RBC is worried United Natural Foods won't capitalize on the Amazon-Whole Foods marriage
Analysts are weighing in on fast-food chain Sonic Corporation (NASDAQ:SONC), organic foods specialist United Natural Foods, Inc. (NASDAQ:UNFI), and mining stock Freeport-McMoRan Inc (NYSE:FCX). Here's a quick roundup of today's bearish brokerage notes on shares of SONC, UNFI, and FCX.
Sonic Earnings Draw Mixed Reactions from Analysts
Sonic shares are up 0.8% to trade at $25.01, despite the company's report of a wider-than-expected drop in same-store sales in the fiscal fourth quarter. And while Barclays lowered its price target to $23 from $24, Canaccord Genuity upped its Sonic target price to $25 from $24, on an earnings beat.
The shares have now dropped 16% since their early June annual high, due in part to a steady stream of short selling. From early March to early September, short interest more than doubled -- hitting its highest point since 2008. While these bearish bets have declined some since then, there's still plenty of skepticism to be found, considering they still account for more than one-fifth of SONC stock's available float.
UNFI Downgraded on Whole Foods Risk
RBC cut its outlook on UNFI stock to "underperform" from "sector perform" and lowered its price target to $34 from $36, citing risk to the company's contract with Whole Foods, and that Whole Foods parent Amazon has the "ability, incentive and precedent to decrease reliance on UNFI." In reaction, UNFI shares have dropped 0.8% this morning to $40.24 -- testing the $39 region, home to a mid-September earnings-induced bull gap.
Most analysts remain skeptical of United Natural Foods, which was already down 15% year-to-date heading into today's trading. Of the 13 brokerages covering the shares, 10 maintained a "hold" or worse rating at last night's close.
Deutsche Bank Downgrades FCX Stock
Freeport-McMoRan was downgraded to "sell" from "hold" at Deutsche Bank on uncertainty surrounding the firm's Grasberg mine in Indonesia. The stock is down 2.8% in early trading at $14.85.
Since its late June lows near $11.10, FCX stock has added nearly 34%, and options traders have been buying to open calls over puts at a faster-than-usual clip. The security's 50-day call/put volume ratio of 3.18 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 97% of all comparable readings taken in the past year.