Tesla, J C Penney, Level 3 Communications Downgraded

Tesla was downgraded to "equal weight" at Morgan Stanley

May 15, 2017 at 10:08 AM
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Analysts are weighing in on electric vehicle maker Tesla Inc (NASDAQ:TSLA), department store operator J C Penney Company Inc (NYSE:JCP), and tech stock Level 3 Communications, Inc. (NYSE:LVLT). Here's a quick roundup of today's bearish brokerage notes on shares of TSLA, JCP, and LVLT.

TSLA Stock Downgraded On Big Tech Competition Worries

Morgan Stanley cited increased competition from tech giants Apple and Amazon when it downgraded TSLA stock to "equal weight" from "overweight," and said it struggles to see "Tesla as the dominant player and as a standalone company longer term." The brokerage firm also cited improving Model 3 expectations and said "adjacent businesses like solar, storage and trucks are not enough to significantly move the needle on Tesla valuation."

In response, TSLA stock is trading down 3.1% at $314.70, putting a slight dent in its nearly 50% year-to-date surge. While short sellers are likely breathing a temporary sigh of relief today, they've been feeling the pain for quite some time, with more than one-quarter of Tesla stock's float dedicated to these bearish bets.

JCP Stock Hits New Record Low on Post-Earnings Downgrades

JCP stock is fresh off a new record low of $4.44 -- last seen down 7% at $4.20 -- as Wall Street continues to chime in on the retailer following last Friday's devastating earnings report. Both Baird and Deutsche Bank downgraded JCP shares to the equivalent of a "hold" rating, and joined no fewer than five other brokerages in lowering their price targets. Though J C Penney stock remains short-sale restricted in the wake of its post-earnings bear gap, there have been plenty of traders betting against it. Short interest on JCP jumped 7.1% in the two most recent reporting periods, and now accounts for a whopping 38% of the equity's available float.

Raymond James Cuts Rating on LVLT Stock

Raymond James downgraded LVLT stock to "underperform" from "market perform," echoing the majority of analysts with a glass-half-empty outlook toward the shares. The brokerage firm issued a similar recommendation for CenturyLink, too, saying negative trends for the two tech firms are unlikely to improve ahead of their upcoming merger. LVLT stock is trading down 0.4% at $58.87 after the downgrade, but remains above its year-to-date breakeven mark. Short sellers have been ramping up the selling pressure on Level 3 Communications stock, too. Short interest surged 15% in the most recent reporting period to 5.9 million shares -- the most since January 2016.

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