Analyst Downgrades: Fortinet Inc, Valeant Pharmaceuticals Intl Inc, and Xilinx, Inc.

Analysts downwardly revised their ratings and price targets on Fortinet Inc (FTNT), Valeant Pharmaceuticals Intl Inc (VRX), and Xilinx, Inc. (XLNX)

Oct 12, 2016 at 9:44 AM
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Analysts are weighing in on cybersecurity stock Fortinet Inc (NASDAQ:FTNT), drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX), and semiconductor specialist Xilinx, Inc. (NASDAQ:XLNX). Here's a quick roundup of today's bearish brokerage notes on FTNT, VRX, and XLNX.

  • Last night, FTNT cut its third-quarter earnings and revenue guidance, citing "the lengthening of deal cycles as enterprises are becoming more strategic with their purchasing decisions and buying with less urgency than last year." Wall Street has panned the development, as evidenced by a raft of negative analyst notes. Of particular note, Goldman Sachs removed Fortinet Inc from its "Conviction" list and slashed its price target to $36 from $43, while Stephens downgraded its rating to "equal weight." Out of the gate, the stock is down 13.3% at $29.56, plunging into negative year-to-date territory and landing on the short-sale restricted list. Option bears should be pleased, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 2.32 FTNT puts for every call in the last two weeks, a ratio that ranks in the high 87th annual percentile.

  • VRX is down 0.4% at $22.85, following a price-target cut to $35 from $36 at RBC, which predicted lower guidance for the drugmaker. That said, the shares have already shed more than three-quarters of their value on a year-to-date basis. In options land, some traders may be betting on a bounce. Specifically, Valeant Pharmaceuticals Intl Inc has racked up a 10-day ISE/CBOE/PHLX call/put volume ratio of 2.72, which registers just 13 percentage points from a 12-month peak. Put differently, speculators have been buying to open calls over puts at a historically accelerated rate.

  • XLNX has tanked 3.6% at $49.17, as a downgrade to "neutral" from Baird overshadows a production milestone on the company's 16nm UltraScale+ portfolio. As such, the stock is on track to close south of its 80-day moving average for the first time since early July, and headed for a fourth consecutive negative session. While shareholders kick rocks, Xilinx, Inc. short sellers should be on cloud nine. Short interest rocketed 28.4% higher in the last two reporting periods, and now accounts for more than a week's worth of pent-up trading activity, at XLNX's average daily volumes. Looking ahead, the company is scheduled to report earnings one week from tonight.
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