Analyst Downgrades: Alere Inc, Infinera Corp., and Activision Blizzard, Inc.

Analysts downwardly revised their ratings and price targets on Alere Inc (ALR), Infinera Corp. (INFN), and Activision Blizzard, Inc. (ATVI)

Jul 28, 2016 at 10:50 AM
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Analysts are weighing in on diagnostics firm Alere Inc (NYSE:ALR), tech stock Infinera Corp. (NASDAQ:INFN), and video game maker Activision Blizzard, Inc. (NASDAQ:ATVI). Here's a quick roundup of today's bearish brokerage notes on ALR, INFN, and ATVI.

  • ALR received a price-target cut to $48 from $56 at Goldman Sachs, following news the company is being investigated by the Department of Justice (DOJ) over its Medicare, Medicaid, and Tricare billing practices. The report had Alere Inc selling off in late trading Wednesday, but the shares are sharply higher this morning, up 23.4% at $38.83, after the company assured investors that the matter related to the DOJ subpoena was "not material." Still, questions surround ALR's pending deal to be bought by Abbott Laboratories (NYSE:ABT) for $5.8 billion -- a deal that has not yet closed, and that ABT attempted to convince Alere to back out off earlier this year.
  • A disappointing current-quarter forecast amid "signs of slowing demand" overshadowed better-than-expected earnings for INFN, which is now down 33.4% to $8.34, just off a new two-year low of $8.20. Analysts were quick to weigh in, with five analyst downgrading the stock to a rating equivalent to a "hold," while several others also reduced their price targets. The lowest target of $8.50 came from J.P. Morgan Securities, which said it is "sidelined until business visibility improves." Infinera Corp. has been on a downtrend for nearly a year, giving back 54% in 2016 alone, so it's no surprise options traders have been betting against the stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.28 ranks in the 94th percentile of its annual range.
  • ATVI is off 1.6% at $40.22, after MKM cut its rating on the stock to "neutral" from "buy" and its price target to $42 -- still a slight premium over current trading levels. Activison Blizzard, Inc., which is due to report quarterly earnings a week from today, has been moving higher since mid-February, up 52%, and fresh off a July 13 all-time high of $43.05. Plus, today's pullback is being contained at the round $40 level, which served as resistance in recent months, but appears to have now switched to a more supportive role. Should the stock resume its longer-term trajectory, it could get a boost if recent short sellers jump ship -- the bearish bets climbed by nearly 29% during the most recent two-week reporting period.
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