Analyst Downgrades: NVIDIA Corporation, Southwest Airlines Co., and DreamWorks Animation SKG, Inc.

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

by Alex Eppstein

Published on Jun 10, 2015 at 9:18 AM

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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