Analyst Downgrades: Chipotle Mexican Grill, Inc., Tesla Motors Inc, and Yahoo! Inc.

Analysts downwardly revised their ratings and price targets on Chipotle Mexican Grill, Inc. (CMG), Tesla Motors Inc (TSLA), and Yahoo! Inc. (YHOO)

by Alex Eppstein

Published on Feb 3, 2016 at 9:29 AM
Updated on Feb 3, 2016 at 9:31 AM

Analysts are weighing in on burrito baron Chipotle Mexican Grill, Inc. (NYSE:CMG), electric automaker Tesla Motors Inc (NASDAQ:TSLA), and Internet pioneer Yahoo! Inc. (NASDAQ:YHOO). Here's a quick roundup of today's bearish brokerage notes on CMG, TSLA, and YHOO.

  • CMG is getting bloodied up in pre-market trading, after the company reported better-than-expected quarterly earnings, but lower-than-forecast sales and a 14.6% drop in same-store sales -- likely due to an E. coli outbreak that was only recently resolved. Also, the company announced that a federal probe into a food-safety incident in California is being broadened to the national level. The rash of bad news has prompted no fewer than eight analysts to cut their price targets on the stock -- though Wells Fargo did boost its rating to "outperform" from "market perform." Ahead of the bell, Chipotle Mexican Grill, Inc. is down more than 6% after closing at $475.67 last night. Since its most recent high of $757 in mid-October, the stock has plummeted over 37%, and option bulls may be starting to feel the heat. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CMG has racked up a call/put volume ratio of 1.12, outstripping 90% of comparable readings from the prior year.

  • Berenberg started coverage on TSLA with a "sell" rating and $165 price target, representing a nearly 10% discount to last night's close at $182.78. The bearish note follows a session in which the shares dropped 7.2% on a stern warning from Pacific Crest. One group that has to be loving Tesla Motors Inc's technical troubles is short sellers. A lofty 28.5% of the stock's float is dedicated to short interest, which would take nearly seven days to buy back, at TSLA's average daily trading volume. And as we noted the other day, this pessimism is echoed in the options pits. That said, the stock is pointed 1% higher ahead of the bell. Looking forward, the automaker is scheduled to report earnings next Wednesday evening.

  • YHOO is down 1.2% in electronic trading, after the company last night announced a 15% drop in quarterly revenue and said it is open to offers for its core assets as part of yet another turnaround plan. The news is being panned on Wall Street, where at least 18 brokerage firms have cut their price targets on the stock, in what is quickly becoming a trend. Technically speaking, Yahoo! Inc. has been a trainwreck, sliding 34% year-over-year to trade at $29.06. That hasn't stopped option traders from placing bullish bets at an extreme speed. In fact, during the last 10 sessions at the ISE, CBOE, and PHLX, speculators have bought to open more than seven YHOO calls for every put. The corresponding call/put volume ratio of 7.10 represents a 12-month high.
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