Analyst Downgrades: Cree, Inc., Mosaic Co, and Alliance Data Systems Corporation

Analysts downwardly revised their ratings and price targets on Cree, Inc. (NASDAQ:CREE), Mosaic Co (NYSE:MOS), and Alliance Data Systems Corporation (NYSE:ADS)

by Karee Venema

Published on Aug 17, 2016 at 9:58 AM

Analysts are weighing in tech stock Cree, Inc. (NASDAQ:CREE), fertilizer firm Mosaic Co (NYSE:MOS), and business solutions specialist Alliance Data Systems Corporation (NYSE:ADS). Here's a quick roundup of today's bearish brokerage notes CREE, MOS, and ADS.

  • CREE's fiscal fourth-quarter profit miss and dismal current-quarter guidance prompted a downgrade to "sell" and a price-target cut to $21 from $24.50 at UBS. Canaccord Genuity and Goldman Sachs also lowered their respective price targets on the stock to $22 and $18 -- the latter of which resides in territory not charted since March 2009. As such, the shares of Cree, Inc. have plunged 15.2% at $23.31, falling back well below the $25 mark -- an area that served as resistance ahead of a mid-July M&A-induced bull gap. CREE stock is now off more than 29% from its early March annual high at $32.92, and options traders have been bracing for more downside. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CREE's 10-day put/call volume ratio of 1.11 ranks in the elevated 78th annual percentile.

  • Susquehanna lowered its rating on MOS to "neutral" from "positive" and its price target to $28 from $30, expecting a slow recovery from softer global potash prices in 2016. Although MOS has slipped this morning -- down 1% at $27.79 -- the stock has surged more than 26% off its early February seven-year low at $22.02. Should the shares resume their longer-term trajectory, there's plenty of ammunition on the sentiment front to help propel Mosaic Co higher. Short interest, for example, accounts for a healthy 13.1% of the stock's available float, and it would take almost two weeks to cover these bearish bets, at MOS' average daily pace of trading.

  • ADS saw its rating cut to "underperform" from "neutral" and its price target lowered to $190 from $233 at Credit Suisse. Specifically, the brokerage firm said ADS is looking more and more like a lender, and as such, "a portion of the receivables portfolio may be exposed to higher credit risk relative to historical norms" and "could push valuation to be more in line with other credit card lenders." As a result, ADS is down 3.7% at the open to trade at $204.07. This is just more of the same for a stock that's shed 13% since being rejected by its descending 200-day moving average in late July. Short-term options traders, meanwhile, have rarely been as put-heavy as they are now. ADS' top-heavy Schaeffer's put/call open interest ratio (SOIR) of 1.86 ranks just 2 percentage points from a 52-week peak.
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