Will Analysts Bail on CBS and CIGNA After Earnings?

CBS Corporation (NYSE:CBS) and CIGNA Corporation (NYSE:CI) could get hit with bearish analyst attention after earnings

Jul 29, 2016 at 11:33 AM
facebook X logo linkedin


We've been highlighting earnings winners and losers all week. This time around, we're going to look at two stocks moving lower after earnings that could be vulnerable to a round of bearish analyst attention: media giant CBS Corporation (NYSE:CBS) and health insurer CIGNA Corporation (NYSE:CI). Let's take a closer look at what's happening with CBS and CI, and why more trouble could be ahead for the stocks. 

The company reported much better-than-expected earnings, but shares of CBS are down 3.7% today at $52.20. While the stock is seeing familiar support from the $52 level and 140-day moving average, a sustained move lower could spark a round of bearish analyst attention. 

For example, 17 of 21 brokerage firms that cover CBS recommend buying it -- even though the stock has been trending lower since early 2014. Moreover, the stock's average 12-month price target of $62.65 represents not only annual-high territory, but a 20% premium to current levels. Reaffirming this sense of undeserved optimism, Cowen this morning raised its price target to $62. If the shares breach the aforementioned layers of support, downgrades and/or price-target reductions could certainly weigh on CBS going forward. 

Plus, any interested options trader will be pleased to note that CBS Corporation's Schaeffer's Volatility Index (SVI) of 27% ranks in the low 13th annual percentile. This means the options market is pricing in unusually low volatility expectations at the moment -- good news for anyone looking to buy CBS' short-term options. 

As for CI, not only is the company dealing with M&A drama, but it just posted lackluster quarterly earnings results, and reduced its full-year outlook. The stock was last seen 4.7% lower at $129.64 -- extending a turbulent 12 months that have seen the shares grind out lower lows. This difficult stretch follows a roughly three-year run that saw CI stock climb from around $40 to all-time highs near $170 back in mid-2015. 

But while CI's performance on the charts has changed drastically, analysts' outlooks have remained firmly upbeat. Seven of 13 brokerage firms tracking the stock say it's a "strong buy," and just one recommends selling CI. Even more notably, the shares have a consensus 12-month price target of $163.07 -- a 26% premium to where the stock is trading now. It appears a round of bearish analyst attention is long overdue for CIGNA. 

While not as attractive as CBS', CIGNA Corporation's (NYSE:CI) short-term options are fairly priced, from a volatility perspective. Specifically, the stock's SVI of 25% sits below 63% of the past year's readings. 

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI