Analyst Downgrades: Kellogg Company, Chipotle Mexican Grill, Inc., and NetApp Inc.

Analysts downwardly revised their ratings and price targets on Kellogg Company (K), Chipotle Mexican Grill, Inc. (CMG), and NetApp Inc. (NTAP)

Kirra Fedyszyn
Dec 7, 2016 at 10:07 AM
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Analysts are weighing in on cereal maker Kellogg Company (NYSE:K), restaurant chain Chipotle Mexican Grill, Inc. (NYSE:CMG), and tech stock NetApp Inc. (NASDAQ:NTAP). Here's a quick roundup of today's bearish brokerage notes on K, CMG, and NTAP.

  • K saw its rating lowered to "neutral" from "outperform" at Credit Suisse, which also slashed its price target to $77 from $84. An analyst at the firm noted that "the company's revenue growth rate continued to under-punch its peers due to ongoing pressure in the breakfast cereal category." Specifically, Kellogg Company, along with its peers, has struggled to engage with millennials, who are reportedly eating less cereal than previous generations. Shares of Kellogg Company are off 0.9% at $71.35 this morning, resuming a months-long slump that seems to have found support in the $70-$71 region, home to the stock's year-over-year breakeven mark. Meanwhile, K's short-term options traders are more put-heavy than usual, per the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.15 -- an annual high. 

  • Following Tuesday's disappointing same-store sales numbers for October and hesitant outlook on its 2017 guidance, CMG is on the receiving end of price-target cuts from J.P. Morgan Securities and Canaccord Genuity -- the latter of which had some scathing comments on the stock yesterday -- with both brokerages lowering their price targets to $375. Nevertheless, CMG is hovering just above breakeven at $366.48, after dropping 7.5% on Tuesday. Amid ongoing technical troubles, bears have continued to pile onto Chipotle Mexican Grill, Inc. For instance, short interest on the stock shot up 13% during the two most recent reporting periods, and now represents nearly 23% of CMG's available float. 

  • Credit Suisse downgraded NTAP to "underperform" from "neutral," and cut its price target on the stock by $1 to $29, saying, "We acknowledge that NetApp has executed well in recent quarters, however we remain of the view that the secular pressures in this business remain." Down 1% at $35.60 this morning, the stock has been a strong performer on the charts over the long term, adding 72% from its January low. Despite such a technical feat, the equity remains surrounded by pessimism. For example, NetApp Inc.'s 10-day put/call volume ratio of 3.99 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks just 1 percentage point from an annual peak. An unwinding of these bearish bets could help send the shares on a fresh leg higher. 
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