Investment Analysts’ Downgrades for August, 7th (AAL, BCE, CTAS, JBLU, JCP, JNPR, MT, NXTM, PKX, SRCL)
American Airlines Group (NASDAQ:AAL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “American Airlines performed well in the second-quarter of 2017 reporting better-than-expected earnings per share and revenues. Both metrics also improved on a year-over-year basis. Results were aided by strong passenger demand. Total revenue per available seat miles (TRASM: a key measure of unit revenue) improved 5.7% in the reported quarter. The company’s efforts to reward shareholders also raise optimism in the stock. During the second quarter, the company returned $500 million to its shareholders through dividends and buyback. Shares of the company have outperformed its industry in the last three months. However, high costs are likely to continue hurting bottom-line growth. Moreover, operating expenses in the second quarter climbed 11.1% due to the rise in fuel costs. American Airlines is also a highly leveraged company. “
BCE (NYSE:BCE) (TSE:BCE) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “BCE reported weak financial results in the second quarter of 2017. However, the company's strategic moves to enhance employee skills, increase capital investments and reduce expenditures looks impressive. Deployment of Gigabit Fibe, 4G LTE mobile networks, upcoming 5G networks, IP phone services and post-paid businesses should help the company gain customers. Buyout of Q9 Networks boosts the company's cloud suite and $854 million investment will aid its fiber-optics network suite. The buyout of Manitoba Telecom Services by BCE's arm, Bell Canada places Bell Canada as one of the largest mobile provider in Manitoba. On the flip side, BCE continues to face multiple problems such as stringent regulatory norms, loss in network access services lines, price competition, labor union issues, operational risks and construction delays.Over the past three months, share price of BCE inched up 5.65% but failed to beat the industry's 11.10% gain.”
Cintas Corporation (NASDAQ:CTAS) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Cintas reported strong fourth-quarter fiscal 2017 results on the back of healthy top-line growth. The company further aims to continually achieve revenue build-up by increasing penetration levels at existing customers and broadening the customer base. The synergies from the combined operations post G&K Services’ acquisition are further expected to yield $130 million to $140 million in cost savings from the fourth year of its operation and the transaction is anticipated to be accretive to Cintas’ earnings. Cintas has also outperformed the industry year to date. However, volatility in raw material prices and third-party supply constraints remain potential headwinds for the company. Moreover, persistent challenging macroeconomic environment has mostly driven customers to perform certain in-house services themselves instead of outsourcing them to Cintas, which have resulted in some loss of businesses.”
JetBlue Airways Corporation (NASDAQ:JBLU) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Even though shares of JetBlue Airways have underperformed its industry so far this year, the carrier received good news when it reported better-than-expected revenues and earnings per share in the second quarter of 2017. The carrier performed well with respect to unit revenues in the second quarter of 2017. PRASM increased 5.9% , while RASM climbed 7% . Yield per passenger mile improved 5.7%. JetBlue's efforts to expand its popular premium service (Mint) and reduce debt levels are also encouraging. The carrier's deal with Goldman Sachs for implementing an accelerated share buyback program is another positive. However, high costs are likely to continue hurting bottom-line growth.”
J.C. Penney Company, Inc. Holding (NYSE:JCP) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “J. C. Penney shares, which have underperformed the industry in the past six months, recently took a sharp U turn after the company informed that the sales performance has improved in the second quarter of fiscal 2017. Moreover, the company whose top line has missed the estimate in the trailing five quarters announced that it expects to post substantial improvement in sales in the second quarter in comparison with the first quarter. Further, in an effort to lure more customers and ramp up sales, management has introduced new loyalty program. These along with remodeling, renovation and refurbishment of stores with special attention on enhancing the reach of national and especially private-label brands looks promising. J. C. Penney is also gradually increasing the count of Sephora stores. However, the impact of challenging retail landscape, high debt level, stiff competition from online retailers, and waning store traffic concerns linger.”
Juniper Networks (NYSE:JNPR) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Juniper is gaining on strong adoption of its cloud products and robust performance from the QFX switch product line, which was evident from the second-quarter results. Both earnings and revenues increased on a year-over-year basis in the reported quarter. We note that the stock has outperformed the industry on a year-to-date basis. We believe that frequent product launches, cost reduction initiatives and improving execution are encouraging. However, management noted that pricing pressure, unfavorable product and customer mix along with higher DRAM memory prices will continue to hurt gross margin in the rest of 2017. Moreover lumpy router revenue growth is also a concern. Additionally, stiff competition and ongoing consolidation in the telecom market remain concerns.”
ArcelorMittal (NYSE:MT) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “ArcelorMittal saw higher profits in second-quarter 2017. Earnings for the quarter topped the Zacks Consensus Estimate. Revenues rose by double digits on higher metals pricing, and surpassed expectations. The company raised its steel demand outlook for 2017. ArcelorMittal outperformed the industry it belongs to over the past one year. ArcelorMittal should gain from its efforts to reduce debt, expand capacity and improve efficiency. It is also making a significant progress in reducing costs and expanding its advanced high strength steel product line under the Action 2020 program. The proposed acquisition of Ilva represents another attractive growth opportunity for the company. However, ArcelorMittal continues to contend with challenging steel market conditions in Europe. Demand for steel remains weak in Europe and Brazil. Moreover, cheap steel exports from China is still causing a problem.”
NxStage Medical (NASDAQ:NXTM) was downgraded by analysts at Craig Hallum from a buy rating to a hold rating.
POSCO (NYSE:PKX) was downgraded by analysts at Standpoint Research from a buy rating to a hold rating.
Stericycle (NASDAQ:SRCL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Stericycle reported solid second-quarter 2017 results with a healthy improvement in revenues on a year-over-year basis. The company has a competitive edge with the largest collection and transportation network in the industry, which reduces operating costs and allows it to compete effectively on both service and price perspectives. International growth rates are expected to accelerate due to increasing customer adoption and expansion into new lines of business. In addition, the acquisition pool of the company remains robust in multiple geographies and lines of business. However, low barriers to entry in the industry and stiff competition from local as well as global players significantly reduce its price control. High operating costs continue to be a headwind for Stericycle. In addition, a challenging macroeconomic environment and volatility in foreign exchange are affecting margins. Stericycle also underperformed the industry year to date.”
Time Warner (NYSE:TWX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Time Warner, which accepted the buyout offer of AT&T, has outpaced the industry in the past one year. The company’s initiatives such as foraying into new markets and digital endeavors, and investments in video content and technology bode well for the stock. This is evident from its positive earnings surprise streak for more than 20 straight quarters, including an earnings beat of 11.8% in second-quarter 2017. The company witnessed robust subscription revenue growth at Home Box Office and Turner, while Warner Bros. benefited from the success of Wonder Woman. Further, Time Warner’s significant international presence has helped broaden client base and product portfolio. Additionally, we believe that investments in programming, production and marketing, along with focus on operating and capital efficiencies augur well. However, decline in overall advertising spending and currency headwinds may impact the performance.”
Zynerba Pharmaceuticals (NASDAQ:ZYNE) was downgraded by analysts at Piper Jaffray Companies from an overweight rating to a neutral rating.
Zynerba Pharmaceuticals (NASDAQ:ZYNE) was downgraded by analysts at Cantor Fitzgerald from an overweight rating to a neutral rating.
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