Analysts are weighing in on fiber-optic communications concern Applied Optoelectronics Inc (NASDAQ:AAOI), as well as hospital stocks Tenet Healthcare Corp (NYSE:THC) and Community Health Systems (NYSE:CYH). Here’s a quick roundup of today’s bearish brokerage notes on shares of AAOI, CYH, and THC.
Earnings Warning Sinks AAOI Stock
Applied Optoelectronics stock is down 21% at $46.51, after the company warned that third-quarter earnings and sales will fall short of estimates, due to declining sales at one of its bigger data-center customers. As a result, Craig-Hallum downgraded the security to “hold” from “buy,” and nearly halved its price target, to $42 from $80. Additionally, three other brokerage firms cut their price targets on the stock. AAOI shares are pacing for their first close beneath their 200-day moving average in over a year, but still remain more than 100% higher year-to-date.
Recent options buyers are likely cheering AAOI’s drop today. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the shares’ 10-day put/call volume ratio of 1.85 is higher than 87% of all other readings from the past year. In other words, options speculators picked up Applied Optoelectronics puts over calls at a faster-than-usual clip during the past two weeks.
THC Touches New Lows on ‘Disruptive’ Trump Order
President Trump yesterday signed an executive order meant to weaken Obamacare, after the GOP failed to take it down in Congress. Mizuho analyst Sheryl Skolnick warned that “the effect of the order is likely to be profoundly destabilizing, disruptive, and potentially materially damaging to hospitals,” and hospital operators should count on bad debts rising next year, after Trump cut off billions in subsidies. Meanwhile, SunTrust Robinson cut its price target on THC stock to $15 from $19.
Tenet Healthcare stock is down 6.3% at $12.99, extending yesterday’s slide, and earlier touched a new eight-year low of $12.25. There are plenty of short sellers likely applauding the equity’s drop, as short interest accounts for more than 37% of THC’s total available float. Today, however, Tenet is on the short-sale restricted (SSR) list.
CYH Stock Drops to Year-to-Date Low
Community Health stock is now on pace for a ninth straight down day, and was last seen 11% lower at $5.32 — a new year-to-date low. Like Tenet, CYH stock is suffering in the wake of the new Trump executive order, and was also singled out for a price-target cut at SunTrust Robinson, to $7 from $8.
Also like THC, CYH stock is a favorite among the shorts. Although short interest depleted by nearly 10% in the most recent reporting period, about 24.4 million Community Health shares are dedicated to short interest — nearly 23% of the stock’s total available float. Today, Community Health is also on the SSR list.
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