Stock Analysts’ downgrades for Monday, September 18th:

Big Lots (NYSE:BIG) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Though, Big Lots’ shares have underperformed the industry in a month, the trend might reverse in the near term owing to better-than-expected second-quarter fiscal 2017 results and encouraging earnings outlook. Moreover, the top line also surpassed the Zacks Consensus Estimate after missing the same in the trailing four quarters on account of robust performance of furniture and soft home. Following the results, management raised fiscal 2017 earnings guidance but remained somewhat cautious about its sales and comparable store sales performance. Sales growth for the full year is predicted to be in the range of 2-2.5%, compared with earlier guided range of 2-3%. Meanwhile, its furniture financing programs have been consistently gaining traction. However, the challenging retail landscape, aggressive promotional strategies and waning store traffic might weigh on the performance.”

Companhia Brasileira de Distribuicao (NYSE:CBD) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of CBD have outperformed the industry over the last six months. The company has been depicting strong improvement in Extra Hiper markets and consistent growth at Assai. Store openings and conversion of Extra Hiper stores to Assai has been boosting sales and aiding the company to accelerate the expansion of its cash-and-carry banner into new cities and states across Brazil. By the end of 2017, the company expects to complete 16 store conversions and open six to eight new Assai stores. We are also encouraged by the company’s operating efficiency and productivity projects. In the second quarter, higher gross margins and a decline in selling, general and administrative expenses at Multivarejo boosted EBITDA margin. However, a challenging economic scenario in Brazil results in lower demand and consumer confidence. A slowdown in consumer expenditure has also been affecting the home appliances retail sector.”

Costco Wholesale Corporation (NASDAQ:COST) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Costco continues to be one of the dominant retail wholesalers based on the breadth and quality of merchandise offered. The stock has outpaced the industry in a year. This came on the backdrop of continued sturdy comps performance and upbeat results in third-quarter fiscal 2017, thereby sidelining the woes, which have gripped the brick-and-mortar retailers for some time now. Major chains are grappling with soft store and mall traffic as consumers choose to shop online. But Costco seems somewhat unfazed by tough retail scenario. We believe that the hike in annual membership fees and increased penetration of Citi Visa co-brand card program will also benefit the stock in the near term. We are also encouraged by Costco’s expansion strategy, as it remains committed to opening new clubs and expanding e-Commerce capabilities. However, stiff competition and cautious consumer spending remain causes of concern. Of late, estimates have been stable.”

FirstEnergy Corporation (NYSE:FE) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of FirstEnergy's have gained higher than the industry in the last three months. FirstEnergy’s modernization drive and new generation asset additions will further strengthen its service reliability and lead to customer retention. This has led to its ambitious “Energizing the Future” plan aimed at upgrading and expanding its transmission capabilities. FirstEnergy is also gaining from industrial load growth. The company is working to transform itself into a regulated company by mid of 2018. It has secured regulatory approvals for base rate increase in Pennsylvania, New Jersey and Ohio which are expected to boost its top line in 2017. However, FirstEnergy’s higher debt/capital ratio compared with peers may further drive up its cost of capital in the rising interest rate environment. In addition, stringent regulatory norms, mild weather and intensifying competition are some of the headwinds.”

Fomento Economico Mexicano S.A.B. de C.V. (NYSE:FMX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “FEMSA outperformed the broader industry in the year so far. The company is on track to drive growth through strategic measures, including increasing store count, diversifying business portfolio and focusing on core business activities. Further, its exposure in various industries including beverage, beer and retail, gives it an edge over competitors. Also, FEMSA's strong cash flow generation capacity enables it to make incremental investments in business expansion. However, second-quarter 2017 results marked its fourth consecutive earnings miss, while sales lagged estimates for the second straight time. Moreover, the company continued to witness margin pressures due to decline in margins at Coca-Cola FEMSA and lower-margin businesses growth at FEMSA Comercio, as well as higher operating expenses at Coca-Cola FEMSA and FEMSA Comercio’s Health division. Nevertheless, FEMSA's focus on achieving growth via acquisitions bode well.”

Gerdau (NYSE:GGB) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Year to date, Gerdau's American Depository Receipts (ADR) have outperformed the industry. We believe that the company's product portfolio, manufacturing techniques and international diversity will help it grow over the long term. Also, its strategy of disposing loss-making assets/businesses will enable it to focus on the profitable ones. Going forward, any investment by the government in infrastructure improvements will boost steel demand in Brazil, thereby creating favorable conditions for the company. However, it is exposed to risks arising from higher raw material costs, foreign currency fluctuations, huge debt levels and cyclical nature of the industry. In second-quarter 2017, the company's adjusted net income declined 19.1% year over year due to 10.6% fall in revenues, forex woes and higher income tax expenses. Also, the stock is currently overvalued compared with the industry.”

Home Depot, Inc. (The) (NYSE:HD) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Home Depot’s spectacular past performance has helped it to surpass the industry in the past year. The company has been consistently gaining from its interconnected strategy, focus on Pro customers, and housing market recovery. These factors helped the company post a stellar second-quarter fiscal 2017 performance, which marked its highest ever quarterly sales and earnings. Notably, sales marked its 13th straight beat, while earnings retained its 5-year long trend of positive surprise. Results were driven by solid growth across all regions, both in stores and online. Also, Pro category sales continued to outperform, driven by constant efforts to enrich customers’ experiences. The sturdy first half and expectations of improved home prices encouraged the company to raise its fiscal 2017 view. However, gross margin remained plateaued, and is likely to fall 10 bps in fiscal 2017. Also, competition from online retailers may impact results.”

Honeywell International (NYSE:HON) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Honeywell’s diversified business portfolio has the potential to earn consistent above-average returns and mitigate operating risks through a balanced organic and inorganic model. A diligent focus on working capital management, free cash flow generation and a conservative balance sheet remain key positives. With a flexible yet disciplined focus on cost and productivity, Honeywell remains focused on increasing its presence in high-growth regions. The company also outperformed the industry year to date. However, adverse foreign currency translations, high R&D expenses to fend off competition and volatility in commodity prices are likely to peg back its growth momentum to some extent. Honeywell also expects a tepid demand pattern for its business jets and mobile scanners in 2017 due to sluggish global growth, volatility in crude oil prices and a tempered Chinese economy.”

IDEX Corporation (NYSE:IEX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “With a flexible yet disciplined focus on cost and productivity, IDEX expects to successfully tap newer markets to boost its revenue. The company intends to optimize its cost structure, increase competitiveness and reallocate resources to improve profitability. IDEX outperformed the industry year to date. Management also raised its earlier guidance for 2017 on robust demand patterns and healthy growth dynamics. However, huge recurring R&D expenses increase operating costs and reduce price control over products, which often result in the loss of market share, poor sales and lower operating margins. With operations across five continents, IDEX’s performance is exposed to the adverse impact of macroeconomic cycles in the United States and international markets. In addition, the company is susceptible to volatility in raw material prices and availability that affects its cash flow and restricts its growth momentum to some extent.”

Infosys Limited (NYSE:INFY) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “In the past six months, Infosys shares have underperformed the industry average. Infosys is facing business disruption due to a high-profile CEO’s exit, bitter ego battles between top management and a co-founder, plus the reputational damage suffered because of a possible securities fraud charge. In addition, U.S. President Trump’s anti-immigration stance and rising costs pose as major headwinds. The fate of H-1B visas will be a crucial determinant of the company’s future profitability. However, Infosys’ results are benefiting from diligent operational execution. Its Renew New strategy has helped reap multiple benefits, including renewing traditional services, winning deals, introducing services and monetizing from key initiatives. In addition, the company’s solid financial health adds to its strength. Its new offerings under its business platforms like Edge, Panaya and Skava are also helping it gain new clients.”

Microsemi Corporation (NASDAQ:MSCC) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Microsemi Corporation is an OEM of a broad range of high-reliability and analog/mixed signal integrated circuits. Third-quarter fiscal 2017 non-GAAP earnings beat the Zacks Consensus Estimate while revenues were in line with the same. The company's focus on improving product mix, operational efficiency, and consolidation are driving revenues and margins through 2017. Moreover, we have confidence in the company's strategic positioning, strong fundamentals and growth prospects. Microsemi's scope for margin expansion and decent balance sheet are the other positives. However, pockets of weakness related to product transition at medical customers, push-out of some communications spending in China and a softer oil & gas market continue to impact revenues. Year to date, the stock has underperformed the industry it belongs to.”

PVH Corp. (NYSE:PVH) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “PVH Corp. has outperformed the industry year to date driven by its superb earnings history and brand strength. The company posted better-than-expected earnings and sales results for second-quarter fiscal 2017. While sales marked its fourth consecutive beat, earnings retained its positive surprise trend for the 13th straight time. Results continued to gain from solid momentum at its Calvin Klein and Tommy Hilfiger brands, particularly in the international regions. Further, the company raised earnings outlook for fiscal 2017. However, concerns regarding the volatile macroeconomic and geopolitical environment remain. While currency rates improved in second quarter, currency headwinds are expected to hurt fiscal 2017 earnings by 20 cents per share. Apart from this, a volatile retail scenario and greater marketing costs may hurt performance. Nonetheless, the company’s efforts to keep pace with the evolving consumer trends bode well.”

S&P Global (NYSE:SPGI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “S&P Global’s strategic portfolio restructuring initiatives and focus on core business are likely to drive future growth. The company’s Standard & Poor's Ratings Services appears to be a long-term growth driver as corporate and U.S. structured finance issuance is picking up momentum with increasing capital infusion in the economy as well as positive growth in M&A activity. This apart, strategic acquisitions and positive industry trends augur well for long-term growth. The company outperformed the industry year to date. However, its performance is likely to be hurt by lower volume of debt securities issued in the capital markets. Financial distress could either dent investor’s demand for debt securities or make issuers reluctant to issue such securities. Various lawsuits have also hampered the credibility of the company and adversely impacted its financial results.”

Silver Spring Networks (NYSE:SSNI) was downgraded by analysts at Guggenheim from a buy rating to a neutral rating.

Teradyne (NYSE:TER) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Teradyne is a leading provider of automated test equipment. On a year-to-date basis, the stock has outperformed the industry it belongs to. Also, Teradyne’s second quarter results surpassed the Zacks Consensus Estimate on earnings and revenue. A recovery in the core semiconductor business (processors, MCUs and power management), long-term opportunities in the high-growth wireless test market, growing memory market exposure, strong product lineup, lean cost structure and strong balance sheet are positives. Given the popularity of its products, the Universal Robots acquisition and the continuous design win momentum; the company is optimistic long-term prospects. However, weakness in the wireless test market could be a concern in the near term.”

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