Analyst Downgrades: Gap, Mentor Graphics, Nimble Storage

Analysts downwardly revised their ratings on Gap Inc (NYSE:GPS), Mentor Graphics Corp (NASDAQ:MENT), and Nimble Storage Inc (NYSE:NMBL)

Nov 20, 2015 at 9:55 AM
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Analysts are weighing in on apparel retailer Gap Inc (NYSE:GPS), automation issue Mentor Graphics Corp (NASDAQ:MENT), and data storage firm Nimble Storage Inc (NYSE:NMBL). Here's a quick roundup of today's bearish brokerage notes on GPS, MENT, and NMBL.

  • GPS is showing resilience this morning, after the Old Navy parent reported weaker-than-expected quarterly sales and cut its full-year profit forecast to a range below Wall Street's estimates, citing a stronger dollar. The news is being met with price-target reductions at no fewer than nine brokerage firms, with the deepest cut courtesy of J.P. Morgan Securities, to $19 from $20 -- territory not explored in nearly three years. Nonetheless, Gap Inc was last seen up 5.2% at $26.40. The pop is likely being met with boos by traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), who have been gambling on extended losses over the past few months. Specifically, GPS' 50-day put/call volume ratio checks in at 4.25, just 1 percentage point from a 52-week high.
  • MENT has plummeted 30.7% this morning to trade at $19.26, following a third-quarter earnings miss, lackluster current-quarter revenue forecast, and a lowered fiscal 2016 outlook. Reacting to the quarterly update, J.P. Morgan Securities cut its rating to "underweight" from "neutral," and its price target to $20 from $28. Likewise, Pacific Crest downgraded Mentor Graphics Corp's rating to "sector weight," while D.A. Davidson and BofA-Merrill Lynch lowered their assessments to "neutral," with the former cutting its price target to $24. Earlier, the stock touched $19.03, putting it in waters not charted for more than three years -- and on the short-sale restricted list. Speaking of which, as of the latest update in early November, 7.3% of MENT's float is sold short. It would take these bears two weeks to repurchase their positions, at the stock's typical volume -- though, given the equity's swoon, short sellers probably aren't in any rush to cover.
  • NMBL has shed 46% this morning to trade at $11.03, and earlier panned $10.30 -- a record low. The technical disaster springs from the company's sharper-than-anticipated third-quarter loss and downbeat current-quarter guidance, which prompted a raft of negative notes from no fewer than 19 brokerage firms. For example, Pacific Crest downgraded the stock's rating to "sector weight" due to pricing pressures -- a move echoed by Oppenheimer, Raymond James, Monness Crespi, William Blair, Stifel, UBS, Wunderlich, and RBC. While bad for Nimble Storage Inc shareholders, this is a welcome development for short sellers. Over one-tenth of the security's float is sold short, which would take more than seven sessions to repurchase, at NMBL's average trading levels.

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