Juniper Networks, Inc. (NYSE: JNPR) joined in on the negative earnings trends in the field of networking and comm-equipment. The awful earnings reaction took shares from $31.17 to $24.66 initially, but then it closed down at $23.79 the following day and closed down at $23.39 for the lowest close on Friday. The analysts really missed this one and the lemmings all downgraded the stock after having mis-guessed that
Juniper would not face the same pressures that Cisco has been feeling. Shares were removed from Conviction Buy List at Goldman Sachs, and we saw downgrades from William Blair, Oppenheimer, ThinkEquity, JPMorgan, Piper Jaffray, and Citigroup. In short, this was a dubious “top call of the week” as almost no one got it right. Kudos to Ticonderoga Securities: it downgraded Juniper to Neutral back on April 20 at $39.26.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) had a down week but its stock has managed to stay over $16 during the malaise in the markets. Maybe gamblers in Macau don’t care about Boehner and Obama and debt ceiling and budget talks. The stock was Reiterated as “Buy” at Citigroup but the company has a new street high price target of $19.10 in this call. Earlier in the week it was BofA/Merrill Lynch that reiterated a “Buy” rating and raised the target to $18.00 per share. Analysts keep lifting their price target objectives here rather than downgrading the casino on valuation.
Netflix Inc. (NASDAQ: NFLX) had a hard week after earnings were above estimates but on higher subscriber acquisition costs and on some peaking North American trends. We outlined what it would take to get shares to $400, but many analysts played catch-up and used the weakness as an opportunity to get clients into the stock:
- Reiterated Outperform and raised target to $310 at Credit Suisse;
- Reiterated Sell at Janney Capital;
- Maintained Buy with $300 target at Citigroup;
- Maintained as Buy with $300 target at Canaccord Genuity.
Pandora Media, Inc. (NYSE: P) saw its quiet period end and the crew of analysts just piled in on the stock with almost all positive ratings. What is interesting is that this did not save the stock, not at all. Shares went out the prior Friday at $18.03 and closed out the week at $15.09 as it turns out that investors do not want companies as much that lose money and where the increase in revenues and subscribers does not really compress the losses into gains. The ratings were as follows:
- Started as Overweight at JPMorgan;
- Started as Outperform at Wells Fargo;
- Started as Outperform at William Blair;
- Started as Buy at Citigroup;
- Started as Hold at Stifel Nicolaus.
Sprint Nextel Corporation (NYSE: S) was another dubious call where an analyst just found the wrong side of fate. Sprint’s earnings reaction knocked the you-know-what out of the stock. On Tuesday came a report that RBC Capital was Raising its rating to “Outperform.” Then came the news late in the week after it traded a monster 200-million-plus in shares for a drop to $4.34 from $5.16… and shares closed out the week at $4.23. Our take is that the worst is yet to come unless a huge market rally bails the company out.
The Wendy’s Company (NYSE: WEN) is finding at least some additional love after shedding Arby’s. Janney Capital initiated coverage of this one with a Buy rating and a $6.50 price target as a turnaround stock. The market kept pressure on the stock and it still closed down for the week at $5.27 versus $5.52 the week before, so maybe the call hasn’t been entirely missed for longer-term investors who prefer to look for patient entry points rather than chasing gainers.
As you can see, there were many gutsy research calls that went against the grain. There were also some really big blow-ups that may have wrecked some investors and may have wrecked some research analyst careers.
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JON C. OGG
