Analyst Update: VMware, Ryder System, and SkyWest

Analysts adjusted their ratings on VMware, Inc. (VMW), Ryder System, Inc. (R), and SkyWest, Inc. (SKYW)

by Mark Fightmaster

Published on Oct 13, 2015 at 12:12 PM
Updated on Jun 29, 2020 at 3:59 PM

Analysts are weighing in today on cloud concern VMware, Inc. (NYSE:VMW), fleet management company Ryder System, Inc. (NYSE:R), and airline SkyWest, Inc. (NASDAQ:SKYW). Here's a quick roundup of today's brokerage notes on VMW, R, and SKYW.

  • VMW is 4.3% lower at $69.14, and earlier hit a two-year bottom of $68.28, after JMP Securities cut the software firm's rating to "market perform" from "market outperform," citing "competitive pressure from Amazon Web Services." UBS also weighed in on VMware, Inc., cutting its price target to $90 from $97. Today's price action is a continuation of yesterday's weakness, in the wake of the EMC Corporation (NYSE:EMC) buyout, a poor third-quarter earnings preview, and another bearish brokerage note. Since hitting an annual high of $93.43 in early August, the shares have shed 26%. Despite this poor performance, sentiment falls on the bullish side of the sentiment spectrum. VMW has received 13 "strong buys" and three "buys" out of 25 total analyst rankings, with not a single "sell" in sight. This alignment leaves the door open for more downgrades. Option players echo this upbeat sentiment, as VMW's 50-day call/put volume ratio of 4.57 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is higher than all but 3% of the readings taken in the past 52 weeks. A capitulation from this bullish bunch could result in even more downward pressure on the shares. Looking ahead, the firm will report earnings after the close next Tuesday, Oct. 20.

  • R has fallen 8.2% to $69.42, after the company reduced its third-quarter and full-year profit forecasts -- making it the session's worst-performing S&P 500 Index (SPX) component. Also, the shares are fresh off an annual low of $68.35. In reaction to Ryder System, Inc.'s announcement, Stifel cut its target price to $94 from $103 and RBC lowered its target price to $103 from $125 -- though the latter still sits in all-time-high territory. With shares of R dropping 31% since their late-April record peak of $100.64, short sellers have taken note. Currently, 9.2% of R's float is sold short, and it would take more than six days for bears to buy back their bearish bets. Meanwhile, seven of the nine analysts following R rate it a "strong buy." Downgrades from this optimism bunch could push the stock lower. 
  • SKYW received a downgrade at Raymond James to "market perform" from "outperform," sending the shares 9.3% lower at $17.48. The brokerage issued the downgrade after SkyWest, Inc. released its September traffic results, including a 7% year-over-year drop in revenue passenger miles. Today's drop has nonetheless been contained by the stock's 20-day moving average, which corresponds with the $17 level. Longer term, SKY has gained 133% year-over-year. Shifting gears, pessimism has grown in the option pits. On the ISE, CBOE, and PHLX, SKYW's 50-day put/call volume ratio of 0.51 ranks higher than 94% of the readings taken in the past year.
For other stocks in analysts' crosshairs, read Analyst Upgrades: Southwest Airlines Co, Juniper Networks, Inc., and Netflix, Inc. and Analyst Downgrades: American Airlines Group Inc, Schlumberger Limited, and QUALCOMM

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