Toshiba, NAND Prices Spark Rare Downgrade for Western Digital Stock

"Digital and execution risks" prompted a negative analyst note for GameStop stock

Nov 27, 2017 at 9:44 AM
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Analysts are weighing in tech stock Western Digital Corp (NASDAQ:WDC), real estate investment trust (REIT) Kimco Realty Corp (NYSE:KIM), and video game retailer GameStop Corp. (NYSE:GME). Here's a quick roundup of today's bearish brokerage notes on shares of WDC, KIM, and GME.

Western Digital Stock Sees a Rare Downgrade

Western Digital is down 6.9% to trade at $86.33, after Morgan Stanley downgraded the stock to "equal weight" from "overweight" and slashed its price target to $90 from $117. The brokerage firm cited sinking NAND prices and uncertainty surrounding the storage device specialists joint venture with Toshiba for the bearish outlook.

Today's negative price action marks a change of pace for WDC shares, which were up 36.5% year-to-date heading into today's trading -- with recent pullbacks quickly contained by the stock's 200-day moving average. Against this backdrop, most analysts are upbeat toward Western Digital stock, with 14 out of 18 maintaining a "buy" or better rating as of last Friday's close, and not a single "sell" to be found.

Kimco Realty Stock Downgraded at Baird

Baird cut its rating on Kimco Realty to "neutral" and its price target to $20 from $23, sending the REIT shares down 1.9% to trade at $18.45. It's been a tough 12 months for KIM stock, down more than 28% year-over-year. More recently, though, the equity has spent November bouncing in the $18.50-to-$19.50 range, and is on track to notch a rare win for the month.

Amid the stock's longer-term downtrend, however, short sellers have been closing out of their winning bets. After hitting a multi-year high of 21.57 million shares in mid-September, short interest on KIM fell 17.9%.

GameStop Stock Brushes off PT Cut

GameStop saw its price target cut to $20 from $24 at Ascendiant Capital, citing "significant digital and execution risks." Nevertheless, GME stock is up 2% to trade at $17.79.

Since tagging a five-year low of $15.86 on Nov. 15, the security has been on the mend -- thanks in part to last week's post-earnings bull gap. However, GME shares remain down 31% year-to-date, with the retail stock's recent rally running out of steam near its 30-day moving average.

Options traders have been quick to bet on more upside, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GME's 10-day call/put volume ratio of 0.81 ranks in the 79th annual percentile, meaning calls have been bought to open relative to puts at a faster-than-usual clip.

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