Analyst Downgrades: Gap Inc, Ross Stores, Inc., and Brocade Communications Systems, Inc.

Analysts downwardly revised their ratings and price targets on Gap Inc (NYSE:GPS), Ross Stores, Inc. (NASDAQ:ROST), and Brocade Communications Systems, Inc. (NASDAQ:BRCD)

May 20, 2016 at 10:03 AM
facebook X logo linkedin

Analysts are weighing in on retail stocks Gap Inc (NYSE:GPS) and Ross Stores, Inc. (NASDAQ:ROST), as well as networking solutions specialist Brocade Communications Systems, Inc. (NASDAQ:BRCD). Here's a quick roundup of today's bearish brokerage notes on GPS, ROST, and BRCD.

  • Analysts were quick to chime in on GPS, after the retailer said it would close roughly 75 Old Navy and Banana Republic stores -- mostly overseas -- to try and stem declining sales. Additionally, Gap Inc reported a 6% drop in first-quarter sales and a nearly 47% drop in profit, results CEO Art Peck called "unacceptable." Stifel, for example, lowered its rating to "hold" from "buy," while at least 12 other brokerage firms cut their price targets. What's more, Standard and Poor's cut its rating on the company to "junk" status. While shares of GPS are up 1.5% out of the gate to $17.54, this post-earnings upside should be taken with a grain of salt. Specifically, GPS has surrendered almost 55% over the past 52 weeks, and tagged a four-year low earlier this week. As such, the stock's 14-day Relative Strength Index (RSI) closed last night at 15 -- well in oversold territory -- suggesting a near-term bounce may have been in the cards.

  • ROST is also lower post-earnings following a challenging quarter for retailers, down 3.5% at $53.56. However, the equity could potentially find a foothold atop its 200-day moving average -- a historically supportive trendline that has helped contain pullbacks going back to last November -- as well as its year-to-date breakeven mark. Meanwhile, the stock is also reacting to a round of price-target cuts, including one from RBC to $56 from $58. On the sentiment front, short-term speculators are more put-skewed than usual toward Ross Stores, Inc., per the stock's Schaeffer's put/call open interest ratio (SOIR) of 2.39 -- in the 81st annual percentile. Should the equity bounce from double-barreled technical support, an unwinding of these bearish bets could create fresh tailwinds for the shares.

  • BRCD's fiscal second-quarter revenue miss was met with no fewer than six price-target cuts, including one from Baird to $9 from $10, with the brokerage firm saying it remains "cautious on rapid architectural changes taking place in the Storage market." Against this backdrop, the shares of BRCD are down 2.2% at $7.80, widening their year-over-year deficit to 35%. This is likely music to the ears of options traders, who have been initiating long puts relative to long calls at a faster-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Brocade Communications Systems, Inc.'s 10-day put/call volume ratio of 0.41 rests in the 79th annual percentile.
Sign up now for Schaeffer's Opening View newsletter to get a head start on all the major pre-market news!

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI