Analyst Downgrades: King Digital Entertainment PLC, Chesapeake Energy Corporation, and Applied Materials, Inc.

Analysts downwardly revised their ratings on King Digital Entertainment PLC (NYSE:KING), Chesapeake Energy Corporation (NYSE:CHK), and Applied Materials, Inc. (NASDAQ:AMAT)

by Karee Venema

Published on Aug 14, 2015 at 10:06 AM

Analysts are weighing in on mobile gaming issue King Digital Entertainment PLC (NYSE:KING), oil-and-gas concern Chesapeake Energy Corporation (NYSE:CHK), and chipmaker Applied Materials, Inc. (NASDAQ:AMAT). Here's a quick roundup of today's bearish brokerage notes on KING, CHK, and AMAT.

  • KING has plunged 9.9% out of the gate to churn near $13.70 -- and could be at risk of closing south of its 200-day moving average for the first time since July 8 -- after the company's lackluster bookings forecast overshadowed an earnings beat, and prompted a round of downbeat analyst attention. J.P. Morgan Securities, for example, lowered its outlook to "neutral" from "overweight" and its price target to $17 from $20, saying it is taking a "more cautious" stance following KING's quarterly results. Elsewhere, RBC cut its price target to $15 from $17, explaining key traffic metrics are "deteriorating" and there is a "lack of diversification away from core Candy Crush franchise." Today's bear gap could please option traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), King Digital Entertainment PLC's 10-day put/call volume ratio of 0.95 ranks in the 89th annual percentile. Simply stated, puts have been bought to open over calls at a near-annual-high clip.

  • Scotia Howard Weil chimed in on a number of energy names today, and for CHK, this resulted in a price-target cut to $13 from $14. This still represents expected upside of 71% to the stock's current perch at $7.59, though. Technically speaking, it's been a rough ride for CHK -- which has been tracking crude oil's slide. Specifically, the shares have surrendered roughly 60% year-to-date, and tagged a 12-year low of $6.85 on Aug. 5. Against this backdrop, option players have been quick to place bearish bets, with Chesapeake Energy Corporation's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.84 resting just 4 percentage points from a 52-week peak.

  • AMAT fell to a fresh annual low of $16.39 out of the gate, and was last seen off 3.1% at $16.52. Stoking the day's downside are poorly received earnings, news that Jana Partners has dissolved its stake in the firm, and a round of bearish brokerage notes. Included in the bunch was B. Riley, which lowered its price target to $20 from $22, and RBC -- which slashed its target price to $16 from $19. Today's negative price action is just more of the same for a stock that's down 33.6% year-to-date, and a continued slide could prompt additional downbeat analyst attention. Currently 11 out of 17 brokerages covering Applied Materials, Inc. maintain a "buy" or better rating, with not a single "sell" to be found. Plus, the average 12-month price target of $23.45 stands at a 42% premium to AMAT's present price.

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