3 Stocks Sinking on Downgrades

Options traders have been betting against PTCT stock in recent weeks

by Patrick Martin

Published on Oct 9, 2017 at 10:02 AM
Updated on Oct 9, 2017 at 10:02 AM

Analysts are weighing in on healthcare firm Medtronic Plc (NYSE: MDT), video game stock Take-Two Interactive Software Inc (NASDAQ:TTWO), and biotech PTC Therapeutics, Inc. (NASDAQ:PTCT). Here's a quick roundup of today's bearish brokerage notes on shares of MDT, TTWO, and PTCT.

Wells Fargo Downgrades MDT Stock

Medtronic stock is down 2.9% to trade at $77.49, after Wells Fargo downgraded the healthcare name to "market perform" from "outperform." The stock also received at least four price-target cuts, including one to $83 from $91 at Stifel. The flurry of bearish analyst attention comes after Medtronic updated the impact of Hurricane Maria on its fiscal second-quarter results.

MDT stock has shed 13.6% since touching a record high of $89.72 on June 26, and the extended pullback has been guided by the shares' 30-day moving average. A continued slide could encourage more downgrades -- which may create additional headwinds for the shares. As of last Friday's close, 11 of the 18 brokerages covering MDT stock rated it a "buy" or "strong buy."

Overbought TTWO Stock Slips After Downgrade

Cowen and Company chimed in on video game stocks today, saying it can't justify a bullish note for the outperforming sector amid a crowded calendar for fall game releases and sky-high expectations. Take-Two Interactive Software was not spared, getting downgraded to "market perform" from "outperform."

TTWO stock, which is currently down 3.1% to trade at $103.91, touched a record high of $107.53 last Friday, and is still maintaining a 110% year-to-date gain. Considering the security's 14-day Relative Strength Index (RSI) closed Friday at 70 --- signaling the shares were "overbought" -- today's pullback may have been in the cards.

J.P. Morgan Securities Downgrades PTC Therapeutics Stock

J.P. Morgan Securities downgraded PTC Therapeutics to "underweight" from "neutral" and slashed its price target by $8 to $15, sending the biotech stock down 4.1% to trade at $18.83. Analysts cited a low probability of approval from the Food and Drug Administration (FDA) for the company's rare muscle disease treatment by the Tuesday, Oct. 24, deadline date. It's nevertheless been a stellar year for PTCT stock, which has tacked on over 72% year-to-date.
Options traders an the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have had a healthier-than-usual appetite for puts over calls lately. PTCT stock sports a 10-day put/call volume ratio of 2.24 -- higher than 84% of comparable readings taken in the past year.

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