Analyst Downgrades: Micron Technology, Inc., SolarCity Corp, and Lions Gate Entertainment Corp. (USA)

Analysts downwardly revised their ratings and price targets on Micron Technology, Inc. (MU), SolarCity Corp (SCTY), and Lions Gate Entertainment Corp. (USA) (LGF)

Jul 1, 2016 at 11:16 AM
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Analysts are weighing in on semiconductor stock Micron Technology, Inc. (NASDAQ:MU), renewable energy specialist SolarCity Corp (NASDAQ:SCTY), and entertainment company Lions Gate Entertainment Corp. (USA) (NYSE:LGF). Here's a quick roundup of today's bearish brokerage notes on MU, SCTY, and LGF.

  • MU is down 9.7% at $12.43 -- and back beneath its 200-day moving average -- after last night's mixed earnings report and an announcement that the company is planning roughly 2,400 layoffs. No fewer than four brokerage firms slashed their price targets, including Goldman Sachs, which lowered its price target to $12 from $13.  The stock is down 33% year-over-year, and there's likely some option bulls kicking rocks after this latest news. MU's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX) currently at 3.55, higher than 76% of all other readings from the past year.
  • SCTY is down 1.1% at $23.67, after Credit Suisse raised the odds of a Tesla Motors Inc (NASDAQ:TSLA) buyout "at, or near, the proposed terms" to 60%-70%, though the $2.8 billion bid "grossly undervalued" SCTY. Credit Suisse downgraded SCTY to "neutral" from "outperform," and slashed its price target to $27 from $38. Year-over-year, SolarCity Corp has shed over half of its value (and TSLA is dealing with a new set of problems today). Nearly 40% of SCTY's float is sold short, an amount that would take over a week of trading, at SCTY's average daily volume, to cover. Option players seem to be anticipating an upswing, however, with SCTY's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.33 sitting in the 63rd percentile of its annual range.
  • LGF is down 6.4% at $18.94 -- territory not charted since February -- following yesterday's announcement of a $4.4 billion deal to acquire media company Starz (NASDAQ:STRZA). Pacific Crest cut LGF's price target to $24 from $27, while Moody's placed the company's credit ratings under review for a potential downgrade. Lions Gate Entertainment Corp. (USA) is down over 40% since the beginning of 2016. Despite this, near-term option players have rarely been more call-biased on the stock, with LGF's Schaeffer's put/call open interest ratio (SOIR) of 0.10 sitting lower than 99% of all other readings taken in the past year. An unwinding of these bullish bets could push LGF lower. Analysts have also been keen on the stock, with eight of 11 rating LGF a "strong buy" and without a single "sell" in sight, leaving plenty of room for future downgrades.
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