Analyst Downgrades: NVIDIA, Southwest Airlines, DreamWorks

Analysts downwardly revised their ratings on NVIDIA Corporation (NVDA), Southwest Airlines Co (LUV), and Dreamworks Animation Skg Inc (DWA)

Alex Eppstein
Jun 10, 2015 at 9:18 AM
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Analysts are weighing in today on visual computing firm NVIDIA Corporation (NASDAQ:NVDA), transportation issue Southwest Airlines Co (NYSE:LUV), and entertainment giant Dreamworks Animation Skg Inc (NASDAQ:DWA). Here's a quick roundup of today's bearish brokerage notes on NVDA, LUV, and DWA.

  • Nomura downgraded NVDA to "neutral" from "buy" -- and slashed its price target by $5 to $18 -- citing concerns about PC gaming shipments in the second half of the year. The bearish note has the stock sitting 0.8% lower ahead of the bell. Longer term, however, NVIDIA Corporation shares have tacked on 9% in 2015 to sit at $21.86, with recent pullbacks contained by their 40-week moving average. Despite this uptrend, 12.9% of NVDA's float is sold short, representing nearly seven sessions' worth of pent-up buying power, at typical daily trading levels. In other words, the equity could benefit from potential short-covering activity, should it extend its long-term ascent.

  • Like many airlines, LUV has been sputtering on the charts, losing 18.3% year-to-date to trade at a seven-month low of $34.59. What's more, the company yesterday forecast a decline in current-quarter passenger revenue per available seat mile (PRASM). As such, no fewer than four analysts cut their price targets on the stock -- the deepest of which came from Evercore ISI, which lowered its target to $40 from $46. Southwest Airlines Co is now bracing for a 0.8% dip out of the gate. This should be music to the ears of recent put buyers. LUV's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.57 ranks in the 82nd percentile of its annual range.

  • CLSA initiated coverage on DWA with a "sell" rating and $17 price target -- a 39% discount to Tuesday's close at $27.84. This, despite the stock's nearly 25% year-to-date gain and new annual high of $29.75 on Friday. CLSA isn't the only one with doubts about Dreamworks Animation Skg Inc, which is bracing for a 2% drop at the open. Two-thirds of covering analysts consider the shares a "hold" or worse, and it would take roughly five weeks to buy back all the shorted DWA shares, at the stock's average pace of trading.

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