Analyst Downgrades: Michael Kors Holdings Ltd, Seadrill Ltd, and Workday Inc

Analysts downwardly revised their ratings and price targets on Michael Kors Holdings Ltd (KORS), Seadrill Ltd (SDRL), and Workday Inc (WDAY)

by Alex Eppstein

Published on May 31, 2016 at 9:59 AM

Analysts are weighing in on fashion fiend Michael Kors Holdings Ltd (NYSE:KORS), drilling contractor Seadrill Ltd (NYSE:SDRL), and software stock Workday Inc (NYSE:WDAY). Here's a quick roundup of today's bearish brokerage notes on KORS, SDRL, and WDAY.

  • KORS saw its price target cut to $43 at Wedbush, but is up 0.5% this morning at $41.98. Tomorrow could be a more decisive day for the stock, with the retailer scheduled to report earnings ahead of the open. With Michael Kors Holdings Ltd's 14-day Relative Strength Index (RSI) still in oversold territory, an earnings beat could result in outsized gains. Technically speaking, the shares have been consolidating just above the $40 level, but recently crossed back above their 10-day moving average, which bodes well going forward. Meanwhile, traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.27 puts for each call over the last two weeks -- a ratio that ranks in the bearishly skewed 86th annual percentile. A sustained show of technical strength could send these skeptics fleeing, potentially serving as another catalyst higher.

  • SDRL was hit with a price-target cut to $3 from $3.25 at KLR, pressuring the shares 1.2% lower to $3.23. Since topping out at $5.21 in late April -- and being rejected by its 200-day moving average -- the stock has struggled, down 38%. All the while, bearish options traders have been piling on Seadrill Ltd. The stock's 50-day ISE/CBOE/PHLX put/call volume ratio has swelled to 1.70, in the 76th percentile of its annual range. Likewise, over 18% of SDRL's float is sold short, which would take more than a week to cover, at the stock's average trading levels.

  • WDAY has muscled 0.7% higher to trade at $76.59, shrugging off a downgrade to "hold" from "buy" at Cross Research. Of course, things could get even more interesting later on, with Workday Inc slated to report earnings after the close. Ahead of the event, short sellers have been active, and it would now take almost 13 sessions for these traders to cover their bearish positions, at the stock's average daily trading volume. Short-term options traders are also more put-skewed than usual, considering WDAY's Schaeffer's put/call open interest ratio (SOIR) of 1.03 outstrips 85% of all readings recorded in the last 12 months.
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