Apple Supplier Dinged by Downgrade

Barclays sees Huawei headwinds still effecting QRVO

Managing Editor
Jun 6, 2019 at 9:58 AM
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While Morgan Stanley dished out an upgrade to Advanced Micro Devices (AMD), Barclays doled out bear notes to its sector peers, downgrading Apple supplier Qorvo Inc (NASDAQ:QRVO) to "equal-weight" from "overweight" and trimming its price target to $60 from $70. The analyst in coverage warned of further trade war escalation, and a potential response out of China to any Huawai uncertainty to end with an Apple ban. 

At last check, Qorvo stock was down 1.4% to trade at $62.54. Huawei headwinds resulted in a 19.1% drop in May, its worst month since January 2016. A subsequent rally was turned away at its 20-day moving average, and QRVO now is clinging to its year-to-date breakeven level. 

Analyst sentiment is pretty evenly skewed. Of the 18 brokerages in coverage, 10 rate it a "hold" or "sell." However, the stock's consensus 12-month price target of $73.85 is a 16% premium to last night's closing perch at $63.44.

In the options pits, puts are clearly favored. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 2.60 ranks in the 95th annual percentile.

Echoing this, the security sports a Schaeffer's put/call open interest ratio (SOIR) of 0.68, indicating that put open interest easily surpasses call open interest among options expiring within the next three months. This SOIR ranks in the 89th percentile of its annual range, suggesting short-term options traders have rarely been more put-biased in the past year.


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