Analyst Downgrades: Tesla Motors Inc, Alibaba Group Holding Ltd, and Wells Fargo & Co

Analysts downwardly revised their ratings and price targets on Tesla Motors Inc (NASDAQ:TSLA), Alibaba Group Holding Ltd (NYSE:BABA), and Wells Fargo & Co (NYSE:WFC)

by Karee Venema

Published on Mar 24, 2016 at 9:59 AM

Analysts are weighing in on electric car company Tesla Motors Inc (NASDAQ:TSLA), e-commerce concern Alibaba Group Holding Ltd (NYSE:BABA), and bank stock Wells Fargo & Co (NYSE:WFC). Here's a quick roundup of today's bearish brokerage notes on TSLA, BABA, and WFC.

  • Ahead of next week's highly anticipated Model 3 reveal, TSLA was downgraded to "sell" at S&P Capital Market Intelligence, which also set its price target at $155. Specifically, the brokerage firm expressed caution toward the shares, while also saying it expects both sales and earnings per share to improve this year. Against this backdrop, the shares of TSLA have dropped 0.9% out of the gate to $220.66, and surrendered a foothold atop their 10-day moving average -- a trendline that has helped guide the shares off their Feb. 9 two-year low of $141.05. On the sentiment front, short sellers have been increasing their bearish exposure at a rapid-fire rate. In the most recent reporting period alone, short interest surged 8.1%, and now accounts for more than one-third of Tesla Motors Inc's available float.

  • Deutsche Bank lowered its price target on BABA to $91 from $102, sending the shares down 2% this morning to $75.02. This negative price action runs counter to the stock's recent trajectory, with shares of BABA up 27% since bottoming at a year-to-date low of $59.25 on Feb. 9. Option traders are likely keeping a close eye on today's retreat -- as well as the drama unfolding at Yahoo! Inc. (NASDAQ:YHOO) -- considering they've been initiating long puts over long calls at a faster-than-usual clip of late. In fact, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Alibaba Group Holding Ltd's 10-day put/call volume ratio of 0.76 ranks in the 83rd annual percentile.

  • UBS started coverage on WFC with a "sell" rating and a $45 price target, citing valuation concerns that pose "bigger risks" than its sector peers. At last check, the shares of WFC have tumbled 1.9% to $48.80 -- widening their year-to-date deficit to 10.2%. Skepticism has been ramping up on the stock in recent weeks, per its 10-day ISE/CBOE/PHLX put/call volume ratio of 0.98, which rests above 78% of all comparable readings taken in the past year. Plus, short interest surged 17.3% in the most recent reporting period. These bearish bets still account for less than 1% of Wells Fargo & Co's available float, though, meaning there's plenty of room for short sellers to increase their exposure.
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