Sun Microsystems (JAVA) NewsBite - Sun Microsystems Falls on Downgrade

Posted on Friday, May 23, 2008 10:10 AM

Sun Microsystems Inc. (JAVA) opened at 12.63. So far today, the stock has hit a low of 12.54 and a high of 12.85. JAVA is now trading at 12.52, down 0.62 (-4.90%). The stock hit its 52 week high of 25.04 in November and set its 52 week low of 12.37 in May. JAVA has been losing ground for the past year. Sun Microsystems shares have been tumbling after a Morgan Stanley analyst downgraded the stock to "Underweight" from "Equal-weight." The broker believes the company is at risk as demand shifts downstream and pricing pressure intensifies. Technical indicators for JAVA are bearish and steady while S&P gives the stock a positive 4 STARS (out of 5) buy rating. If you’re looking for a hedged play on this stock, consider an October bear-call credit spread above the $15 range. JAVA hasn’t been above $15 since it fell sharply in early May and has shown resistance around $12.50 recently. This trade could be risky if the company's earnings (due out in late July) are a positive surprise, but even if that happens, this position could be protected by resistance JAVA might find at its 50 day moving average, which is currently around $15 and falling. [RHF - Seven Summits Strategic Investments NewsBite]