Bearish Backlash Hits Western Digital Stock Amid Toshiba Turmoil

One analyst has concerns over Celgene's 2018 pipeline

Managing Editor
Oct 5, 2017 at 10:04 AM
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Analysts are weighing in on luxury retailer Coach Inc (NYSE:COH), pharma stock Celgene Corporation (NASDAQ:CELG), and Apple supplier Western Digital Corp (NASDAQ:WDC). Here's a quick roundup of today's bearish brokerage notes on shares of COH, CELG, and WDC.

Coach Stock Lower After Downgrades

Coach received two downgrades today, one to "peer perform" from "outperform" at Wolfe Research, and another to "neutral" from "overweight" at Piper Jaffray. An analyst at Piper Jaffray cited the ongoing integration of Kate Spade as reason for its downgrade. As a result, COH stock is down 1.3% to trade at $39.21. The shares have been staring up at their 30-day moving average since an earnings-induced bear gap in mid-August.

Should Coach stock continue to struggle, more bearish brokerage notes could come down the pike. At last night's close, 16 of 24 analysts maintained a "strong buy" rating. Plus, the average 12-month price target of $49.49 is well above present trading levels.

Concerned Morgan Stanley Cuts Celgene To 'Underweight'

Celgene Corp is down 4.3% to trade at $140.31, after Morgan Stanley cut the pharma stock to "underweight" from "equal weight." An analyst at Morgan Stanley called 2018 a "make or break year" for Celgene's pipeline, citing concerns over commercial headwinds and clinical success for the company's ozanimod drug.

Although Celgene shares just racked up another positive September -- and touched a new record high of $147.17 on Monday -- put traders have been bracing for a pullback. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.61 ranks in the 87th percentile of its annual range, indicating puts have been bought to open relative to calls at a faster-than-usual clip.

Deutsche Bank Downgrades Western Digital Stock

Deutsche Bank downgraded Western Digital to "hold" from "buy," while slashing its price target by $35 to $80. The brokerage firm said traders should take a "more cautious, wait-and-see approach" as the tech firm's legal dispute with Bain Capital and Toshiba over the sale of the latter's chip unit stokes uncertainty surrounding the joint venture between WDC and Toshiba.

While WDC stock has tacked on 24% year-to-date, today's 2.1% drop to $82.62 takes the shares below their 200-day moving average -- a trendline that has served as support for over a year.However, the shares could find an options-related foothold near $82.50, which is home to peak front-month put open interest of nearly 8,100 contracts.

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