Analyst Downgrades: American Eagle Outfitters, Freeport-McMoRan Inc, and Sunedison Inc

Analysts downwardly revised their ratings and price targets on American Eagle Outfitters (AEO), Freeport-McMoRan Inc (FCX), and Sunedison Inc (SUNE)

by Alex Eppstein

Published on Mar 3, 2016 at 9:58 AM

Analysts are weighing in on apparel retailer American Eagle Outfitters (NYSE:AEO), mining stock Freeport-McMoRan Inc (NYSE:FCX), and solar specialist Sunedison Inc (NYSE:SUNE). Here's a quick roundup of today's bearish brokerage notes on AEO, FCX, and SUNE.

  • AEO reported quarterly earnings and sales roughly in line with estimates, with the retailer citing "choppy mall traffic," "unseasonable weather," and minimum wage "pressure" as reasons its results weren't better. RBC responded by cutting its price target to $18 from $20. As such, American Eagle Outfitters is down 4.5% out of the gate at $14.74, potentially spelling the end of a rally off its early February annual low of $12.78. This is a welcome sight for short sellers. One-quarter of AEO's float is sold short, representing over eight days' worth of trading activity, at the stock's average volume.
  • Unlike one sector peer, FCX is selling off in early trading, down 4.2% at $8.59, after UBS lowered its opinion on the stock to "neutral" from "buy," citing "hurdles to recovery." However, the brokerage firm also bumped its price target to $9 from $6.50. Today's slide is more of the same for Freeport-McMoRan Inc, which has plunged 58.6% year-over-year. Not surprisingly, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been buying to open puts over calls at an accelerated clip. Specifically, FCX's 10-day put/call volume ratio of 0.88 ranks in the bearishly skewed 81st annual percentile.
  • SUNE announced last night it will suspend its quarterly dividend payment on preferred stock, just days after the company delayed its annual earnings report. This news prompted Needham to cut its rating on the shares to "hold." As a result, Sunedison Inc has dropped 8.4% at $1.64, and over 95% since hitting a nearly seven-year high of $33.45 last July. On the options front, short-term speculators are relatively put-focused toward the stock. SUNE's Schaeffer's put/call open interest ratio (SOIR) stands at 0.68, outstripping 88% of comparable readings from the past year.
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