Analyst Downgrades: McDonald's Corporation, Wells Fargo & Co, and Akorn, Inc.

Analysts downwardly revised their ratings and price targets on McDonald's Corporation (MCD), Wells Fargo & Co (WFC), and Akorn, Inc. (AKRX)

Dec 1, 2016 at 9:15 AM
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Analysts are weighing in on Dow component McDonald's Corporation (NYSE:MCD), bank stock Wells Fargo & Co (NYSE:WFC), and biotech issue Akorn, Inc. (NASDAQ:AKRX). Here's a quick roundup of today's bearish brokerage notes on MCD, WFC, and AKRX.

  • MCD is 0.4% lower ahead of the bell following a downgrade to "neutral" from "buy" at Guggenheim. Meanwhile, sources are reporting the restaurant chain is nearing a deal to sell its China and Hong Kong business, which is estimated to be worth up to $3 billion. McDonald's Corporation is just above its year-to-date breakeven level, at $119.27, and the brokerage bunch has been taking a skeptical stance, with 14 out of 22 calling the stock a "hold" or worse. But options traders don't seem to agree. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MCD's 10-day call/put volume ratio of 1.28 ranks higher than 72% of the past year's readings. 

  • WFC was on the receiving end of a downgrade to "neutral" from "positive" at Susquehanna, which nonetheless upped its price target to $56 from $53 -- near annual-high territory. Following the mixed note, the shares are up 0.3% in pre-market trading after finishing Wednesday at $52.92. The stock could run into trouble today, however, as the overhead $53 mark has been capping the shares' upward moves in recent weeks. Meanwhile, near-term options traders have been busy targeting puts over calls. Specifically, Wells Fargo & Co holds a Schaeffer's put/call open interest ratio (SOIR) of 1.00 -- just 2 percentage points from a 12-month high. 

  • AKRX is set to drop 3.4% at the open, after Goldman Sachs initiated coverage on the stock with a downbeat "sell" rating and a $20 price target -- a discount to last night's close of $21.22. It's hard to argue with this bearish assessment, given AKRX's 43% year-to-date loss. However, half of the stock's 12 covering analysts still sit on "strong buy" ratings, suggesting downgrades could be in the equity's future. It looks like short sellers have been hitting the exits in recent weeks -- and likely collecting profits -- with these pessimistic positions falling by 15.3% during the most recent reporting period. Still, 12.7% of Akorn, Inc.'s total float is sold short, representing four sessions' worth of trading, at the stock's typical daily pace. 
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