Ericsson Downgraded

LM Ericsson (NASDAQ: ERIC) was downgraded this morning at Bank of America/Merrill Lynch to ‘Underperform” with an $11.30 price target. The stock is currently trading $10.90, off 3.54% on the day. Ericsson made a new 52-week high of $11.33 just yesterday inciting Merrill’s price target downgrade. The stock has been on a complete tear over the past month, jumping higher by 14.6%.

I am detecting some bullish sentiment in LM Ericsson today, however. The July $12.50 calls were purchased 5,000 times on the offer for $0.25 earlier in the day. This action is below open interest and may lead to short call sellers buying back positions, but that would still have a bullish tone to it. It is possible that these calls were also purchased as hedges to short shares, but there was no sizable volume around the time of the options trade to support that; since then volume has picked up well above the average on the day and it may be possible that a trader is getting short shares.