Analyst Downgrades: Lululemon Athletica inc., Ambarella Inc, and Workday Inc

Analysts downwardly revised their ratings and price targets on Lululemon Athletica inc. (LULU), Ambarella Inc (AMBA), and Workday Inc (WDAY)

Dec 2, 2016 at 9:23 AM
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Analysts are weighing in on apparel retailer Lululemon Athletica inc. (NASDAQ:LULU), GoPro Inc (NASDAQ:GPRO) supplier Ambarella Inc (NASDAQ:AMBA), and software stock Workday Inc (NYSE:WDAY). Here's a quick roundup of today's bearish brokerage notes on LULU, AMBA, and WDAY.

  • LULU is 3.2% lower ahead of the open, after Canaccord Genuity downgraded the stock to "sell" from "hold" and slashed its price target to $44 from $65 -- representing annual-low territory -- citing concern over the retailer's shift to denim from athleisure. The shares have been stuck in a choppy sideways pattern between the $54 and $59.50 levels since early October, but are still up 7.7% year-to-date, based on last night's close at $56.53. Lululemon Athletica inc. could be in trouble should further brokerages lower their opinions, however, especially if the firm unveils a poorly received earnings report next Wednesday morning. Of the 24 analysts tracking the stock, 14 still call it a "strong buy." 

  • While the company's third-quarter earnings beat analyst estimates, a disappointing outlook has shares of AMBA down 9% in pre-market trading. So far, Canaccord Genuity, Stifel, and Deutsche Bank have issued price-target cuts -- the latter setting the lowest bar, at $65, although this is still above the stock's Thursday finish at $61.39. Meanwhile, today's projected price move could be contained by Ambarella Inc's 160-day moving average, which caught the equity's early November pullback. Elsewhere, the stock's 10-day call/put volume ratio of 3.09 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 86% of the past year's readings, suggesting calls have been bought to open over puts at a faster-than-usual clip. 

  • WDAY is on pace to open at its lowest level in nine months, down 16% ahead of the bell, after closing Thursday at $81.60. The company reported a third-quarter beat, but in a subsequent conference call, CEO Aneel Bhusri said the closing of several large contracts has been delayed due to geopolitical uncertainty. Against this backdrop, no fewer than 12 analysts have lowered their price targets on the stock, including BTIG, which cut its target price to $88 from $97, citing "near-term uncertainty." A post-earnings bear gap could please short sellers. Nearly 12% of Workday Inc's available float it wrapped up in these bearish bets. 
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