Investment Analysts’ Updated EPS Estimates for August, 7th (AFG, BDX, CAH, DG, DNB, ED, FLR, FMS, HTGC, MOS)
American Financial Group (NYSE:AFG) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. They currently have $117.00 price target on the stock. According to Zacks, “American Financial’s second-quarter earnings beat estimates. Higher operating earnings in both Specialty Property and Casualty (P&C) Insurance Segment and Annuity Segment drove the upside. Shares of American Financial have outperformed the industry since it posted better-than-expected earnings. It is well poised to benefit from impressive inorganic growth and restructuring initiatives. Better industry fundamentals, with strong pricing and a higher renewal ratio, should drive overall growth. A strong balance sheet, low leverage cost, and disciplined capital management are positives. Based on strong operational performance, it raised core net operating earnings of $6.40–$6.90 per share in 2017. However, American Financial’s exposure to cat loss is a risk to underwriting results. A still soft interest rate environment is expected to weigh on investment results.”
Becton, Dickinson and (NYSE:BDX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Becton, Dickinson and Company, popularly known as BD, saw a mixed third quarter, wherein adjusted earnings beat the Zacks Consensus Estimate, while revenues missed the same. A solid guidance for fiscal 2017 instills our confidence in the stock. The company is steadily progressing with its planned acquisition of medical technology player, C. R. Bard. The $24-billion transaction is slated to be completed in the fourth quarter. Post completion, BD expects growth in adjusted earnings starting fiscal 2019. We view the acquisition as a strategic fit which will generate benefits from complementary businesses and geographical expansion. BD's cost-control initiatives are also noteworthy. On the flipside, unfavorable sales performance from the BD Medical segment is a concern. Massive growth in the segment was negated by sluggishness in the Medication Management Solutions and Pharmaceutical Systems units in the U.S.”
Cardinal Health (NYSE:CAH) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Cardinal Health ended fourth-quarter fiscal 2017 on a solid note, courtesy of an encouraging performance at the Medical segment. Although, the Pharmaceutical segment witnessed strong growth in the Specialty business and gained a huge number of Pharmaceutical Distribution customers, profits at the segment were hurt by generic pharmaceutical pricing and the loss of a major Pharmaceutical Distribution customer. Over the past one year, the company has underperformed the broader industry with respect to price. Increasing generic pricing pressure is a major headwind. Intensifying competition and customer concentration are other bottlenecks. A sluggish macroeconomic scenario and tough product pricing environment are likely to impede growth. Meanwhile, the company is banking on strategic buyouts, joint ventures and supply agreements to drive growth. A solid fiscal 2018 guidance instills our confidence in the stock.”
Buckingham Research started coverage on shares of Dollar General Corporation (NYSE:DG). They issued a neutral rating and a $75.00 price target on the stock.
Dun & Bradstreet Corporation (The) (NYSE:DNB) was upgraded by analysts at Zacks Investment Research from a hold rating to a buy rating. Zacks Investment Research currently has $127.00 price target on the stock. According to Zacks, “Dun & Bradstreet reported second quarter results 2017 wherein earnings topped the Zacks Consensus Estimate but revenues missed the same. On a year over year basis, revenues registered growth driven by the Avention acquisition. Plus, cost savings resulted in a strong operating margin performance. Management has now raised the lower end of its operating margin growth for the year. We continue to expect that DNB will benefit from its high-margin business model and strong product portfolio. Its partnerships with big players have also helped it bring many more customers into the fold. Plus, the company is also well-positioned to gain from its strategic acquisitions and alliances. The company’s focus on expanding analytics capabilities is also a positive. However, stiff competition, weak DNBi business and high debt continue to remain areas of concerns. Shares have underperformed the broader market in the past one year.”
Consolidated Edison (NYSE:ED) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “Consolidated Edison posted disappointing results in the second quarter, when compared with the Zacks Consensus Estimate. Evidently, the company missed the mark on both the top and bottom-line fronts. Results also saw a downward movement year over year. On a brighter note, the company raised the lower end of its earnings per share guidance range for 2017. Moreover, Consolidated Edison has a history of favorable rate decisions by regulatory authorities, which will likely encourage it to invest more in infrastructure improvements. The company is also making notable progress in generating renewable energy. Yet, the company underperformed its broader industry in the past one year. Also, disruption in wholesale energy markets may affect its ability to meet customers’ energy needs and thereby adversely affect its performance. Again, stringent utility regulations and interruption in operation of its generating units could be detrimental to growth.”
Fluor Corporation (NYSE:FLR) was downgraded by analysts at Johnson Rice from a buy rating to an accumulate rating. The firm currently has $48.00 target price on the stock.
Fresenius Medical Care Corporation (NYSE:FMS) had its buy rating reiterated by analysts at DZ Bank AG.
JMP Securities began coverage on shares of Hercules Capital (NYSE:HTGC). JMP Securities issued an outperform rating and a $14.50 price target on the stock.
Mosaic Company (The) (NYSE:MOS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Mosaic’s adjusted earnings and sales for second-quarter 2017 beat the respective Zacks Consensus Estimate. However, the company’s phosphate volume guidance for the third quarter reflects a decline on a sequential comparison basis. It has also narrowed its volume guidance for phosphate and potash for full-year 2017. Mosaic has underperformed the industry it belongs to over a year. The company is exposed to a difficult pricing environment. Lower pricing is hurting sales and margins in its phosphate business and is expected to remain a headwind in the third quarter. Mosaic also faces a challenging operating environment in the agriculture space.”
Nustar Energy L.P. (NYSE:NS) was downgraded by analysts at Zacks Investment Research from a hold rating to a strong sell rating. According to Zacks, “Considering NuStar Energy's weak distribution coverage and high leverage, we have turned bearish on the partnership. Crude's historic decline has undoubtedly impacted the demand for transportation and storage services. With operations likely to generate weak cash and management not expected to cover distribution until late 2018, NuStar's future looks bleak. In fact, the distribution coverage ratio dipped to a dismal 0.59x in the second quarter – down from 1.09x a year ago. While the midstream MLP has underperformed the broader industry across the past three- and 6-month periods, its debt-to-equity ratio of over 2 is almost double when compared to the industry average. 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.”
Royal Dutch Shell PLC (NYSE:RDS.A) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “Royal Dutch Shell shares are up +5.4% in the year-to-date period vs. the -3.3% loss for the broader industry, with the stock getting a boost from the strong Q2 earnings report (the stock has gained in excess of +5% since then). The integrated behemoth's upstream unit swung to a Q2 profit from a year-ago loss thanks to steady oil price recovery during the period and production contribution of BG assets. The Hague-based supermajor was also able to reduce operating costs and progress on its large divestment program. Importantly, the Anglo-Dutch company generated a surge in cash flows, allowing it to cut debt and cover its cash dividend. However, with oil falling below the psychologically-critical $50 threshold again, Shell's near-to-medium term revenue outlook remains cloudy. Hence, we advise investors to wait for a better entry point before buying shares in Europe's largest oil company.”
Triangle Capital Corporation (NYSE:TCAP) was downgraded by analysts at National Securities from a buy rating to a neutral rating. The firm currently has $18.00 price target on the stock, down from their previous price target of $22.00. The analysts wrote, “• TCAP reported NII/share of $0.41 versus our estimate of $0.44 and the dividend of $0.45. Total non-accruals at cost (including PIK) increased to $94.1 million or 7.5% of the portfolio from $68.2 million or 5.7% of the portfolio Q/Q. The worrisome trend continues to get worse and the pattern of PIK non-accruals turning into full cash non-accruals has been maintained as well. We do not expect this to resolve itself any time soon and as a result we think the non-accruals will continue to weigh on all-in effective yields on the portfolio, causing TCAP to continue to under-earn the dividend and eventually force them to cut it to $0.39/share in 1Q18.
• NAV/share decreased by 3% Q/Q to $14.85 from $15.29, generating an annualized economic return of 0.1%. We expect this will not be the end of NAV declines for the year and model NAV/share to finish 2017 at $14.18 before we expect it to recover in 2018. Realized losses finished 2Q17 at $80.9 million from $54.7 million in 1Q17 and $42.6 million a year ago and we expect this to increase to $105.3 million in 1Q18.
• We are revising our 2017 NII/share estimate to $1.68 from $1.81 and our 2018 NII/share estimate to $1.77 from $1.96.”
TCP Capital Corp. (NASDAQ:TCPC) was upgraded by analysts at National Securities from a neutral rating to a buy rating. They currently have $19.00 price target on the stock, up from their previous price target of $17.00. The analysts wrote, “• We are upgrading TCPC to BUY from NEUTRAL and raising our price target to $19 from $17. To remind our readers, we had previously downgraded shares to NEUTRAL in November 2016 for valuation only. TCP has continued to outperform most peers in the sector with a more favorable fee structure, consistently strong economic returns, minimal credit issues, and steady portfolio growth. With comparable peers trading much richer and TCP continuing to have excellent operational performance, we think the gap between peers and TCP will narrow and think that TCPC shares have additional upside.
• NAV improved Q/Q to $15.04 from $14.92, largely as a result of the accretive equity issuance done at a 13% premium to 1Q17 NAV/share. The portfolio at fair value increased by 8% Q/Q to $1.45 billion with origination volume during the quarter a very robust $263.4 million. We think TCP saw good deal flow and opportunities as the company has always been a very disciplined credit investor.
• We are revising our 2017 NII/share estimate to $1.58 from $1.56 and are revising our 2018 NII/share estimate to $1.60 from $1.61.”
THL Credit (NASDAQ:TCRD) had its buy rating reiterated by analysts at National Securities. National Securities currently has a $12.00 target price on the stock. The analysts wrote, “• TCRD reported NII/share of $0.31 versus our estimate of $0.28/share with the beat largely driven by the incentive fee coming in at $1.2 million compared to our estimate of $2.3 million. The incentive fee, subject to a total return hurdle, was not earned in full during the quarter as NAV/share declined Q/Q to $11.48 from $11.71.
• Non-accruals at amortized cost increased during the quarter to $46.3 million or 6.8% of the portfolio from $13.3 million or 1.9% the quarter prior. Washington Inventory Services was sold during the quarter and thus removed from non-accrual but CRS Reprocessing and Specialty Brands Holdings were added with a combined cost of $36.6 million.
• THL’s portfolio at fair value was comprised of 74.0% first lien loans and the Logan JV (joint venture) combined, up from 66.6% the quarter prior. We expect that this composition will continue to trend upwards as a percentage of total fair value and lead to fewer credit issues and thus more NAV stability going forward. While the first lien debt increasing will likely weigh on effective yields somewhat, the company can continue allocating capital to Logan (88% first lien as of 6/30/17) which had a 12.7% yield by cost as of 2Q17. Additionally, our expectation for fewer credit issues in 2018 also means less of a drag on overall portfolio yield.
• We are maintaining our 2017 NII/share estimate of $1.15 and are revising our 2018 NII/share estimate to $1.16 from $1.18.”
Time Warner (NYSE:TWX) was downgraded by analysts at Evercore ISI from an outperform rating to an in rating. They currently have $108.00 target price on the stock.
Exxon Mobil Corporation (NYSE:XOM) was upgraded by analysts at Zacks Investment Research from a sell rating to a hold rating. According to Zacks, “ExxonMobil has a leading position in the energy industry owing to the size and diversity of its asset base, both in terms of business mix and geographical footprint. With a stable cash position, the company’s balance sheet is one of the best in the industry. The company has been investing heavily in its extensive refining businesses, which will likely help it counter expensive offshore drilling operations. In fact, the upside in year-over-year earnings in the second quarter was supported by increased refining margins and refining volumes. However, the company’s second-quarter earnings missed the Zacks Consensus Estimate. Also, tensions between the U.S. and Russia could mar the integrated major’s prospects for exploiting huge Russian oil and gas reserves. On top of that, the one-year pricing chart shows a 9.5% drop in Exxon’s stock price, which compares unfavorably with smaller rival Chevron’s 8.8% increase.”
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