Analyst Downgrades: Groupon, MannKind, and DSW

Analysts downwardly revised their ratings on Groupon Inc (GRPN), MannKind Corporation (MNKD), and DSW Inc. (DSW)

Nov 4, 2015 at 9:52 AM
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Analysts are weighing in on daily deals peddler Groupon Inc (NASDAQ:GRPN), drugmaker MannKind Corporation (NASDAQ:MNKD), and shoe seller DSW Inc. (NYSE:DSW). Here's a quick roundup of today's bearish brokerage notes on GRPN, MNKD, and DSW.

  • GRPN has plummeted 30.5% out of the gate to trade at $2.80, hitting a three-year low in the process. Sparking the technical implosion were a weak 2016 forecast and talk of lower margins due to increased marketing costs, as well as the resignation of CEO and co-founder Eric Lefkofsky, though he'll stay on as chairman. Adding insult to injury, BofA-Merrill Lynch lowered its rating to "underperform" from "buy," Piper Jaffray downgraded its opinion to "neutral" from "overweight" and slashed its price target to $2.50 from $7.50, and at least seven other brokerages also cut their price targets on Groupon Inc. This negativity is common on Wall Street, where 10 of 16 analysts rate the shares a "hold" or worse, and 14.5% of the equity's float is sold short -- or nine days' worth of trading, at typical volumes. Technically speaking, GRPN's value had been cut in half in 2015, even prior to this morning's bear gap.

  • MNKD, which is slated to report earnings next Monday evening, was downgraded to "underperform" from "market perform" at RBC Capital Markets. The brokerage firm said a physician survey indicates sluggish growth for the company's diabetes treatment Afrezza, and added, "Patient interest remains low and Afrezza prescriptions appear to get lost due to payer hurdles." Accordingly, MannKind Corporation is down 6.2% out of the gate at $3.03, bringing its year-to-date loss to nearly 42%. This is music to the ears of option bears, who appear to be gambling on an extended fourth-quarter swoon. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MNKD has racked up a 10-day put/call volume ratio of 1.61 -- 3 percentage points from a 12-month peak.

  • DSW hit a three-year low of $21.23 earlier, and was last seen 7.4% lower at $22.70. Traders and analysts are panning the company's lackluster sales guidance, and apparently aren't impressed with the appointment of Roger Rawlins as CEO. Susquehanna downgraded the stock to "neutral" from "positive," and sliced its price target to $23 from $37. Meanwhile, at least five other brokerage firms cut their price targets on DSW, including Canaccord Genuity (to $19 from $24). This year, DSW Inc. shares have now shed more than 39%. Nevertheless, option buyers on the ISE, CBOE, and PHLX have bought to open nearly 12 DSW calls for every put during the past two weeks. Likewise, eight out of 13 analysts offer up "strong buy" opinions, leaving the door wide open for additional downgrades.
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