Morgan Stanley: 'We Have Been Wrong' on Snap

CUDA options traders were bracing for a post-earnings retreat

Jul 11, 2017 at 10:03 AM
facebook X logo linkedin


Analysts are weighing in on Snapchat parent Snap Inc (NYSE:SNAP), cybersecurity stock Barracuda Networks Inc (NYSE:CUDA), and luxury retailer Michael Kors Holdings Ltd (NYSE:KORS). Here's a quick roundup of today's bearish brokerage notes on shares of SNAP, CUDA, and KORS. 

Lead Underwriter: 'We Have Been Wrong' About SNAP

Morgan Stanley -- a lead underwriter on Snap's initial public offering (IPO) earlier this year -- downgraded the stock to "equal weight" from "overweight," and slashed its price target by nearly 43% to $16. "We have been wrong about SNAP's ability to innovate and improve its ad product this year," said the analysts, who also noted escalating competition from Facebook-owned Instagram.

SNAP stock on Monday closed below its IPO price of $17 for the first time since going public back in March, settling at $16.99. In early trading, the shares are steepening their slide into record-low territory, down 4.6% at $16.21 -- earlier bottoming at $16. The negative price action could encourage a fresh batch of bearish traders to Snap's table. Short interest surged 81.5% in the two most recent reporting periods, but accounts for just 6% of the stock's available float.

Barracuda Networks Issues Lackluster Guidance

Barracuda Networks reported in-line per-share earnings and reported quarterly revenue above forecasts. However, the cybersecurity company's current-quarter guidance fell short of estimates, sending CUDA stock down 5% to trade at $22.81. Adding salt to the proverbial wounds, Piper Jaffray trimmed its price target on Barracuda stock to $28 from $29. CUDA is now trading back below recent resistance in the $23.00-$23.50 region.

CUDA options traders were seemingly bracing for a post-earnings pullback. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.72 ranks in the 72nd annual percentile, meaning puts have been bought to open relative to calls at a faster-than-usual clip.

KORS Stock Started at 'Sell'

While MKM Partners initiated coverage of fellow luxury goods producer Coach stock with a "buy" endorsement, the brokerage firm started Michael Kors stock with an ice-cold "sell" rating. KORS stock is down 4.4% at $34.30, and has racked up a year-to-date loss of 20%, with recent rebound attempts capped at its 80-day moving average.

Not surprisingly, of the 15 analysts following KORS stock, 14 carry a tepid "hold" rating. Meanwhile, short-term options traders are more put-heavy than usual, as Michael Kors stock sports a Schaeffer's put/call open interest ratio (SOIR) of 1.42 -- higher than 86% of all others from the past year.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI