Investing
Five Huge Sell Ratings After News: Tesla, InterMune and More
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The higher the market goes, the more likely analysts are to pull the trigger on names they think are stretched. The problem for analysts: In a hot market, stocks often go higher when they are fully valued because money that has been sitting on the sidelines starts to come in to the market, and come in fast.
At 24/7 Wall Street, we consistently screen the research of the firms we cover on Wall Street looking for recent Sell or Underperform ratings. The sooner our readers see what Wall Street is downgrading, the sooner they can take action in their own portfolios if they happen to own any of the stock that we find.
Here are the top five analyst high-profile Sell ratings from the past week:
Tesla Motors Inc. (NASDAQ: TSLA) has been on fire and is raising the eyebrows of some analysts on Wall Street. They soared 344% in 2013 and were up as much as 76% in 2014 on Wednesday.
The one firm making the biggest negative call, and sticking to their guns, is Merrill Lynch. We wrote this week about the huge market cap rise, now about half of General Motors Co. (NYSE: GM). Merrill Lynch analysts are clearly unimpressed and think the stock is horribly overvalued, although they have been wrong on this one for quite some time. They have a $65 price target and an Underperform rating. The Thomson/First Call estimate is set at $222.67. Tesla closed Friday at $244.81 after peaking at $265 on Wednesday.
Medivation Inc. (NASDAQ: MDVN) is a top biotechnology name that was absolutely hammered Friday. Lower than expected sales of their leading drug Xandi and very weak 2014 guidance caused numerous Wall Street firms to bring out the Sell sign. Cowen continues to rate the stock a Sell, although the firm actually raised its price target from $52 to $56. The consensus is at $94.42. Medivation tumbled nearly 15% to $71.91 on Friday.
InterMune Inc. (NASDAQ: ITMN) had a huge parabolic move this week, and the Jefferies analysts are not impressed. While they conceded the Phase 3 data on their top pipeline drug probably will get them FDA approval, they note that the market is pricing in more sales than may actually happen. The Jefferies price target is at $20. The consensus is at $38. Intermune closed Friday at $30.04, down 2%. It fell 22.4% from a $38.73 peak reached on Tuesday.
Procera Networks Inc. (NASDAQ: PKT) was initiated this week with a sell rating at Deutsche Bank. The ompany missed its annual revenue guidance, and that is the kind of miss that Wall Street typically applies forward. Procera delivers Internet Intelligence solutions to service providers and network equipment manufacturers for analytics and enforcement of broadband traffic worldwide. The Deutsche Bank price objective is $10, and the consensus is much higher at $16.29. Shares fell 6% to $11.03 on Friday and dropped 97% on the week.
Niska Gas Storage Partners LLC (NYSE: NKA) is another natural gas MLP that is cut to a Sell. This time Credit Suisse goes after one of the stocks. Analysts fear that the high yielding MLP will have to do what Boardwalk Pipeline Partners LP (NYSE: BWP) did recently, when they drastically cut their distribution. Niska pays a gigantic 11.30% distribution. The Credit Suisse target is lowered to $14 and may be headed farther down, while the consensus target is at $14.71. The units finished Friday at $13.24, up 1.5%. But the units are down 18% from a recent peak of $16.24 on Feb. 5.
Clearly, the big Wall Street firms are looking either for valuations that have moved past their fair market values, or companies that are failing to achieve sales and revenue goals. One thing is for sure: Just because you are a high-profile name, that alone will not keep you out of the Sell rating penalty box. Top momentum stocks are fair game as well apparently.
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