Analyst Downgrades: PulteGroup, Inc., Ascena Retail Group Inc, and VeriFone Systems Inc

Analysts downwardly revised their ratings and price targets on PulteGroup, Inc. (NYSE:PHM), Ascena Retail Group Inc (NASDAQ:ASNA), and VeriFone Systems Inc (NYSE:PAY)

by Karee Venema

Published on Sep 20, 2016 at 9:57 AM

Analysts are weighing in on homebuilder PulteGroup, Inc. (NYSE:PHM), retail stock Ascena Retail Group Inc (NASDAQ:ASNA), and electronic payment processor VeriFone Systems Inc (NYSE:PAY). Here's a quick roundup of today's bearish brokerage notes on PHM, ASNA, and PAY.

  • PHM is down 2.9% at $19.30, as a dismal "underperform" initiation at Wedbush and plunging August housing starts outweigh solid earnings from sector peer Lennar Corporation (NYSE:LEN). This negative price action just echoes PulteGroup, Inc.'s recent trajectory, with the shares off nearly 14% from their late-July annual high at $22.40. Options traders have shown a preference for long calls over puts in recent months, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PHM's 50-day call/put volume ratio of 2.60 shows call buying nearly tripling put buying in recent weeks.
  • ASNA was hit with a barrage of bearish brokerage attention, after the retailer's fiscal fourth-quarter earnings and full-year forecast came in below estimates. Oppenheimer, FBR, and RBC, for instance, all downgraded the stock to the equivalent of a "neutral" rating, while no fewer than five brokerage firms lowered their price targets. Against this backdrop, shares of Ascena Retail Group Inc have sunk 25.6% to trade at $6.05 -- and are fresh off a seven-year low of $5.80. While the stock is short-sale restricted today, short sellers are likely cheering this post-earnings bear gap. Specifically, short interest accounts for a whopping 21.6% of ASNA's available float.
  • Morgan Stanley slashed its price target on PAY to $16 from $23. As such, the shares were last seen down 1.2% at $15.84 -- and earlier hit a three-year low of $15.74. Longer term, PAY has struggled mightily both on and off the charts, shedding 43% year-over-year. Nevertheless, options traders have been initiating long calls over puts at a near-annual-high clip of late. In fact, VeriFone Systems Inc's 10-day call/put volume ratio of 31.92 at the ISE, CBOE, and PHLX sits just 5 percentage points from a 52-week peak.
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