Analyst Downgrades: QUALCOMM, Inc., Restoration Hardware Holdings Inc, and Insmed Incorporated

Analysts downwardly revised their ratings and price targets on QUALCOMM, Inc. (QCOM), Restoration Hardware Holdings Inc (RH), and Insmed Incorporated (INSM)

Jun 9, 2016 at 11:24 AM
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Analysts are weighing in on semiconductor stock QUALCOMM, Inc. (NASDAQ:QCOM), home furnishings retailer Restoration Hardware Holdings Inc (NYSE:RH), and biotech Insmed Incorporated (NASDAQ:INSM). Here's a quick roundup of today's bearish brokerage notes on QCOM, RH, and INSM.

  • QCOM fell sharply at the open, following a downgrade to "hold" from "buy" by Brean, but has pared its losses to 0.3% to trade at $54.76. QUALCOMM, Inc. has added 10% in 2016, yet short interest in the stock is up 34% over the past two reporting periods. Now may be an opportune time for short-term option buyers, as QCOM's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 90, showing that the semiconductor stock has tended to exceed volatility expectations during the past year, compared to what the options market has priced in. Meanwhile, QCOM's Schaeffer's Volatility Index (SVI) of 16% sits lower than 95% of all other readings from the past 12 months, indicating that near-term options are attractively priced at the moment.

  • RH is taking it on the chin the day after reporting dismal earnings and guidance, down 20.2% at $28.78 – a new all-time low. Once again, RH finds itself in the center of a downgrade stormbeing dealt at least seven price-target cuts and at least five downgrades. RH shares are now down 64% year-to-date. There are likely quite a few bears cheering today's drop, though. Nearly 20% of Restoration Hardware Holdings Inc's float is dedicated to short interest.

  • INSM is down 3.3% at $11.73 -- after hitting a three-year low earlier today -- following the announcement that the biopharmaceutical company had withdrawn a marketing application to the European Medicines Agency for its drug ARIKAYCE.

    J.P. Morgan Securities cut INSM's price target to $18 from $20, and Leerink similarly slashed its target to $21 from $23. INSM has lost nearly half of its value year-over-year, and the stock could be at risk of downgrades, with five of six analysts maintaining "strong buy" endorsements. An exceptional call-bias remains towards the stock, with Insmed Incorporated's Schaeffer's put/call open interest ratio (SOIR) of 0.3 sitting lower than any other reading from the past year, suggesting this is the most call-biased near-term options players have been in the past year.

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