Analyst Downgrades: American Airlines, Schlumberger

Analysts downwardly revised their ratings on American Airlines Group Inc (NASDAQ:AAL), Schlumberger Limited (NYSE:SLB), and QUALCOMM, Inc. (NASDAQ:QCOM)

Josh Selway

Oct 13, 2015 at 9:29 AM

Analysts are weighing in on airline stock American Airlines Group Inc (NASDAQ:AAL), oilfield services provider Schlumberger Limited (NYSE:SLB), and chipmaker QUALCOMM, Inc. (NASDAQ:QCOM). Here's a quick roundup of today's bearish brokerage notes on AAL, SLB, and MRK.

AAL is set to take a 1.4% dip at the open, amid some bearish attention from the Street. For one, Evercore ISI cut its outlook to "hold" from "buy," while J.P. Morgan Securities lowered its price target to $66 from $72. The latter also lowered its 2017 profit forecast for the airline industry as a whole, citing higher costs for fuel and labor. Based on last night's close at $43.84, AAL shares are already 18.3% lower year-to-date, with the $44 region offering stiff resistance in recent months -- an area now home to AAL's descending 320-day moving average. It's not a surprise, then, to see a growing bearish bias in American Airlines Group Inc's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day put/call volume ratio of 0.75, which is only 7 percentage points from an annual high. This means puts have been bought to open over calls at a faster-than-normal rate in the past two weeks.

Ahead of SLB's third-quarter earnings release this Thursday evening, Seaport Global Securities lowered its price target on the security by $5 to $100. The stock has been trending lower since touching an all-time high in July 2014, dropping 17.6% in the past 12 months to trade at $74.94. As a result, short sellers have emerged. Specifically, short interest on Schlumberger Limited jumped by 35% in the two most recent reporting periods.

Barclays hit QCOM with a price-target reduction to $68 from $77 this morning, though that's still a premium to the stock's close at $57.79 on Monday. The shares are 22.3% below breakeven on the year, and this weakness has led to an influx in put buying. QUALCOMM's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.69 is only 4 percentage points from an annual high.

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