Analyst Downgrades: L Brands Inc, Urban Outfitters, Inc., and Take-Two Interactive Software, Inc.

Analysts downwardly revised their ratings and price targets on L Brands Inc (NYSE:LB), Urban Outfitters, Inc. (NASDAQ:URBN), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

May 19, 2016 at 10:03 AM
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Analysts are weighing in on retail stocks L Brands Inc (NYSE:LB) and Urban Outfitters, Inc. (NASDAQ:URBN), as well as game maker Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Here's a quick roundup of today's bearish brokerage notes on LB, URBN, and TTWO.

  • Echoing a recent trend among retailers, LB is down 2% at $62.51 -- and fresh off a new annual low of $60.00 -- after the firm reported lower-than-expected first-quarter revenue and offered up a dreary full-year forecast. What's more, Baird cut its rating to "neutral" and its price target to $66, saying, "Near-term visibility is greatly reduced amid a multi-front sales slowdown, leadership changes, significant shifts in promotional strategy." The stock also saw its price target cut at Deutsche Bank (to $76) and UBS (to $68). Year-to-date, the shares of L Brands Inc have now shed 33%. Short-term options traders, meanwhile, are more put-heavy than usual, per LB's Schaeffer's put/call open interest ratio (SOIR) of 1.55 -- in the 81st percentile of its annual range.

  • URBN, however, is following in the footsteps of its fellow teen retailer -- up 11.8% at $27.50, after the company posted solid results for the first quarter. In fact, not even price-target cuts from Mizuho (to $28), Wedbush (to $30), Stifel (to $32), and Baird (to $34) are slowing the stock down. Longer term, shares of Urban Outfitters, Inc. are off 21% from their April 4 year-to-date high of $34.77, and short sellers have been piling on. In fact, short interest surged 23% in the most recent reporting period, and now accounts for a healthy 9.4% of URBN's available float. It would take more than six sessions to cover all of these bearish bets, at the equity's average daily pace of trading.

  • Analysts are reacting to TTWO's mixed earnings report, with the company's fiscal fourth-quarter results exceeding estimates, but its current-quarter forecast falling short. Baird, for example, cut its price target to $37, as did Ascendiant Capital (to $42), Jefferies (to $45), Mizuho (to $40), and Credit Suisse (to $37). Macquarie, MKM Partners, and Wedbush, however, all boosted their price targets. After plunging 7.3% at the open, TTWO has since bounced off its 200-day moving average to trade 2% higher at $36.36. This positive price action just echoes the equity's longer-term trajectory, with TTWO up 31.5% year-over-year. Short sellers are likely smarting over this bullish reversal, considering 15.9% of Take-Two Interactive Software, Inc.'s float is sold short. What's more, at the stock's average pace of trading, it would take almost two weeks to cover these shorted shares.
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