JKS, SPLK, SHPG Stocks Downgraded Today

While one analyst called Splunk earnings "underwhelming," another said to "buy the dip" on the sinking stock

May 26, 2017 at 9:58 AM
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Analysts are weighing in on alternative energy stock JinkoSolar Holding Co., Ltd. (NYSE:JKS), software concern Splunk Inc (NASDAQ:SPLK), and drugmaker Shire PLC (ADR) (NASDAQ:SHPG). Here's a quick roundup of today's bearish brokerage notes on shares of JKS, SPLK, and SHPG.

JKS Stock Slapped With Downgrades

JinkoSolar stock hit an 11-month high of $22.19 yesterday, but is pulling back this morning after a pair of downgrades. Specifically, Citigroup lowered its rating to "sell" from "neutral," while Morgan Stanley cut its rating to "underweight" from "overweight" and its price target by $3 to $16.40. Specifically, the brokerage firm said it expects a tough road for the solar stock over the next year, as "demand is gloomy from the uncertainties of policies worldwide." 

JKS stock was last seen trading 7.1% lower at $19.94 -- an area that's a roughly 23.6% Fibonacci retracement of its 2017 rally. Short sellers are likely hoping for an even bigger retreat. Short interest accounts for 21.3% of JinkoSolar stock's available float, or 11.4 times the average daily pace of trading.

Profit Margin Concerns Sink SPLK Stock

Splunk stock is down 7.1% to trade at $62.34, after the company reported earnings that were "underwhelming," according to Wedbush -- which lowered its price target to $72 from $78. Despite beating on both the top and bottom lines, though, Splunk said its GAAP operating profit margin arrived at negative 40% and negative 1.2% on an adjusted basis.

Not all the attention was bad, however, with Barclays raising its price target to $65 from $63, and Canaccord Genuity saying to "buy the dip" on SPLK stock. In fact, the stock has been a long-term outperformer -- adding 31.2% year-to-date heading into today's trading and fresh off a May 15 annual high of $69.23. Should Splunk shares resume this uptrend, there's ample room for shorts to start covering. At SPLK's average pace of trading, it would take more than 11 sessions to cover these bearish bets.

Bernstein Weighs In On SHPG Stock

Bernstein cut its rating on Shire stock to "market perform" from "outperform." In response, the shares have shed 3% to trade at $179.29 -- and could be at risk of closing south of their 50-week moving average for the first time this month. On the sentiment front, short-term Shire options traders are much more call-skewed than usual. SHPG stock's Schaeffer's put/call open interest ratio (SOIR) of 0.52 ranks lower than 96% of all comparable readings taken in the last 12 months.

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