Analyst Downgrades: Under Armour Inc, Gap Inc, and Palo Alto Networks Inc

Analysts downwardly revised their ratings and price targets on Under Armour Inc (NYSE:UA), Gap Inc (NYSE:GPS), and Palo Alto Networks Inc (NYSE:PANW)

Josh Selway

Aug 31, 2016 at 9:29 AM

PANW
GPS
UA

Analysts are weighing in on athletic apparel firm Under Armour Inc (NYSE:UA), retail stock Gap Inc (NYSE:GPS), and cybersecurity specialist Palo Alto Networks Inc (NYSE:PANW). Here's a quick roundup of today's bearish brokerage notes on UA, GPS, and PANW.

UA is down 0.7% in electronic trading, after brokerage firm Argus downgraded the stock's rating to a "hold" from a "buy," warning the company will need to invest considerably in order to expand further. At $41.56, Under Armour Inc currently sits pennies below its year-to-date breakeven mark, but most analysts remain on the bullish side of the fence. Specifically, 15 of 24 consider the shares a "strong buy," and just one recommends selling them. Meanwhile, premium on UA's short-term options still appears relatively low.
GPS is sinking 4.3% in pre-market trading, after one of its main distribution centers in New York caught fire last night. Wells Fargo has since weighed in, saying the disaster creates more uncertainty surrounding the business. The pending drop would put Gap Inc back into the red for the year, as it closed Tuesday at $25.34 after selling off in sympathy with sector peer Abercrombie & Fitch Co. (NYSE:ANF). This is all bad news for options traders, since GPS call buying has nearly doubled put buying during the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

Despite an earnings beat and impressive revenue growth, as well as a $500 million stock buyback, PANW is set to fall roughly 6.5% at the open. Sinking the shares is a disappointing current-quarter outlook, and a flurry of bearish analyst attention. While Barclays, Goldman Sachs, and Piper Jaffray raised their price targets, at least six others reduced theirs -- including Raymond James, which also downgraded the stock's rating to "outperform" from "strong buy." Palo Alto Networks Inc settled at $143.45 on Tuesday, already well below its year-to-date breakeven mark of $176.14, and more losses could be in store, if optimism toward the stock begins to unwind. For example, 22 of the 25 covering brokerage firms say to buy PANW, and none recommending selling it.

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