Research Analysts’ Downgrades for July, 17th (AC, ALNY, AZN, BDSI, CLDX, CNP, CVX, EBS, EPZM, GATX)
Air Canada (TSE:AC) was downgraded by analysts at Macquarie from an outperform rating to a neutral rating. They currently have C$22.50 target price on the stock, up from their previous target price of C$18.00.
Alnylam Pharmaceuticals (NASDAQ:ALNY) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Alnylam expects 2017 to be a pivotal year with its first phase III data read out from the APOLLO study for its late-stage pipeline candidate patisiran. It also plans to advance two additional programs into late-stage trials in 2017 and already commenced a phase III study for one of its candidates-fitusiran in July 2017. The company expects to achieve the profile of three marketed products by the end of 2020. Shares of the company have outperformed the Medical-Biomedical/Genetics industry year-to-date. The company’s RNAi technology has allowed it to ink collaborations with leading pharmaceutical and life sciences companies like Novartis, Roche, Monsanto and Sanofi. These deals not only provide it with funds but also take its RNAi technology outside the core focus area. However, the company’s dependence on collaborations for revenues is concerning.”
Astrazeneca PLC (NYSE:AZN) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a sell rating. According to Zacks, “AstraZeneca has a strong product portfolio and is one of the key players in the global cardiovascular market. It has been very active on the acquisition and partnering front, and expects to continue pursuing accretive deals. However, generic competition faced by AstraZeneca has put significant pressure on the top line. Atacand, Toprol-XL, Seroquel and Merrem are already facing generic competition in the U.S. Lately, its core products Crestor and Nexium are facing declining sales due to generic competition. Sales of another important drug, Symbicort, are declining due to significant pricing pressure on the ICS/LABA class. The diabetes franchise also faces stiff competition. Estimates for 2018 have declined slightly ahead of the company’s Q2 earnings release. The company has a positive record of earnings surprises in the recent quarters.”
BioDelivery Sciences International (NASDAQ:BDSI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “BioDelivery’s has secured improved positioning in six new managed care contracts providing preferred access to its key drug Bunavail since July last year, which is expected to boost the drug’s sales and profitability in 2017. Moreover, its second marketed drug Belbuca’s sales hit all-time high since the product was launched a year ago. However, the company recently discontinued development of clonidine topical gel for management of painful diabetic neuropathy. BioDelivery’s portfolio as well as its pipeline candidates may also face sever competition as it targets a highly genericized and crowded market. Its share significantly outperformed the Zacks classified Medical-Biomed/Genetics market so far this year. Estimates have been stable lately ahead of the company’s Q2 earnings release. The company has mixed record of earnings surprises in recent quarters.”
Celldex Therapeutics (NASDAQ:CLDX) was downgraded by analysts at Zacks Investment Research from a buy rating to a sell rating. According to Zacks, “Celldex’s efforts to build its immuno-oncology pipeline are impressive. Its lead pipeline candidate, glembatumumab vedotin, is in mid-stage development for different types of cancer. Apart from glembatumumab vedotin, Celldex has several promising candidates in its pipeline, including varlilumab. We are also encouraged by Celldex’s partnership agreements with big players like Bristol-Myers. Meanwhile, the recent Kolltan acquisition adds some interesting candidates to the company’s pipeline. However, with no approved product in its portfolio, Celldex has to depend entirely on product development and licensing agreements, contracts and grants for revenues. We are also concerned about the early- to mid-stage nature of its pipeline. Estimates have remained mostly stable lately ahead of the Q2 results. Celldex has a positive record of earnings surprises in the recent quarters. “
CenterPoint Energy (NYSE:CNP) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “CenterPoint Energy has been strengthening its infrastructure through regular capital investment and acquisitions, which will help it to meet the requirements of an expanding customer base. Toward this end, the company continues with its capital expenditure plan of $7 billion from 2017 through 2021. Moreover, it is investing substantially to expand its operations to cope with increasing utility demand. The company is currently focused on upgrading infrastructure and improving reliability. Moreover, the shares company returned higher than the Zacks categorized Utility-Electric Power industry, in the last twelve months. However, the company’s results are subject to the impact of weather patterns, regulatory and judicial proceedings, and fluctuating commodity prices. Moreover, the company is overvalued in terms of EV/EBITDA ratio when compared to its historical levels.”
Chevron Corporation (NYSE:CVX) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “For more than three years, Chevron has seen its stock price decline precipitously, as the commodity downturn has taken its toll on the entire industry. Since July 2014, shares of the No. 2 U.S. energy producer have dived 20% – a significant fall considering its status as a ‘traditionally defensive stock’. Consequently, with oil and natural gas prices collapsing, the U.S. energy major’s upstream division’s revenues, earnings and cash flows have taken a beating. Moreover, Chevron is still outspending its cash flow, making it dependent on asset sales. In the wake of weak industry sentiment and apprehensions of more punishing times ahead with future cash flows drying up, we see little reason for investors to hold the stock.”
Emergent Biosolutions (NYSE:EBS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Emergent’s key drug BioThrax is from the company’s Biodefense segment. The U.S. government is the primary purchaser of its Biodefense products. Hence, the company’s sole dependence on BioThrax for its revenue is concerning. Moreover, Emergent faces competition from a number of companies with Biodefense products, which could adversely affect the company’s operating results. Shares of the company have underperformed the broader industry so far this year. However, the company’s follow-on contract with the CDC for BioThrax and deals with the BARDA for BioThrax and NuThrax (the next-generation anthrax vaccine candidate) bodes well for growth. NuThrax’s approval will be a huge boost for the company. Estimates have been stable lately ahead of the company’s Q2 earnings release. The company has positive record of earnings surprises in recent quarters.”
Epizyme (NASDAQ:EPZM) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Epizyme's efforts on developing its lead candidate, tazemetostat, for a number of hematological malignancies and genetically defined solid tumors are impressive. Additionally, its attempts to evaluate tazemetostat in combination with anti-PD 1 or PDL-1 agent are also encouraging. We believe, the company’s collaboration agreement with Celgene for small-molecule HMT inhibitors including pinometostat is a big positive. Epizyme’s share price has also outperformed the Zacks classified Medical/Biomedical Genetics industry year to date. However, with no approved product in its portfolio, Epizyme is highly dependent on its collaboration partners for top-line growth.”
GATX Corporation (NYSE:GATX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of GATX Corporation have outperformed the Zacks categorized Transportation-Equipment & Leasing industry in the last one year on the back of its strong product portfolio and impressive earnings history. The company has outshined the Zacks Consensus Estimate for earnings in each of the last four quarters. The company is expected to perform well with respect to the bottom line in the near future as well. We are also impressed by GATX Corporation's efforts to reward investors through share buybacks and dividend payments. However, the company's struggles on the top line front bother us. Moreover, GATX Corporation is a highly leveraged company.”
Impax Laboratories (NASDAQ:IPXL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Impax’s epinephrine auto-injector sales picked up and the company has 24 ANDAs pending FDA approval. Moreover, Impax’s generics pipeline should be able to take advantage of the upcoming patent expirations in the pharma industry. The acquisition of several generic products in Aug 2016 including 15 currently marketed products bode well for Impax. However, the Generics segment has been under competitive and pricing pressure, which is expected to persist through 2017. Meanwhile, the company is taking steps to reduce costs and improve efficiencies,which is expected to produce total savings of $130 million by the end of 2019. However, the company’s earnings guidance for 2017 is significantly lower than 2016 numbers as continued impact of lower pricing on generics is expected to dampen revenues.Estimates have remained mostly stable lately ahead of the Q2 results. Impax has a negative record of earnings surprises in the recent quarters.”
Keryx Biopharmaceuticals (NASDAQ:KERX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Keryx intends to focus on the growth of Auryxia in the U.S. dialysis market. Meanwhile, the company’s label expansion efforts on Auryxia in the iron-deficiency anemia (IDA) indication seem to be encouraging, given that the IDA market holds great potential. The FDA accepted for review the supplemental New Drug Application (sNDA) for Auryxia tablets for the same indication and has set the Prescription Drug User Fee Act (PDUFA) target action date as Nov 6, 2017. A potential approval should boost sales.. Moreover, shares of the company have outperformed the Medical-Biomed/Genetic Market in year to date. However, considering that the company is heavily dependent on Auryxia for growth, any further interruption in the supply of Auryxia will hamper its growth trajectory, going forward.”
Methanex Corporation (NASDAQ:MEOH) (TSE:MX) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Methanex is still exposed to a volatile methanol pricing environment. Moreover, it continues to face headwinds due to curtailment of gas supply. Short-term natural gas supply issues are expected to continue across the company’s Trinidad and Egypt operations. Production outages are also affecting its operations.”
Marathon Petroleum Corporation (NYSE:MPC) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Over the past one month, shares of Marathon Petroleum have declined and underperformed the broader industry. High operating and direct expenses associated with the heavy turnaround schedule have affected the refining margins of the company adversely. Glut of product inventories has translated to lower profitability in the refining sector. Further, we remain worried of the stiff regulations and cut-throat competition in the industry. We also need to factor the low return on equity of the downstream operator when compared to its peers. Moreover, it has become tougher for the U.S. refiners who are feeling the pinch of higher RFS costs to comply with new cleaner gasoline production rules. Soaring costs arising from RIN obligations is likely to impact the financials of the company negatively. These factors form the basis of our bearish stance on MPC.”
Nokia Corporation (NYSE:NOK) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Nokia have outperformed the Zacks-categorized 'Wireless-Equipment' industry over the last one year. The recent resolution of the patent related dispute with Apple has removed a major overhang on Nokia’s shares. Following the deal, Nokia will get an up-front payment in cash from Apple. Nokia's growth-by-acquisition strategy is impressive. We are positive on Nokia's acquisitions of Withings S.A. and Gainspeed. In early Jan 2016, Nokia Networks gained control of Alcatel-Lucent. Nokia expects to realize annual operating cost synergies €1.2 billion in full-year 2018 from the deal. However, the below-par performance of its Networks division continues to hurt Nokia. Moreover, since the company operates globally its top line is vulnerable to adverse foreign currency movements.”
Novo Nordisk A/S (NYSE:NVO) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Continued growth from Novo Nordisk’s Victoza and Tresiba as well as higher contributions from Saxenda and Xultophy will be partly offset by the impact of lower realized prices in the U.S., loss of exclusivity for products in hormone replacement therapy, intensifying competition within the diabetes and biopharmaceuticals markets and macroeconomic conditions in many markets under International Operations. Tresiba is becoming one of the major contributors of revenue for the company. The company also received approval by the FDA for the Biologics License Application (BLA) for Rebinyn for the treatment of adults and children with hemophilia B and marketing authorization in Europe for the same for the treatment of adolescents and adults with haemophilia B. Shares of Novo Nordisk have outperformed the Large Cap Pharmaceuticals industry year to date.”
Pioneer Natural Resources (NYSE:PXD) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “The pricing scenario of oil and natural gas has been weak since mid-2014 level following oversupplied commodity market. The development to this front could harm Pioneer Natural’s cashflows as the company could sell the commodities at lower prices. The pricing chart also shows significant weaknesses as reflected that year-to-date, Pioneer Natural fell more than 10% while the Zacks categorized Oil & Gas-U.S Exploration & Production industry slipped almost 26%. Moreover, to a certain extent, the company’s long-term production and reserve growth depends on its acquire-and-exploit model. In keeping with this, Pioneer Natural Resources may find it difficult to complete accretive transactions in the future. This could, in turn, negatively impact its growth rate.”
Shire PLC (NASDAQ:SHPG) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “The approval of Mydayis is likely to boost Shire’s ADHD segment dominance while strong performance of Vyvanse, Cinryze and Elaprase will continue to drive Shire’s top line. The label expansion of Cinryze in paediatrics and conditional approval of Natpara in Europe should continue to drive the top line going ahead. The hematology and immunology segment, acquired from Baxalta, gave a major boost to product sales. The approval of Xiidra has boosted the company’s ophthalmology space, acquiring roughly 22% of the total market by the end of Mar 2017. The Dyax acquisition has integrated well and Shire announced positive results from the phase III trial on lanadelumab in May 2017. However, the adult ADHD space is one of the largest and fastest growing segments of the market but is highly genericized. Earnings estimates have fallen lately ahead of the Q2 results. Shire has a positive record of earnings surprises in the recent quarters.”
Scripps Networks Interactive (NASDAQ:SNI) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of Scripps Networks have underperformed the Zacks-categorized Broadcasting-Radio TV industry over the past one year. The company's high debt levels bother us. We also remain mindful of other headwinds like mounting programming costs, advertising and marketing expenses. Scripps Networks also remains exposed to foreign currency exchange rate risks due to its presence in Europe and Asia. The headqinds are likely to hurt the company's bottom line in the second quarter of 2017. Detailed results should be out on Aug 9. The negative sentiment surrounding the stock can be gauged from the fact that the Zacks Consensus Estimate for the quarter has moved down 1.93% in the last month to $1.52 per share. We are however impressed by Scripps Networks' expansion efforts. The company recently announced plans to acquire Spoon University. We are also impressed by its efforts to reward shareholders. “
Sarepta Therapeutics (NASDAQ:SRPT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Sarepta has received a huge boost with the FDA approval of Exondys 51, the first DMD treatment to gain approval in the U.S. Also, a marketing application is under review in the EU, which if approved, should augment sales. Moreover, the company’s collaboration agreements with Summit Pharmaceuticals and Catabasis as well as its own follow-on exon-skipping pipeline candidates represent the most comprehensive approach to treat DMD. Sarepta’s shares have outperformed the industry in the last one year. However, Exondys 51’s commercial launch has been slower than expected due to slow patient starts and reimbursement hurdles. However, Sarepta expects a pickup in patient starts and conversion rates as 2017 progresses. Meanwhile, competition in the RNA-based treatment market remains a threat. Estimates have remained mostly stable ahead of the Q2 results. Sarepta has a mixed record of earnings surprises in the recent quarters.”
TMAC Resources (TSE:TMR) was downgraded by analysts at Scotiabank from an outperform rating to a sector perform rating. The firm currently has C$16.00 price target on the stock, down from their previous price target of C$22.00.
United Parcel Service (NYSE:UPS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of United Parcel Service have underperformed the Zacks-categorized Transportation-Air Freight industry over the last one year. The company is being troubled by headwinds like higher costs and foreign exchange-related issues. Foreign currency-related headwinds are expected to hurt results in the second quarter of 2017, scheduled to be revealed on Jul 27. The negative sentiment surrounding the stock can be gauged from the 0.7% decline in the Zacks Consensus Estimate to $1.46 per share over the last two months. United Parcel's efforts to reward its shareholders are, however, impressive. The company hiked quarterly dividend by 6.4% earlier this year. Its expansion efforts also raise optimism.”
WestJet Airlines (TSE:WJA) was downgraded by analysts at Macquarie from a neutral rating to an underperform rating. The firm currently has C$24.00 target price on the stock, down from their previous target price of C$25.00.
Westport Fuel Systems (NASDAQ:WPRT) (TSE:WPT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Westport Fuel Systems has outperformed the Zacks categorized Auto/Truck Original Equipment industry over the last three months. The company is expected to enjoy significant savings and long-term fundamental benefits from the merger with Fuel Systems. The company’s product launches and strategic relationships are other positives. Also the sale of one of its non-core assets has concluded, providing additional liquidity. However, the company has been incurring losses over the past several years due to high operating expenses. As a result, it has a significant level of accumulated deficit. Weakness in the CWI JV and high cash outflow are other headwinds. The company is also exposed to currency fluctuations and volatility in some markets.”
WSP Global (TSE:WSP) was downgraded by analysts at Raymond James Financial, Inc. from a strong-buy rating to an outperform rating.
WSP Global (TSE:WSP) was downgraded by analysts at Canaccord Genuity from a buy rating to a hold rating.
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