The shares of Summit Midstream Partners LP (NYSE:SMLP) have slumped 4.6% to trade at $9.62 — fresh off a record low of $9.28 — after Credit Suisse double-downgraded the energy stock to “underperform” from “outperform,” and slashed its price target to $9 from $15. The brokerage firm said the company’s fourth-quarter earnings report highlighted “execution issues and funding risks,” making it difficult to “justify SMLP’s valuation.”
Analysts are already skeptical of SMLP stock, with seven of nine covering brokerages maintaining a “hold” or “sell” rating. However, the average 12-month price target of $12 is a 25.3% premium to current levels, meaning there’s room for more price-target cuts to come through.
Short sellers have been ramping up their bearish exposure to the equity, too. Short interest rose 22.7% in the two most recent reporting periods to 1.2 million shares. This represents a slim 3% of Summit Midstream Partners’ float, meaning there’s room for more shorts to climb on board.
While SMLP stock’s options pits are typically quiet, volume is buzzing today. While still light on an absolute basis, the 346 calls and 427 puts traded are roughly four and five times what’s usually seen at this point, respectively. Some traders appear to be setting a near-term ceiling for the shares, with sell-to-open activity detected at the April 10 call. The $10 level served as a short-term floor for the stock ahead of today’s drop, and marked the bottom to its fourth-quarter drop.