Sprouts Farmers Market Inc has been underwhelming, with the shares down 11.1% year-to-date to close Thursday at $30.21. Despite this downtrend, options traders have kept the faith, as SFM's 50-day ISE/CBOE/PHLX call/put volume ratio of 3.56 is higher than 96% of all similar readings from the last 12 months. Echoing this indicator is the stock's Schaeffer's put/call open interest ratio of 0.32, which stands in the 30th percentile of its annual range. Simply stated, short-term traders have rarely been this call-skewed over the past year.  

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!

Schaeffer's Investment Research Stock Pick Report


Special Offers from Schaeffer's Trading Partners