Analyst Downgrades: JPMorgan, Chesapeake Energy, Verint

Analysts downwardly revised their ratings on JPMorgan Chase & Co. (JPM), Chesapeake Energy Corporation (CHK), and Verint Systems Inc. (VRNT)

Dec 3, 2015 at 9:51 AM
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Analysts are weighing in on financial firm JPMorgan Chase & Co. (NYSE:JPM), oil-and-gas name Chesapeake Energy Corporation (NYSE:CHK), and actionable intelligence issue Verint Systems Inc. (NASDAQ:VRNT). Here's a quick roundup of today's bearish brokerage notes on JPM, CHK, and VRNT.

  • Standard & Poor's downgraded the credit ratings of eight major U.S. banks, including JPM, citing a diminished possibility of "extraordinary support" from the government in the event of excessive stress. Specifically, the company's rating was lowered to A- from A. Nonetheless, JPMorgan Chase & Co. -- just a day after the firm established a new small business lending partnership -- is up 0.2% out of the gate at $66.78. Longer term, the stock has been bouncing back from its late-August two-year low of $50.07, tacking on 33.4% since then. Option traders, however, are rolling the dice on downside for JPM. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security has amassed a 10-day put/call volume ratio of 1.27 -- just 4 percentage points from a 12-month peak. Similarly, JPM's Schaeffer's put/call open interest ratio (SOIR) of 0.98 sits in the 97th percentile of its annual range.
  • Long-term laggard CHK was hit with a price-target cut to $5.50 from $7 at Susquehanna. In the wake of this bearish attention, the shares are down 5.8% at $5.20, extending their year-to-date loss to 73.4%. Short sellers are sure to be celebrating the move lower. Nearly 35% of Chesapeake Energy Corporation's float is dedicated to short interest, representing over two weeks of trading activity, at average daily volumes. In fact, the 228.2 million CHK shares sold short represents the highest level seen in more than a decade.
  • VRNT reported mixed quarterly results (subscription required) last night, and also lowered its full-year guidance. The brokerage bunch has reacted negatively, with FBR removing the stock from its "Top Picks" list and Credit Suisse downgrading its rating to "neutral" from "outperform." Those firms, along with RBC, Oppenheimer, and J.P. Morgan Securities, cut their price targets on Verint Systems Inc., as well. Out of the gate, the shares have plunged 13.7% to trade at $40.09, and earlier hit an annual low of $39.23. This should come as good news to a recent round of put buyers. During the past 10 days at the ISE, CBOE, and PHLX, traders have bought to open 4.52 VRNT puts for each call.

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