Fiesta Restaurant, Perrigo, Workday Downgraded

Fiesta Restaurant Group Inc (FRGI), Perrigo Company plc Ordinary Shares (PRGO), and Workday Inc (WDAY) are under the gun from analysts

Feb 28, 2017 at 10:01 AM
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Analysts are weighing in on fast-casual food firm Fiesta Restaurant Group Inc (NASDAQ:FRGI), drugmaker Perrigo Company plc Ordinary Shares (NYSE:PRGO), and cloud stock Workday Inc (NYSE:WDAY). Here's a quick roundup of today's bearish brokerage notes on FRGI, PRGO, and WDAY shares.

Fiesta Restaurant Stock Slammed by Comp Sales

FRGI has plunged 18.5% to trade at $21.15-- and earlier touched a four-year low of $19.85 -- landing on the short-sale restricted (SSR) list, after the company's same-store sales struggled and its board suspended the sale evaluation process after receiving no final offers. Meanwhile, the firm's fourth-quarter earnings were in line with estimates, and Richard Stockinger has been appointed CEO. On Wall Street, Raymond James lowered its rating on Fiesta Restaurant Group Inc to "market perform" from "outperform," while Jefferies, Wedbush, and Canaccord Genuity slashed their price targets. Today's bearish gap should be a boon to short sellers. Nearly 8% of FRGI's float is dedicated to short, interest, which would take approximately two weeks to cover, at the stock's average daily trading volume.

Perrigo Slides on Delayed Report, Price-Target Reductions

Last night, PRGO announced leadership changes, a workforce reduction, and the sale of Tysabri's royalty stream to Royalty Pharma, while filing for a non-timely 10-Q, delaying its annual report. Responding to the news, no fewer than seven analysts cut their price targets on the stock, including Goldman Sachs (to $68 from $75), which wrote, "While we view the Tysabri divestiture as a strategic positive and view favorably PRGO's decision to consider strategic alternatives to the Rx business, we think the path forward is still unclear." Out of the gate, Perrigo Company shares have shed 9.3% to trade at $76.81, putting them on the SSR list, and bringing their year-over-year deficit to 39%. This is good news for a recent raft of put buyers. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), options traders have bought to open 4.16 puts for every call in the past two weeks -- a ratio ranking just 4 percentage points from a 12-month peak.

Workday Outlook Weighs On Stock

WDAY has tanked 7.2% to trade at $83.68, as the company's conservative full-year guidance overshadows a surprise fourth-quarter profit. The response among the brokerage bunch has been mixed. Citigroup dropped its rating on Workday Inc to "sell" from "neutral," but was one of at least 13 analysts to up its price target. And despite raising its target to $86 from $78, Wunderlich said, "Workday is not showing enough incremental traction outside of its core business to warrant an additional premium to the stock's current valuation." Despite today's setback, the stock is still 26.6% higher year-to-date. Nonetheless, options traders have focused on short-term puts over calls. This, per Workday Inc's top-heavy Schaeffer's put/call open interest ratio (SOIR) of 3.52, in the 98th percentile of its annual range.

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