Schaeffer's Top Stock Picks for '25

J.P. Morgan Securities Slams Red Hat Stock With Downgrade Before Earnings

RHT is clinging to its 19% year-to-date lead

Managing Editor
Sep 18, 2018 at 2:06 PM
facebook X logo linkedin


Shares of Red Hat Inc (NYSE:RHT) are slightly lower in afternoon trading after J.P. Morgan Securities dealt another bear note in today's trading, downgrading the software concern to "neutral" from "overweight" and slashing its price target to $150 from $160. From a broader viewpoint, 10 of 18 covering analysts sport "strong buy" ratings on the stock. Plus, this bear note comes just one day before Red Hat is scheduled to report its second-quarter earnings.

RHT is down 1% at $143, giving up a short-term floor at the 50-day moving average. This comes after the equity was firmly rejected at the 80-day moving average. Despite its recent underperformance, Red Hat stock remains up 19% year-to-date.

Daily Chart of RHT with 50 and 80MA

Red Hat is scheduled to report earnings after the market closes tomorrow, Sept. 19. Digging into its earnings history, RHT has closed higher the day after the company reports in five of the past eight quarters. However, the stock suffered a steep 14.2% drop after reporting in June, while overall the shares have averaged a 7.1% move the day after earnings over the last two years, regardless of direction. This time around, the options market is pricing in a larger-than usual 12.5% move for Thursday's trading.

In the options pits, traders have been leaning bullish in recent weeks. This is per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which shows a 10-day call/put volume ratio of 1.96, ranking in the 81st annual percentile. This indicates that calls have been bought over puts at a faster-than-usual clip.

Echoing this is the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.37, which ranks in the low 16th percentile of its annual range. This means short-term traders have rarely been more call-heavy on Red Hat in the past year.

 
 

Which of These SUB-$5 Stocks Could 26x From Here? (AD)

He called a rare 11x on Tesla…

Then he called a 26x on Workhorse…

Then an even rarer 35x on Nio Inc…

Now Tim Bohen says these 5 tiny “America First” stocks are next up in 2025.

They’re trading for less than $5 right now.

But thanks to Elon & Trump’s new alliance…

They could be off to the races in Trump’s first 100 days.

And right now for a limited time…

You can get the names & tickers for just $1 here. (AD)

FREE Opening View

 
 

Featured Articles from Trusted Partners:

The $23,000,000,000,000 Ace Up Elon’s Sleeve
Elon & Trump are working on something up to 1,000x BIGGER than Tesla. It’s a $23 Trillion opportunity, and you can tap in right now for just $1.

Easy 92% Crypto Dividends (No Coins Req)
There's actually a new way to collect a massive dividend that's indirectly based on $COIN stock and offers a terrific monthly income 

Revealed: 3 Defensive Stocks for Your Portfolio
Worried about the market? This free report reveals 3 under-the-radar defensive stocks for uncertain times in any kind of economy.

 

 
 

FREE Report Download

 

Follow us on X, Follow us on Twitter