Equities Research Analysts’ Upgrades for September, 20th (ABB, ALLY, AMCC, BTO, DPS, GWW, JAKK, KSU, MAN, MTB)
ABB (NYSE:ABB) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. They currently have $25.00 target price on the stock. According to Zacks, “ABB has a decent earnings history, with three beats and one miss in the four trailing quarters. ABB is one of the best managed industrial infrastructure, power and automation companies in the world that stands to benefit from investments made in the upgrade of power infrastructure. ABB’s proven “Next Level Strategy” and focused investments in three strategic areas, namely, growth, execution and business-led collaboration are expected to propel growth. The company has made significant progress in all the three areas during the quarter that were conducive to the quarterly results. Going forward, the company’s three major customers in utilities, industry and transport & infrastructure are anticipated to drive growth. However, on the flip side, volatility in the oil & gas industry and currency fluctuations are expected to pose as major headwinds, marring the company’s prospects.”
Ally Financial (NYSE:ALLY) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. Zacks Investment Research currently has $21.00 price target on the stock. According to Zacks, “Ally Financial is undertaking a strategic transformation by strengthening its balance sheet and diversify growth avenues. The company has forayed into the credit card business and re-entered mortgage operations as well as acquired TradeKing to further enhance top-line growth. Additionally, initiation of its capital deployment activities (share repurchases and quarterly dividends) depicts capital strength. However, high debt levels may restrain the company’s ability to procure additional funds for working capital, acquisitions or other purposes. Also, stringent regulations and concentration risks will likely continue to weigh on the company’s near-term profitability.”
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Applied Micro Circuits Corp. (NASDAQ:AMCC) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “Applied Micro is focused on offering innovative products like Mudan storage reference platform to augments its revenues. The company expects the embedded computer products to generate solid revenues in the next 18 to 24 months as it transitions to X-Gene based embedded products. However, the company’s computing segment continues to be adversely impacted by the overall business spending cuts as the PowerPC architecture is reportedly in secular decline. Stiff competition from other industry players and high technology obsolescence remain additional headwinds. The company also has a lackluster earnings history in the trailing four quarters. Earnings estimates have remained steady over the last month at a loss of $0.09. High operating expenses owing to significant R&D expenses reduced the profitability of the company and remain concerns. Moreover, the company continues to be cautious about the erratic macroeconomic environment.”
B2Gold Corp. (TSE:BTO) was upgraded by analysts at Dundee Securities from a neutral rating to a buy rating. Dundee Securities currently has C$4.50 price target on the stock, up from their previous price target of C$4.25.
Dr Pepper Snapple Group (NYSE:DPS) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. Zacks Investment Research currently has $102.00 price target on the stock. According to Zacks, “Dr Pepper has robust long-term fundamentals – strong position in the flavored CSD market, aggressive RCI cost savings and regular cash returns to its shareholders. Continuing the strong performance seen in 2015, the company delivered solid top-line and bottom-line results in the first half of 2016. Solid execution, pricing gains, innovations, strong NCB performance, powerful marketing programs and productivity improvements have been driving strong sales and earnings growth for Dr Pepper since 2015. Moreover, Dr Pepper raised its earnings expectations for 2016 twice this year. Dr Pepper’s allied brands have been an important driver of volume growth and profits in recent quarters. However, sluggish volumes of its carbonated beverages, including the diet versions, due to CSD category headwinds, raises concerns.”
W.W. Grainger (NYSE:GWW) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “During its second quarter conference call, Grainger revised sales growth guidance to 1%–4% for 2016 and earnings per share outlook to $11.20–$12.20. Given the deflationary environment, the company remains cautious on gross margins and lowered its margin expectations. In addition, higher interest expense, tax rates & lower capital expenditure will hurt earnings. Moreover, its Canadian business continues to be affected by low oil prices, impact of the fire in Fort McMurray and unfavorable foreign exchange. Nevertheless, Grainger will benefit from acquisitions, focus on restructuring and growth in eCommerce channel. Further, strong performance of single channel online businesses and attractive growth opportunities in the large and fragmented MRO market bode well for growth.”
Jakks Pacific (NASDAQ:JAKK) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. They currently have $9.50 target price on the stock. According to Zacks, “Over the past few quarters, JAKKS Pacific’s revenue growth has been mainly supported by sales of products such as the BIG-FIGS featuring Star Wars and Batman vs. Superman, Warcraft figures, collectible figurines line Tsum Tsum, Disguise Halloween costume, and Nintendo figures and plush. The company’s international expansion efforts have also added to the results. Going forward, product launches and organic growth initiatives are likely to propel growth. Besides, associations with popular brands and licensing agreements with well-liked movie and television franchises should boost sales. Also, estimates have been mostly stable lately ahead of JAKKS Pacific’s third quarter earnings release. Meanwhile, the company has mixed record of earnings surprises in recent quarters. However, a challenging retail environment, age compression and the shift to alternative modes of entertainment like smartphones are potent threats to the top line.”
Kansas City Southern (NYSE:KSU) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. The firm currently has $101.00 target price on the stock. According to Zacks, “Kansas City Southern, with its wide cross-country network, remains focused on growing opportunities in cross-border intermodal businesses between the U.S. and Mexico. The company has a dominant position on the U.S.-Mexico routes. Moreover, the company’s consistent efforts to expand its business, its ability to hike prices and efforts to reduce costs continue to impress. We are also impressed by the company's efforts to reward its shareholders. However, like most railroads, the company has been adversely affected by weakness in the energy segment. The Mexican peso depreciation is another headwind. However, the company's top line is expected to improve in the second half of the year.”
ManpowerGroup (NYSE:MAN) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. They currently have $76.00 target price on the stock. According to Zacks, “ManpowerGroup’s brand value, wide range of services and strong global network reinforces its dominant position in the market. Management continues to believe that global recovery is on track but at a slow and uneven pace. As a result, management is focusing on internal drivers like disciplined pricing and tough control on productivity to ensure uninterrupted profitability. This led the company to post better-than-expected bottom-line results in past 10 quarters. ManpowerGroup expects third-quarter earnings per share in the range of $1.66–$1.74. However, on the revenue front, the company continues to struggle and missed the estimate in the four straight quarters. The strengthening U.S. dollar will continue to affect ManpowerGroup’s quarterly performance as the international markets contribute nearly 85% of its revenues. More importantly, the U.K.’s exit from EU will have an impact on business.”
M&T Bank Corp. (NYSE:MTB) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “M&T Bank’s rising net interest income and decent deposit and loan growth backed by improving economy will aid in top-line enhancement. Further, the bank expects low to mid-single digit loan growth in 2016, following the Hudson City merger in Nov, 2015. Also, steady capital deployment activities along with strong liquidity levels are expected to enhance investors’ confidence in the stock. However, mounting costs resulting from ongoing investments in several areas and pending litigations remain a hindrance for bottom-line growth. Further, the company’s higher exposure in commercial real estate loans poses a threat, in addition to stricter regulatory norms.”
Navient Corp. (NASDAQ:NAVI) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “Navient should benefit from its previous acquisitions of asset recovery and business process outsourcing firms. Also, the economic recovery and declining unemployment rate should boost its business prospects. Further, the company’s ability to generate modest cash aids steady capital deployment activities, thereby enhancing shareholders’ confidence. Notably, considering the results through the first half of 2016, management expects core EPS for the year to trend at higher end of its prior guidance of $1.82–$1.87 per share. However, failure to access new loans and alternative sources of revenue may hinder top-line growth. Also, higher operating expenses and costs resulting from increased regulatory oversight and persistent low interest rate environment adds to the woes in the near term.”
Anglo American plc (OTC:NGLOY) was upgraded by analysts at Macquarie from an underperform rating to a neutral rating.
Posco (NYSE:PKX) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “Over the long term, POSCO stands to benefit from its regional diversifications, superior product portfolio and initiatives to dispose non-core assets. In second-quarter 2016, the company's net income grew 88.9% year over year, driven by cost reduction and increase in gains derived from the share of profit from equity-accounted investees. Net earnings were US$0.54 per American Depository Receipt ("ADR"). Revenues exceeded the year-ago tally by 15.4%. Despite these positives, the company is exposed to risks from higher costs and expenses, industry rivalry, huge debt level, geopolitical issues and foreign currency fluctuations. For third-quarter 2016, POSCO predicts domestic steel demand to remain weak in the automobile and shipbuilding industries.”
Polycom (NASDAQ:PLCM) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “Polycom is scheduled to be acquired by affiliates of Siris Capital Group LLC in a deal valued at approximately $2 billion. This deal was finalized after Polycom agreed to turn down the acquisition offer from Mitel. Recently the company's shareholders also approved the acquisiton, which is expected to close shortly. Following the closure of the deal, Mary McDowell will be appointed as the CEO, succeeding Peter Leav. The company continues to face increasing competition and has been struggling to ramp up growth and performance. It remains to be seen if the combined entity can see a turnaround and post better opertaing results.”
Potash Corp. of Saskatchewan (NYSE:POT) was upgraded by analysts at Zacks Investment Research from a strong sell rating to a hold rating. According to Zacks, “Estimates Potash Corp. have been stable of late. In a big move, Potash Corp. and Agrium have agreed to merge in a deal that would create the world’s biggest crop nutrient company. The proposed merger is expected to create significant cost and operational synergies. The company should also gain from an improving demand environment and its strong operational capability. However, Potash Corp. faces headwinds associated with macroeconomic uncertainties stemming from weakness across specific developing markets. It is also exposed to challenges in its nitrogen business and a weak pricing environment. The prevailing softness in agricultural commodity pricing remains a headwind.”
Synovus Financial Corp. (NYSE:SNV) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. Zacks Investment Research currently has $36.00 price target on the stock. According to Zacks, “We remain encouraged by Synovus’ cost containment initiatives, which are expected to support bottom-line. Further, the company remains focused on inorganic growth opportunities backed by its strong capital position. In Aug 2016, Synovus inked deal to acquire Entaire Global Companies, Inc., with an aim to diversify its loan portfolio. Management expects the transaction to be immediately accretive to Synovus’ earnings per share, return on equity and return on assets. Also, the company is focused on disposing its distressed assets, thereby enhancing its balance sheet position. However, top-line pressure amid low interest rate environment and stringent regulations remain near-term headwinds.”
Sohu.com (NASDAQ:SOHU) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “Sohu.com's business has been impacted by sluggish macroeconomic conditions in China. Specifically, its brand advertising business has remained sluggish because of the lower spending levels. Furthermore, the company has been cutting down its spending levels, which will make market share gain more difficult in the near term due to stiffening competition from peers. Nonetheless, the company’s strength in search and mobile businesses is a positive. The online video business also has some decent growth potential.”
SOUTH32 LTD SPON ADR EA REPR 5 (OTC:SOUHY) was upgraded by analysts at Macquarie from an underperform rating to an outperform rating.
Toyota Motor Corp (NYSE:TM) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “Toyota’s estimates have been stable over the last 7 days. However, quarterly earnings estimates declined in the last 30 days, while annual estimates increased. The company focuses on product development, capacity increases and expansion in emerging markets. The automaker also made several structural changes in order to deliver high-quality vehicles and improve the strength and autonomy of regional operations. However, declining global sales, a string of product recalls and large fines pose concerns for Toyota. Also, the company issued a weak guidance for earnings, operating income and revenues for fiscal 2017.”
Woodward (NASDAQ:WWD) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. The firm currently has $67.00 target price on the stock. According to Zacks, “Woodward is steadily becoming a major supplier of aircraft, gas turbines and heavy-duty engines. The company also stands to benefit from increased global usage of natural gas as a source of electricity and transportation fuel. Woodward has also been recently witnessing strong backlog in the commercial aerospace space due to rising demand for fuel-efficient aircraft and increasing passenger miles. That said, Woodward's dependence on government defense budgets, stiff competition from a number of major players in the U.S. and abroad, persistent market weakness and sluggish growth in China are major concerns for the company.”
Xilinx (NASDAQ:XLNX) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. Zacks Investment Research currently has $60.00 target price on the stock. According to Zacks, “The California-based chipmaker Xilinx designs and manufactures a broad range of high-performance, high-density programmable devices. Increasing demand for 28-nm, 20-nm and 16-nm nodes, driven by higher wireless deployments and strength in the wired communication segment, are expected to remain growth drivers. Further, we are optimistic about the company’s recent decision to tap the fast growing cloud computing, embedded, industrial IoT, and 5G markets which are likely to boost its revenues in the long-run. Nonetheless, a slowdown in the Chinese economy, along with economic weakness in Europe and the Asia-Pacific, could impact Xilinx’s near-term results. Further, the company has been facing new challenges due to the acquisition of Altera by Intel.”
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