Analyst Downgrades: Caterpillar, BP, and VeriFone Systems

Analysts downwardly revised their ratings on Caterpillar Inc. (CAT), BP plc (ADR) (BP), and VeriFone Systems Inc (PAY)

Sep 4, 2015 at 9:50 AM
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Analysts are weighing in today on blue chip Caterpillar Inc. (NYSE:CAT), energy giant BP plc (ADR) (NYSE:BP), and electronic payments expert VeriFone Systems Inc (NYSE:PAY). Here's a quick roundup of today's bearish brokerage notes on CAT, BP, and PAY.

  • Baird slashed its rating on CAT to "neutral" from "outperform," and its price target to $77 from $89. As such, the stock is down 2% out of the gate at $72.98, bringing its year-to-date deficit beyond 21%. Baird is hardly the only brokerage firm to recognize Caterpillar Inc.'s lackluster performance, as evidenced by the fact that over 73% of analysts rate the equity a "hold" or worse. Options traders are similarly bearish. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CAT's put/call volume ratio has risen to an annual high of 3.80. In other words, speculators have bought to open puts over calls at the fastest rate in the past 12 months.

  • BP is down 4% this morning at $31.11, after BofA-Merrill Lynch downgraded its rating to "underperform" from "neutral," and cut its price target to 330P from 420P, citing "growing risks" to the company's dividend. Also, the shares are approaching their five-year low of $30.53, touched last week. Amid this downtrend, traders have placed BP plc in the bearish crosshairs, based on data from the ISE, CBOE, and PHLX. Across those exchanges, the stock has amassed a 10-day put/call volume ratio of 0.85 -- just 7 percentage points from a 12-month peak.

  • PAY topped quarterly estimates last night in the earnings confessional, but also provided lower-than-expected guidance. The lackluster outlook prompted Susquehanna and Wedbush to cut their respective price targets to $42 and $40. Understandably, VeriFone Systems Inc is struggling out of the gate, down 2.2% at $30.36 -- and is now off more than 18% in 2015. In fact, the shares are perfectly set up for an additional round of bearish brokerage notes. Despite its weakness, PAY has received 14 "buy" or better recommendations, compared to four "holds" and not a single "sell." Plus, the stock's consensus 12-month price target of $40.97 sits in waters not charted in over three years. In other words, future downgrades and/or price-target reductions are a distinct possibility.
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