3 Stocks Trading Lower After Analyst Downgrades

iRobot stock found a bottom near a familiar chart area

by Josh Selway

Published on Jul 10, 2018 at 3:01 PM

Stocks are surging again today, as the Dow looks to lock up its fourth straight win. However, apparel retailer Genesco Inc. (NYSE:GCO), Roomba maker iRobot Corporation (NASDAQ:IRBT), and car dealer AutoNation, Inc. (NYSE:AN) are all lower today after receiving some bearish analyst attention. Below, we will take a closer look at how shares of GCO, IRBT, and AN are trading.

Genesco Stock Pulls Back After Downgrade

Genesco stock is down 7% to trade at $37.70 today, after Jefferies downgraded the apparel retailer to "hold" from "buy," while lowering its price target to $43 from $48. The analyst in coverage said that a number of potential tailwinds, including a sale of its Lids business, is already priced into the stock. The bear note takes GCO shares below their 160-day moving average for the first time since December. Despite the drop, GCO still sports a nearly 17% gain for 2018, yet most analysts have taken a stance similar to Jefferies. By the numbers, two-thirds of those covering the security have tepid "hold" ratings in place.

IRBT Stock Setback Could Hurt Call Buyers

IRBT stock has pared much of its early losses, but was still last seen down 1.8% at $79.44 following a downgrade at Raymond James. The brokerage firm lowered its opinion on the equity to "market perform" from "outperform" and named a number of headwinds for the shares, including a rapid increase in their valuation and near-term competitive pressure.

Looking closer at the charts, iRobot stock earlier bounced near the $75 level, which has served as a level support over the past month. The shares are also hovering just above their year-to-date breakeven level near $77. Recent options activity has been extremely bullish, too, based on the security's 10-day call/put volume ratio of 3.86 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 95th annual percentile.

Morgan Stanley Sees Headwinds for Auto Dealers

Morgan Stanley this morning lowered its rating on AN shares to "underweight" from "overweight" and sliced its price target to $44 from $57, expecting sector-wide turbulence for auto dealers. AutoNation stock has given back 4.8% today to trade at $48.06, holding near the $48 level that's acted as both resistance and support over the past year. Meanwhile, the 200-day moving average has been a stubborn ceiling for the shares since early June.

Most analysts are already bearish on AN stock, with just 20% handing out anything better than a "hold" recommendation. Plus, almost 10% of the float is controlled by short sellers -- or more than eight times the average daily trading volume.

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