Analyst Downgrades: Mattress Firm Holding Corp, Urban Outfitters, Inc., and Gilead Sciences, Inc.

Analysts downwardly revised their ratings and price targets on Mattress Firm Holding Corp (MFRM), Urban Outfitters, Inc. (URBN), and Gilead Sciences, Inc. (GILD)

Jun 10, 2016 at 10:18 AM
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Analysts are weighing in on retail stocks Mattress Firm Holding Corp (NASDAQ:MFRM) and Urban Outfitters, Inc. (NASDAQ:URBN), and biotech Gilead Sciences, Inc. (NASDAQ:GILD). Here's a quick roundup of today's bearish brokerage notes on MFRM, URBN, and GILD.

  • MFRM is down 16.6% at $28.01 -- and just off a three-year low of $27.18 -- after a disappointing earnings report. Mattress Firm Holding Corp reported steeper-than-expected per-share losses, and downwardly revised its 2016 forecast. No fewer than four brokerage firms have since issued price-target cuts for the retailer, while Raymond James downgraded MFRM to "perform" from "outperform." There are lots of bears likely cheering, with 40.7% of MFRM's float sold short, an amount that would take a whopping 30.8 days, or over six weeks, to cover, at MFRM's average daily volume. In the options pits, near-term traders have been especially put-biased, with MFRM's Schaeffer's put/call open interest ratio of 4.9 sitting higher than 98% of all other readings from the past year.

  • URBN is trading at $26.38, down 5.5%, after announcing an anticipated decline in comparable store sales in the current quarter -- a shift from the company's well-received first-quarter figures. This announcement was met with a slew of price-target cuts from the analyst community, with no fewer than six brokerage firms issuing downward revisions. However, one analyst at Stifel said the sales weakness "is likely due to unfavorable weather and not merchandise related." Urban Outfitters, Inc. has gained over 20% year-to-date, but is set to close beneath its 200-day moving average for the first time since its post-earnings bull gap in mid-May. Today's news may come as a shock to some options bulls, as URBN's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 3.1 sits in the 87th percentile of annual readings, suggesting a bigger-than-usual bullish appetite. 

  • GILD is down 1.3% at $84.67, ahead of Executive Vice President and CFO Robin L. Washington's fireside chat at the Jefferies 2016 Healthcare Conference. Leerink cut GILD's price target to $120 from $123, but maintained an "outperform" rating. GILD has dropped about 17% since muscling north of $100 in late April, but options players remain optimistic, with GILD's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.3 sitting higher than 89% of all other readings taken within the last 12 months, suggesting a larger-than-usual bullish bias. Gilead Sciences, Inc. has a Schaeffer's Volatility Scorecard (SVS) of 81, suggesting the stock has tended to make outsized moves on the charts during the past year, relative to what the options market has priced in -- a good thing for premium buyers. Plus, GILD's short-term contracts are relatively inexpensive right now, with GILD's Schaeffer's Volatility Index (SVI) sitting lower than 94% of all other readings from the past 12 months, suggesting near-term options are pricing in relatively low volatility expectations.
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