2 Athleisure Stocks Struck By Downgrades; Jefferies Not Buying Tesla

Nike and Under Armour stocks both received downgrades amid stiff competition from rivals

Managing Editor
Sep 19, 2017 at 10:11 AM
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Analysts are weighing in on electric car company Tesla Inc (NASDAQ:TSLA), as well as athletic apparel stocks Nike Inc (NYSE:NKE) and Under Armour Inc (NYSE:UAA). Here's a quick roundup of today's bearish brokerage notes on shares of TSLA, NKE, and UAA.

Jefferies Starts Tesla Stock at 'Underperform'

Tesla stock is down 0.9% to trade at $381.38, after Jefferies initiated coverage on the electric car name with an "underperform" rating and a $280 price target. The new target represents levels not seen from TSLA since late March, and is a roughly 26% discount to the stock's current price. Analyst Phillippe Houchois does not believe "Tesla's vertically integrated business model can be scaled up as profitably and quickly as consensus thinks and valuation multiples imply." In addition, the analyst -- echoing Barclays -- expects Tesla to lose money on a year-over-year basis through 2019.

TSLA shares are coming off a new record high of $389.61 yesterday, and have tacked on 78% year-to-date. Despite Tesla's recent success, the stock remains heavily shorted. The 29.24 million shares of TSLA sold short represent a whopping one-quarter of the stock's total available float. It would take over six days for shorts to fully cover their positions, at TSLA's average daily trading volume, making the electric car name ripe for a potential short squeeze.

Nike Stock Downgraded Amid Adidas Competition

Nike stock is down 1.6% to trade at $52.64, after Susquehanna cut its rating on the shoe giant to "neutral" from "positive," while also issuing a price-target cut to $54 from $64. Raymond James and Jefferies joined in on the fun as well, issuing price-target cuts to $67 and $49, respectively -- the latter of which would mark a two-year low for NKE shares -- and trimming their per-share earnings estimates for the blue chip The flurry of activity comes from intensifying sneaker sale competition, particularly from rival Adidas.

NKE stock gapped higher in late June, thanks to a well-received earnings report, but has since filled that gap amid an athleisure sector swoon. NKE options traders have had a a healthier-than-usual appetite for puts over calls lately. The equity's 50-day put/call volume ratio of 0.97 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks just 5 percentage points from an annual high.

Analyst Trims Under Armour Price Target

UAA stock is down 1.6% to trade at $17.17, after Wells Fargo downgraded the apparel stock to "underperform" from "market perform," and issued a price-target cut to $13 from $17. The new price target would represent a four-year low for the equity.

UAA stock has shed 40% year-to-date, and fell as low as $15.93 on Sept. 1 -- territory not charted since 2013. Most analysts are already bearish on Under Armour stock. Of the 34 brokerages covering UAA 29 rate the shares a "hold" or "strong sell." 

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