Analyst Downgrades: NetApp Inc., Pure Storage Inc, and Gilead Sciences, Inc.

Analysts downwardly revised their ratings and price targets on NetApp Inc. (NTAP), Pure Storage Inc (PSTG), and Gilead Sciences, Inc. (GILD)

by Kirra Fedyszyn

Published on May 26, 2016 at 10:15 AM

Analysts are weighing in on software maker NetApp Inc. (NASDAQ:NTAP), data storage specialist Pure Storage Inc (NYSE:PSTG), and biotech stock Gilead Sciences, Inc. (NASDAQ:GILD). Here's a quick roundup of today's bearish brokerage notes on NTAP, PSTG, and GILD.

  • NTAP reported fiscal fourth-quarter earnings below expectations and offered up disappointing guidance, resulting in price-target cuts from no fewer than six brokerage firms. Susquehanna, Goldman Sachs, and BMO set their targets lowest, at $23. Piper Jaffray, meanwhile, raised its price target on NTAP to $26 from $25. The shares have given up 25% year-over-year, last seen down 3.4% at $24.66, and it looks like analysts and traders have been bracing for the worst. Of the 25 brokerage firms providing coverage, 92% rate NetApp Inc. a "hold" or worse. And short interest on the stock accounts for a healthy 6.7% of its available float, or more than seven days' worth of trading, at NTAP's typical daily volume.

  • PSTG has plunged nearly 21% to $11.66 -- and earlier matched its Feb. 8 record low of $11.05 -- after reporting uninspiring quarterly results. The stock has since received a downgrade to "market perform" and price-target cut to $13 from $25 at BMO, with the brokerage firm saying "that revenue beat and raises and/or a more aggressive path to profitability will be required for the stock to work." Additionally, the stock received at least six other price-target cuts. Both short sellers and options traders may be cheering Pure Storage Inc's fall, however. Short interest on the stock represents more than 30% of its total float, while traders have bought to open 2.65 PSTG puts for each call over the past two weeks on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

  • GILD received a price-target cut to $103 from $107 at Morgan Stanley this morning, and the shares are off 1.4% at $85.30 in response. Gilead Sciences, Inc. is down 24% over the past 12 months, but near-term options traders have been unusually call-heavy toward the stock. In fact, GILD's Schaeffer's put/call open interest ratio (SOIR) of 0.66 sits lower than 95% of all readings taken in the past year. Buyers of the equity's near-term options could also be getting a great deal, as the stock's Schaeffer's Volatility Index (SVI) of 22% sits in the low 7th percentile of its annual range -- meaning the options market is pricing in relatively low volatility expectations right now.
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