Analyst Update: Heron Therapeutics Inc, Fred's, Inc., and Cognizant Technology Solutions Corp

Analysts are weighing in on Heron Therapeutics Inc (HRTX), Fred's, Inc. (FRED), and Cognizant Technology Solutions Corp (CTSH)

Oct 3, 2016 at 2:43 PM
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Analysts are weighing in on biotech stock Heron Therapeutics Inc (NASDAQ:HRTX), discount retailer Fred's, Inc. (NASDAQ:FRED), and IT specialist Cognizant Technology Solutions Corp (NASDAQ:CTSH). Here's a quick roundup of today's brokerage notes on HRTX, FRED, and CTSH.

  • HRTX is down 5.8% at $16.23 -- and earlier touched a new annual low of $15.13 -- following news that three of the company’s executives are leaving, along with a price-target cut to $40 from $46 at Jefferies. Specifically, the brokerage firm cited Heron Therapeutics Inc's delayed launch date for chemotherapy-induced nausea treatment, Sustol. Still, all eight analysts following HRTX maintain a "strong buy" rating on the stock, even though it's down 39% year-to-date. But it's also clear many traders don't agree with that upbeat sentiment, as the roughly 12.5 million shares sold short represent a record high. Plus, at HRTX's typical pace of trading, it would take more than four weeks to cover all those bearish positions.
  • An upgrade to "hold" from "sell" at Deutsche Bank has FRED surging 15.8% to $10.49. The stock could use all the help it can get, too, considering the shares have shed nearly 36% so far in 2016, and just hit a seven-year low of $8.98 on Friday. Unsurprisingly, all six analysts tracking Fred's, Inc. rate the equity a "hold" or a "strong sell." Short interest keeps ticking higher, too, currently representing 10.8% of FRED's available float. All those shorted shares account for more than two weeks' worth of trading, at the stock's average daily volumes.
  • CTSH has added 5.6% to trade at $50.34, after Deutsche Bank reiterated its "buy" rating and $69 price target -- representing a healthy 37% premium over the stock's current value. "We would be aggressively buying shares at these levels," noted an analyst at the firm, who also argued that the resignation of Cognizant Technology Solutions Corp President Gordon Coburn shouldn't impact its fundamental position or guidance. The brokerage also dismissed worries over an internal investigation regarding improper payments made in India, saying "several US multinationals have received similar fines and have run into similar issues conducting business in India."

    This optimism is a welcome relief to shareholders, as the stock has been slapped with numerous bearish analyst notes of late. And though the shares sank to an annual low of $45.44 on Friday, bulls still have the upper hand in the options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CTSH's 10-day call/put volume ratio of 3.58 ranks in the 83rd percentile of its 12-month range.
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