Analyst Downgrades: Smith & Wesson Holding Corp, SolarCity Corp, and BlackBerry Ltd

Analysts downwardly revised their ratings and price targets on Smith & Wesson Holding Corp (SWHC), SolarCity Corp (SCTY), and BlackBerry Ltd (BBRY)

Apr 4, 2016 at 10:08 AM
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Analysts are weighing in on firearms maker Smith & Wesson Holding Corp (NASDAQ:SWHC), alternative energy stock SolarCity Corp (NASDAQ:SCTY), and phone maker BlackBerry Ltd (NASDAQ:BBRY). Here's a quick roundup of today's bearish brokerage notes on SWHC, SCTY, and BBRY.

  • Cowen and Company downgraded SWHC to "market perform" from "outperform" this morning, sending the shares down 14.8% to $23.64. In its note, the brokerage firm cited potentially tougher background checks for gun buyers. Smith & Wesson Holding Corp recently pulled back from a record high of $30.44, seen March 18, after moving steadily higher for more than a year on support from its 120-day moving average. But in the option pits, it appears traders are targeting further downside. At the International Securities Exchange (ISE) Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open nearly three SWHC puts for each call during the past 10 sessions, with the resulting 10-day put/call volume ratio of 2.69 landing in the 97th percentile of its annual range.
  • SCTY is up 3.3% at $25.08, despite a price-target cut to $56 from $65 at Stifel. SolarCity Corp announced this morning that it closed a renewable energy certificate transaction that will provide funding of up to $40 million. Analysts have been mostly in SCTY's corner, maintaining 11 "buy" or better ratings, compared to just four "holds." Plus, option traders continue to make bullish bets. As such, an unwinding of this optimism toward the underperformer -- SCTY is down more than 50% year-to-date -- could put pressure on the shares.
  • RBC began coverage on BBRY with a "sector perform" rating and set an $8 price target this morning, while Deutsche Bank cut its price-target on the stock to $6.50 from $7 -- a discount to the shares' current value of $7.21, down 3.6% from Friday's close. A drop in quarterly revenue weighed on BlackBerry Ltd at the end of the week, but while option traders are still buying BBRY calls over puts at an unusually high rate, short interest on the stock is running high. Specifically, more than 14% of BBRY's available float is tied up in these bearish bets, accounting for nearly three full weeks of trading, at the stock's average daily volume.
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