Analyst Downgrades: Twitter Inc, Square Inc, and Bank of America Corp

Analysts downwardly revised their ratings and price targets on Twitter Inc (NYSE:TWTR), Square Inc (NYSE:SQ), and Bank of America Corp (NYSE:BAC)

Karee Venema

May 16, 2016 at 9:55 AM

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Analysts are weighing in on Jack Dorsey stocks Twitter Inc (NYSE:TWTR) and Square Inc (NYSE:SQ), as well as financial firm Bank of America Corp (NYSE:BAC). Here's a quick roundup of today's bearish brokerage notes on TWTR, SQ, and BAC.

MKM Partners slashed its price target on TWTR to $14 to $18. Nevertheless, the shares are up 0.9% at $14.23. This positive price action runs counter to TWTR stock's longer-term trajectory, though, with the security down almost 62% year-over-year -- and fresh off a May 3 all-time low of $13.90. Options traders have kept the faith, however, and those currently purchasing the stock's near-term contracts are getting a quite a deal. Specifically, Twitter Inc's Schaeffer's Volatility Index (SVI) of 47% rests lower than 87% of all comparable readings taken in the past year, meaning premium on TWTR's short-term options is pricing in relatively low volatility expectations at the moment.

SQ saw its price target lowered to $8 from $9 at Wedbush, but the shares have managed a 1.6% gain at $9.51. Longer term, the stock has had a dismal run, and -- even with last Friday's dead-cat bounce -- remains off 27.4% year-to-date. Options traders have shown a distinct preference for long calls over puts, though. At the International Securities Exchange (ISE), Chicago Board Options (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, speculative players have bought to open 1.89 calls on Square Inc for every put over the past 20 sessions.

KBW downgraded BAC to "market perform" from "outperform" and lowered its price target to $16 from $17. While the stock is up 0.6% in early trading at $13.96, its longer-term technical troubles helped one option bear win big last week. In fact, in 2016 alone, the shares of Bank of America Corp have surrendered 17%. Another round of bearish brokerage notes could put even more pressure on BAC, considering roughly four-fifths of those covering the shares maintain a "buy" or better rating. Plus, the average 12-month price target of $17.43 stands at a stiff 25% premium to current trading levels.

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