Analyst Downgrades: Visa Inc, Sonic Corporation, and VF Corp

Analysts downwardly revised their ratings and price targets on Visa Inc (V), Sonic Corporation (SONC), and VF Corp (VFC)

by Alex Eppstein

Published on Oct 25, 2016 at 10:00 AM

Analysts are weighing in on blue chip Visa Inc (NYSE:V), fast-food stock Sonic Corporation (NASDAQ:SONC), and North Face parent VF Corp (NYSE:VFC). Here's a quick roundup of today's bearish brokerage notes on V, SONC, and VFC.

  • V's upbeat earnings and revenue are being overshadowed by concerns about economic weakness in Europe and a potential Brexit fallout. As a result, Guggenheim lowered its rating to "neutral," while Stifel and Evercore ISI slashed their respective price targets to $93 and $95 -- both still all-time highs. On the other hand, UBS and RBC raised their price targets to $97 and $89, respectively. In separate news, Visa Inc announced it is opening its new tokenization services to third party partners.

    The Street apparently isn't impressed with the collective developments, as the shares have shed 1.1% at $82.26 -- though this is still not far from their late-September record high of $83.79. Longer term, options traders have been keeping the faith in the technical outperformer, based on activity at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). V's 10-day call/put volume ratio of 2.52 ranks in the bullishly skewed 83rd annual percentile. 
  • SONC stock has plunged over 15% this morning to trade at $22.42, landing on the short-sale restricted list and earlier hitting a two-year low of $22.02. Sparking the selloff, Sonic Corporation reported a fiscal fourth-quarter sales miss and disappointing guidance -- due to what CEO Cliff Hudson called "slowing consumer trends that began in April" -- which have been panned by the brokerage crowd. Specifically, Stephens reduced its rating to "equal weight" from "overweight," while at least seven analysts trimmed their price targets. Short sellers should be in good shape, considering 13.3% of SONC's float is dedicated to these bearish bets.
  • VFC is down 0.3% at $52.90 -- and fresh off a roughly three-year low of $51.76. Analysts are chiming in after the company reported lower-than-expected third-quarter revenue Monday morning. For example, Citigroup and Deutsche Bank all lowered their opinions to the equivalent of a "hold," while also cutting their respective price targets to $57. Suffice it to say, VF Corp's bullish options traders could be feeling the heat amid this negative price action. Specifically, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.30 ranks in the high 71st percentile of its annual range.
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