After hitting a one-year high of $60.00 in December, the stock has hit a new one-year low today. This morning, AET opened at $36.98. So far today the stock has hit a low of $36.01 and a high of $37.99. As of 11:55, AET is trading at $37.29, down 2.50 (-6.3%). The chart for AET looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in six weeks as long as AET is below $45 at August expiration. AET would have to rise by more than 20% before we would start to lose money.
MOST NOTEWORTHY: Nvidia, Air France and UnitedHealth were today's noteworthy downgrades:
JP Morgan downgraded Nvidia (NASDAQ:NVDA) to Neutral from Overweight following the company's lowered guidance.
Deutsche Bank cut Air France (Other OTC:AFLYY) to Sell from Hold as they believe consensus revenue estimates need to come down.
Following UnitedHealth's (NYSE:UNH) lowered guidance, UBS said there is "little hope" for improvement in 2009 and that the company has above average exposure to the Medicare segment, which is being politically pressured. UBS downgraded shares to Neutral from Buy.
OTHER DOWNGRADES:
Aetna (NYSE:AET) and Health Net (NYSE:HNT) were downgraded to Sell from Neutral at Goldman.
Dice Holdings (NYSE:DHX) was lowered at Wachovia to Market Perform from Outperform.
Zhone (NASDAQ:ZHNE) was downgraded to Source of Funds from Buy at ThinkPanmure.
MOST NOTEWORTHY: Tower sector stocks, Tesco Plc and Alcoa were today's noteworthy upgrades:
RBC Capital upgraded American Tower (NYSE:AMT), Crown Castle( NYSE::CCI), SBAComm (NASDAQ:SBAC) to Outperform from Sector Perform citing recent weakness in the tower sector group and a continued favorable outlook.
Merrill upgraded shares of Tesco (Other OTC:TSCDY) to Buy from Neutral as they believe it is the only proven growth stock in the sector.
Soleil upgraded shares of Alcoa (NYSE:AA) to Hold from Sell on valuation following the recent weakness.
Soleil upgraded Alcoa (NYSE:AA) to "hold" from "sell", according toBriefing.com. The news service also reports that Citigroup upgraded Peabody Energy (NYSE:BTU) to "buy" from "hold".
D.A. Davidson raised it price target on Talbots (NYSE:TLB) from $7.50 to $12.50, according to the AP.
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: ExxonMobil, Susquehanna and BJ's Wholesale were today's noteworthy upgrades:
Bernstein upgraded shares of ExxonMobil (NYSE: XOM) to Outperform from Market Perform to reflect the company's best of industry returns and high credit rating, which they feel makes for a safe investment in the current environment.
Keefe Bruyette upgraded shares of Susquehanna (NASDAQ: SUSQ) to Market Perform from Underperform on valuation and believes the company is unlikely to have to raise capital.
JP Morgan raised BJ's Wholesale (NYSE: BJ) to Overweight from Neutral citing improvement in the company's ability to convert free trial customers to paid members and strong June sales, which could result in EPS upside for Q2-Q4.
OTHER UPGRADES:
J.M. Smucker (NYSE: SJM) was lifted to Buy from Hold at Deutsche Bank.
France Telecom (NYSE: FTE) was upgraded to Overweight from Neutral at HSBC.
MOST NOTEWORTHY: Concur Tech, Groupe Danone and General Motors were today's noteworthy downgrades:
Piper downgraded shares of Concur Tech (NASDAQ: CNQR) to Neutral from Buy after transferring analyst coverage, as they believe potential upside to estimates is priced into shares while competitive concerns from American Express (NYSE: AXP) are not.
Morgan Stanley downgraded shares of Groupe Danone (OTC: GDNNY) to Equal Weight from Overweight to reflect reduced visibility in the company's core business.
Merrill downgraded General Motors (NYSE: GM) to Underperform from Buy citing the company's deteriorating US auto sales, resulting in a higher cash burn, which could result in a larger than expected capital raise. The firm believes GM capital raise could be in the range of $15 billion and notes that bankruptcy is "not impossible."
OTHER DOWNGRADES:
Progenics Pharma (NASDAQ: PGNX) was lowered to Underperform from Market Perform at Friedman Billings.
UAL Corp. (NASDAQ: UAUA) was cut to Neutral from Buy at Goldman.
Deutsche Bank (NYSE: DB) shares are trading 4.2% higher in premarket action after the bank, seeking to calm investors, said it expects a profit in its second quarter.
While AT&T Inc. (NYSE: T) unveiled its pricing strategy for Apple Inc. (NASDAQ: AAPL)'s 3G iPhone to go on sale July 11 with a $199 and $299 (with contract) price points as expected, Canadians are outraged over Rogers Communications Inc. (NYSE: RCI)'s 3G iPhone rates and have created an online petition that collected over 19,000 signatures already.
AstraZeneca (NYSE: AZN) rose in Europe and is rising over 2.7% in premarket trading after winning a court case against Teva Pharmaceutical (NASDAQ: TEVA) and the Sandoz unit of Novartis (NYSE: NVS) over patents on its Seroquel schizophrenia drug.
Citi Investment Research maintained its "hold" rating on Biogen Idec (NASDAQ:BIIB) saying the firm "is poised to gain from higher prices for multiple sclerosis drugs," according to the AP.
Merrill Lynch downgraded GM (NYSE:GM) to "underperform" from "buy", according toBriefing.com. Bernstein upgraded Exxon Mobil (NYSE:XOM) to "outperform" from "market perform", the news service also reported.
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: McClatchy News, Ansys and Fortune Brands were today's noteworthy downgrades:
Deutsche Bank downgraded shares of McClatchy (NYSE:MNI) to Sell from Hold after transferring analyst coverage as they believe leverage issues will continue to pressure the stock.
Jefferies downgraded shares of Ansys (NASDAQ:ANSS) to Hold from Buy on valuation and their belief that a slow U.S. manufacturing economy may be impacting sales cycles at the margin.
Fortune Brands (NYSE:FO) was lowered to Market Perform from OUtperform at Wachovia following its lowered 2008 outlook.
MOST NOTEWORTHY: Lam Research, Deutsche Telekom and France Telecom were today's noteworthy upgrades:
Credit Suisse upgraded Lam Research (NASDAQ:LRCX) to Outperform from Neutral citing margin expansion and valuation. Lam was named the firm's top pick in SCE names for 2H08.
JP Morgan upgraded shares of Deutsche Telekom (NYSE:DT) to Overweight from Neutral as they expect a stronger second half of the year for the industry.
France Telecom (NYSE:FTE) was upgraded to Buy from Neutral at Merrill and to Buy from Hold at Societe Generale after the company walked away without bidding for Sweden's TeliaSonera.
Deutsche Telekom (NYSE:DT) was upgraded to "overweight" from "neutral" at JP Morgan, according toMarketWatch. The financial news site also reports that France Telecom (NYSE:FTE) was upped to "buy" from "neutral" at Merrill Lynch.
Stifel Nicolaus & Co reiterated its "hold" rating on Campbell Soup (NYSE:CPB) ahead of the company annual meeting according to the AP.
Merrill Lynch resumed coverage of Home Depot (NYSE:HD) with an "underperform" rating, according toBriefing.com. The news service also reports that JP Morgan initiated Comcast (NASDAQ:CMCSA) with an "overweight" rating.
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: Symantec, Cardinal Financial and BP Plc were today's noteworthy upgrades:
ThinkPanmure upgraded Symantec (NASDAQ:SYMC) to Buy from Accumulate based on improved execution, stable growth in core business, and ramping competitive position in some high-growth businesses.
Baird upgraded Cardinal Financial (NASDAQ:CFNL) to Outperform from Neutral based on valuation, the company's favorable credit risk profile in Northern Virginia, and its excess capital position.
Societe Generale raised BP Plc (NYSE: BP) to Hold from Sell as it believes the bad news is priced into shares and earnings could be better than expected.
OTHER UPGRADES:
Alcatel-Lucent (NYSE:ALU) was upgraded at Merrill Lynch to Neutral from Underperform.
Jefferies lifted Hunsman (NYSE: HUN) to Hold from Underperform.
MOST NOTEWORTHY: Texas Industries, TransGlobe Energy and Level 3 Communications were today's noteworthy downgrades:
Stephens downgraded shares of Texas Industries (NYSE: TXI) to Equal Weight from Overweight as it believes higher energy costs will affect the company's ability to achieve its guidance. The firm lowered its target to $68 from $83.
Jefferies assumed coverage and downgraded shares of TransGlobe Energy (NYSE:TGA) to Hold from Buy as it sees limited upside until the company completes its seismic activity and can better quantify its exploratory reserve potential. The firm lowered its target to $5.25 from $6.50.
Citigroup downgraded Level 3 (NASDAQ: LVLT) to Sell from Hold as it believes the pullback in telecom valuations increases downside risk for the stock. Citigroup lowered their target price to $2.50 from $3.
PAREXEL International Corporation (NASDAQ: PRXL) provides contract research, medical marketing and consulting services to the pharmaceutical, biotechnology and medical device industries. Its Clinical Research Services segment offers clinical trial and data management, clinical pharmacology and related medical advisory services. The Consulting and Medical Communications Services unit offers technical advice on new product development, marketing and regulatory affairs. Subsidiary Perceptive Informatics sells IT system, medical imaging, and related services that help manage clinical trials.
The company pleased investors last week, when it guided fiscal Q4 EPS to 25-26 cents and revenues to $258-$265 million. Analysts had been looking for 26 cents and $259.31 million. Management also guided FY09 EPS to $1.10-$1.20 ($1.08 consensus) and FY09 revenues to $1.11-$1.14 billion ($1.14B consensus). Raymond James subsequently upgraded the stock to "outperform", noting that the firm "will exhibit a strong growth profile due to a strong biopharmaceutical outsourcing market, a large geographic footprint and a diversified service offering."
Alcatel-Lucent (NYSE:ALU) was raised to "neutral" from "underperform" at Merrill Lynch, according to24/7 Wall St. The financial website also reports that Whole Foods Market (NASDAQ:WFMI) was cut to "neutral" from "buy" at UBS.
Citigroup added Google (NASDAQ:GOOG) to its Top Picks Live list, according toBriefing.com. The news service reports that Time Warner (NYSE:TWX) was also added to the list.
Societe Generale raised its rating on BP (NYSE:BP) to "hold" from "sell" according toMarketWatch.
Aetna (NYSE: AET) shares are falling today after an analyst at Goldman Sachs downgraded the stock to "Sell" from "Neutral," saying the company will face lower profit margins over the next few years. Other companies in the health-care industry also got downgrades today. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AET..gif){kind=logo}
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