Investors get to hear about Wall Street analysts issuing Buy ratings daily. They often do not get to hear about the Sell ratings.
24/7 Wall St. reviews dozens of analyst research reports each morning. This last week we tracked several analyst Sell ratings, which imply that analysts think these are stocks to sell. Some may be identified as “Underperform” or “Underweight” rather than an outright Sell rating, but the implied view is generally the same — SELL!
These are three of this last week’s more general Sell ratings we identified that do not fit into any specific sector grouping.
PulteGroup Inc. (NYSE: PHM) was downgraded to Underweight from Equal Weight by Barclays this past Tuesday. Barclays was moving to a more balanced approach to the homebuilders, saying that 2014 will be a transition year, awaiting the new entry-level buyers. Although the $20 price target was slightly higher than the $18.84 closing bell price the day before, Pulte remained in the doghouse and was at $18.90 in mid-Friday trading. Barclays simply feels the stock is too expensive.
Telefonica S.A. (NYSE: TEF) is often forgotten about now, but this telecom player in Europe and Latin America was downgraded to Underperform from Neutral at Bank of America Merrill Lynch last Wednesday. The team called it “lost in translation” and the downside of 9.40 euro (versus a prior 11.11 euro close) implied roughly 15% downside for the ADSs that trade in New York. Oddly enough, its ADSs rose later in the week and were up around $15.70 in mid-Friday trading. Was the research team looking at the chart upside down?
Wet Seal Inc. (NASDAQ: WTSL) is a turnaround that may be on borrowed time, according to B. Riley. The boutique firm downgraded the women’s apparel retailer to Sell from Neutral on Monday. What really stood out was the reported price target change — down to $0.50 from $2.10. This represents the street-low from the five analysts that have price targets on Wet Seal. Rationale behind the Sell rating on Wet Seal was based on guidance, another capital raise, and turnaround efforts that may be too little and too late. This stock closed out the prior Friday at $1.55, after being at $1.75 prior to its report, then its stock closed down at $1.26 after the downgrade. Shares hit a low of $1.08 during the week but were back up at $1.25 by mid-Friday.
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