Spirit Airlines Stock Gets Its Wings Clipped By Deutsche Bank

Options traders have been betting against CREE stock for some time now

Managing Editor
Oct 6, 2017 at 10:01 AM
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Analysts are weighing in on LED specialist Cree, Inc. (NASDAQ:CREE), healthcare firm Mallinckrodt PLC (NYSE:MNK), and travel stock Spirit Airlines Incorporated (NASDAQ:SAVE). Here's a quick roundup of today's bearish brokerage notes on shares of CREE, MNK, and SAVE.

Cree Stock Dips After Downgrade

Cree stock is down 2.4% to trade at $28.97, after a J.P. Morgan Securities downgrade to "underweight" from "neutral" -- though the brokerage firm raised its price target to $28 from $23. CREE has rallied over 28% since a bear gap took the stock to an annual low of $20.50 on Aug. 23. CREE sports a 14-day Relative Strength Index (RSI) of 80 -- firmly in overbought territory, suggesting a breather may be in the works

It seems put traders have been bracing for a pullback for some time now. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 1.38 ranks 2 percentage points from a 52-week high, indicating long puts have rarely been more popular relative to calls.

Struggling Mallinckrodt Stock Receives Price-Target Cut

Mallinckrodt stock received a price-target cut from J.P. Morgan Securities today to $53 from $55, following yesterday's downgrade to "hold" from "buy" at Canaccord Genuity. Nevertheless, MNK stock is currently up 0.8% to trade at $35.79. The shares have lost roughly half their value over the past year and hit a record low of $33.61 on Sept. 19 following a string of bearish analyst attention. The shares' 80-day moving average has curbed any attempts at a breakout since August. More downgrades could be on the way for Mallinckrodt stock, should it continue to struggle. Of the 13 brokerages covering MNK, 10 rate the shares a "buy" or "strong buy."

Spirit Airlines Stock Grounded By Deutsche Bank

Deutsche Bank downgraded Spirit Airlines to "hold" from "buy" today, sending the airline stock down 0.3% to trade at $35.10. Analysts at Deutsche cited concern over Spirit's revenue outlook due to competitiveness in its market. It's been a turbulent year for SAVE stock, which has shed over 28% year-to-date and fell to a four-year low of $30.32 on Sept. 6. The shares' 50-day moving average has contained any attempts at a breakout since early June.

Short sellers are likely cheering the equity's struggles. Short interest has grown by a whopping 38.6% during the last two reporting periods to 5.84 million shares, more than doubling April's level. However, this only accounts for 8.5% of the SAVE's total available float, indicating that there is still plenty of room for short sellers to hop aboard the stock. 

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