Analyst Downgrades: Apple Inc., Netflix, Inc., and Illumina, Inc.

Analysts downwardly revised their ratings and price targets on Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), and Illumina, Inc. (NASDAQ:ILMN)

by Karee Venema

Published on Jul 5, 2016 at 10:12 AM
Updated on Jul 6, 2016 at 9:07 AM

Analysts are weighing in on tech stock Apple Inc. (NASDAQ:AAPL), streaming service Netflix, Inc. (NASDAQ:NFLX), and medical equipment maker Illumina, Inc. (NASDAQ:ILMN). Here's a quick roundup of today's bearish brokerage notes on AAPL, NFLX, and ILMN.

  • Citigroup cut its third- and fourth-quarter earnings estimates for AAPL, explaining that the potential for lower demand exists due to "Brexit"-related headwinds, as well as volatility in the currency market and a longer replacement cycle. The brokerage firm did, however, maintain its "buy" rating and $115 price target on the stock. Nevertheless, AAPL is down 1.1% at $94.79, widening its year-over-year deficit to almost 25%. Should the shares continue to move south -- or the firm's beef with Spotify heats up -- there's ample room for analysts to downgrade the stock, considering 83% currently maintain a "buy" or better rating. Separately, Apple Inc. said it will encourage iOS 10 users to become organ donors.

  • Needham lowered its rating on NFLX to "hold" from "buy," and cut its earnings estimates for the remainder of this year and all of next. Specifically, the brokerage firm cited possible "Brexit"-related headwinds, and the potential for "slow international subscriber growth," should Netflix, Inc. leave certain European Union (EU) markets where proposed legal measures could increase costs for the firm. At last check, NFLX was off 2.9% at $93.88 -- and back below this key moving average. Longer term, NFLX stock is about 18% lower year-to-date, and options traders have been buying-to-open puts relative to calls at a faster-than-usual clip in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NFLX's 50-day put/call volume ratio of 0.93 sits just 2 percentage points from a 52-week peak.

  • ILMN is down 4.3% at $134.68, after Morgan Stanley downgraded the stock to "underweight" and cut its price target to $110 from $130 -- a steep discount to current trading levels. This negative price action is just more of the same for a stock that's shed roughly 39% year-over-year, and hit a two-year low of $127.10 in early May. There's ample room for more downgrades to come down the pike, too. Six of 17 brokerages maintain a "buy" or better rating on Illumina, Inc., with not a single "sell" to be found.
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