Equities Research Analysts’ Downgrades for October, 4th (ACTA, ANSS, ARW, CHD, CTXS, D.UN, DNB, FII, FISV, GHDX)
Actua Corporation (NASDAQ:ACTA) was downgraded by analysts at Barrington Research from an outperform rating to a market perform rating.
ANSYS (NASDAQ:ANSS) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “ANSYS is a dominant player in the high-end design simulation software market. Notably, the stock has outperformed the industry on a year-to-date basis. We believe that robust product portfolio, expanding total addressable market (due to rising complexity in manufacturing IoT related products), improving enterprise penetration, collaborations with leading vendors and strong balance sheet will aid the stock to sustain momentum. Further, the ongoing restructuring and investments on product development along with sales execution are positives, in our view. However, declining perpetual license revenues will hurt top-line growth at least in the near term. Moreover, weakness in Europe and adverse foreign currency exchange rates are other major concerns.”
Arrow Electronics (NYSE:ARW) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Electronic component distributor, Arrow Electronics have outperformed the industry over the last one year. Original equipment manufacturers, contract manufacturers and commercial customers are selecting Arrow’s strong distribution channels for marketing their products, which is driving its revenues. We believe that the company’s core strength in providing best-in-class services and easy-to-acquire technologies should drive growth in the long run. Moreover, the company has secured a significant market share through a broad portfolio of products and services, and continued efforts to maximize consumer satisfaction. Additionally, incremental sales from strategic acquisitions are expected to boost the top line. However, an uncertain economic environment, high debt burden and competition remain the concerns.”
Church & Dwight (NYSE:CHD) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of Church & Dwight have declined and underperformed the industry in the past six months. Though the company's sales gained from the acquisitions in the second quarter 2017, earnings suffered due to higher promotional expenses. Additionally, higher input costs and promotional spending have been hurting the company’s margins, and going forward, management expects modestly inflationary environment. Nevertheless, we believe that its stable portfolio of value and premium products, along with robust sales growth and expense management is likely to boost the company’s performance. Also, the recent acquisitions of Water Pik, Agro BioSciences, VIVISCAL business and ANUSOL and RECTINOL brands are expected to add further strength to the company’s sturdy portfolio and improve business. However, pricing pressures, rising commodity costs, stiff competition and weak consumer demand in many of its markets remain its headwinds.”
Citrix Systems (NASDAQ:CTXS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of Citrix Systems have underperformed its industry on a year-to-date basis due to multiple headwinds. High costs have hurt the bottom line for quite some time and the third quarter is likely to be no different. The company has issued lackluster views for third quarter of 2017. The company expects expects net revenues in the band of $685-$695 million. Earnings per share (on an adjusted basis) are projected in the range of $1.02-$1.05. Both figures compare unfavorably to those reported a year-ago. Declining revenues from products and licenses also pose a severe challenge to the company. We are, however, impressed by the company's efforts to expand its product portfolio. Its strong customer base is an added positive.”
Dream Office Real Estate Investment Trst (TSE:D.UN) was downgraded by analysts at National Bank Financial from an outperform rating to a sector perform rating. The firm currently has C$22.00 target price on the stock.
Dun & Bradstreet Corporation (The) (NYSE:DNB) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “We continue to expect that Dun & Bradstreet 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. Plus, cost savings resulted in a strong operating margin performance in the last reported quarter. Management has now raised the lower end of its operating margin growth for the year. 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.”
Federated Investors (NYSE:FII) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Federated have underperformed the industry over the last six months. Yet, the company boasts an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate for earnings in all the trailing four quarters. Rise in interest rates and lower fee waivers are expected to aid top-line performance, moving ahead. Also, Federated’s inorganic growth strategies encourage us. Further, the company’s active involvement in capital deployment activities continues to inspire investors’ confidence. However, mounting expenses are a major concern. Also, strict regulations for investment management companies remain a headwind.”
Fiserv (NASDAQ:FISV) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Fiserv has underperformed the industry on a year-to-date basis. Fiserv’s core banking products and services are part of a highly competitive market. Given the attractive prospects in the financial services market, there are always new entrants who seek to leverage on shifts in technology or product innovation to attract customers. Stricter regulations in the banking/financial services industry also pose concern. Further, the company’s highly leveraged balance sheet will continue to weigh on its profitability. However, product-oriented acquisitions are leading to a steady flow of customers and investment in digital-oriented technologies is improving its competitiveness. The company is also expected to benefit from its five year cost cutting program.”
Genomic Health (NASDAQ:GHDX) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Over the past three months, Genomic Health has been trading below the broader industry. Also, the company exited the last reported quarter with wider-than-expected loss. Moreover, the company’s rising operating losses continue to be a concern. Its sole reliance on profitability of Breast Oncotype DX test is another concern. On a positive note, the company continues to experience strong growth in its cancer scores. Moreover, the company recently announced expanded Medicare coverage of the Oncotype DX Genomic Prostate Score test. Recently, the company presented favorable results related to its Oncotype DX tests. The company is also witnessing healthy progress with regard to establishing coverage of its breast cancer test. We are also encouraged by declining cost of sales combined with gross margin expansion, on account of higher revenue growth.”
KBR (NYSE:KBR) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Over the past one year, KBR’s shares have underperformed the industry’s average gain significantly. Prolonged softness in the Engineering & Construction sector, coupled with volatility in oil and gas prices, may pose a threat to KBR's growth. Sluggish activities in several projects approaching completion add to the company’s concerns. Moreover, long-cycle nature of the contracts, volatility in material and equipment pricing and stiff competition pose as major concerns. Also, the company continues to incur high general and administrative expenses which are about $4-$5 million above the normative level. However, on the flip side, the company’s Government Services business is experiencing stellar growth and the company remains confident that recent acquisitions will continue to accelerate growth momentum of this business.”
Kansas City Southern (NYSE:KSU) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Kansas City Southern's shares comfortably outperformed the industry it belongs to in the last six months. The improving scenario with respect to coal is aiding Kansas City Southern significantly. We are also bullish on the company's efforts to reward shareholders dividend payments and buybacks. In line with this objective, the company recently hiked its quarterly dividend in excess of 9%. Moreover, its board cleared a new share repurchase program worth $800 million. Sluggish intermodal revenues and high fuel costs, however, remain concerns. Moreover, high fuel costs might limit bottom line growth going forward.”
Lions Gate Entertainment Corp. (NYSE:LGF) was downgraded by analysts at Rosenblatt Securities from a buy rating to a neutral rating.
Microchip Technology (NASDAQ:MCHP) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Microchip is one of the better-positioned companies in the semiconductor industry based on its product strength. The stock has outperformed the industry on a year-to-date basis. The company is benefiting from the addition of Atmel’s product portfolio, which it acquired in Apr 2016. Microchip reaffirmed its guidance for the second quarter and expects robust demand for its products to drive growth. We believe the company’s initiatives to bridge the gap between lead time, inventory and backlog will benefit earnings and revenues in the near to middle term. Additionally, expanding product portfolio driven by new launches will continue to increase customer base. Moreover, acquisitions like that of Atmel are likely to expand its geographical presence, augment customer base, extend product portfolio and supplement operational excellence.”
MGIC Investment Corporation (NYSE:MTG) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of MGIC Investment have outperformed the industry, year to date. The company also seen its 2017 and 2018 estimates moving north over the last 60 days. MGIC Investment remains well poised to deliver improved earnings banking on declining delinquency, lower claims payments and improving housing market. The company expects to write about the same amount of new business as 2016, and also estimates insurance in force to improve in 2017. This apart, the company remains focused in enhancing shareholders’ value and is a major contributor to housing finance policy. Also, positive credit trends, low expense ratio are tailwinds. However, a competitive environment and pressure to maintain capital at required level will reduce the company’s capital flexibility.”
Pengrowth Energy Corp (TSE:PGF) (NYSE:PGH) was downgraded by analysts at Canaccord Genuity from a hold rating to a sell rating. They currently have C$0.90 price target on the stock, up from their previous price target of C$0.85.
Rite Aid Corporation (NYSE:RAD) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Rite Aid, which has lagged the broader industry year to date, has had quite an eventful ride of late. The company suffered a huge setback in June, when its merger with Walgreens was terminated. Thereafter, both the entities entered into a new deal, per which Walgreens will buy certain Rite Aid stores and related assets. However, this contract was also amended recently and finally won the FTC’s clearance. Rite Aid posted dismal second quarter-fiscal 2017 results nearly a week after receiving FTC’s nod. The company reported a loss that compared unfavorably with the year-ago earnings figure. Also, sales remained soft, and lower pharmacy reimbursement rates continued to hurt EBITDA margins. Nonetheless, management intends to use funds from the aforementioned deal to reduce debt and improve financial leverage. Further, the pact should make Rite Aid a smaller, yet stronger independent firm with solid control in key markets.”
Radius Health (NASDAQ:RDUS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “The FDA’s approval of Radius Health’s lead candidate, Tymlos, is a significant boost for the company. The company is moving ahead with its plans in contracting with managed care organizations with access to over 133 million covered lives across Commercial and Medicare Part D plans. Although the osteoporosis market in the U.S. has a great potential as approximately 1.4 million postmenopausal women in the U.S. experience an osteoporotic fracture each year, Tymlos is expected to face significant competition from Eli Lilly &Co's Forteo and Amgen’s Prolia. Further, the company suffered a setback when the CHMP issued a second Day-180 List of Outstanding Issues to its MAA for Eladynos in Europe. While Radius' efforts in developing its pipeline are encouraging, we note that most of its candidates are in their early or mid stages of development. The company’ shares have underperformed the industry in the year so far.”
Regeneron Pharmaceuticals (NASDAQ:REGN) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Regeneron’s key growth driver, Eylea, continues to drive revenues on market share gains and the company is expanding the drug's label for additional indications. The FDA’s approval of Dupixent for atopic dermatitis was a major boost to the company’s portfolio and the company is working to expand its label. The drug was recently approved in Europe and we expect sales to get a boost from geographic expansion. Further, the approval of Kevzara (sarilumab) for the treatment of moderately-to-severely active rheumatoid arthritis both in the United States and Europe has boosted the company’s portfolio. Shares have outperformed the industry so far in 2017. We expect the new drug approvals and label expansion of Eylea will continue to boost Regeneron’s performance. However, sales of Praluent have failed to impress.”
RenaissanceRe Holdings (NYSE:RNR) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of RenaissanceRe have underperformed the industry year to date. The company’s exposure to pricing pressures bothers as it has been affecting top-line growth over past many quarters. The company’s weak investment portfolio also raises concern. Being a property and casualty insurer, its continuous exposure to catastrophe losses remains a major headwind. The stock has seen the Zacks Consensus Estimate for 2018 being revised downward in the last 90 days. Neverthless its top line growth remains impressive. The company has been undertaking divestitures to streamline its operations by getting rid of low-return high-risk businesses which should drive long term growth.”
Rockwell Automation (NYSE:ROK) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Backed by an improving macro environment, Rockwell Automation expects adjusted earnings per share guidance to lie between $6.60 and $6.80 and projects sales to be around $6.3 billion in fiscal 2017. The company will benefit from the consistent growth in the consumer and transportation verticals and expects heavy industries to grow in 2017 despite the prevailing softness in oil and gas and mining. Further, increased investment, acquisitions, product launches and share repurchases will support growth. However, Rockwell Automation's results will be hurt by foreign currency headwinds and lack of higher margin projects. Weak commodity prices and softness in oil and gas and mining remain headwinds. Its shares have outperformed the industry in the past year.”
Sprint Corporation (NYSE:S) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Sprint is on track with its network modernization and integration efforts, to fortify its position in the wireless industry. Sprint’s prepaid subsidiary has extended its unlimited offerings to its existing iPhone owners and has also inked deal with Apple to relaunch itself as an exclusive iPhone carrier. Sprint also offers attractive unlimited data plans to lure customers from rivals. We believe these efforts have driven the huge wireless subscribers. Sprint unveiled its Sprint MultiLine solution which allows businesses to add a company-owned number to their employees' personal phones for better businesses. For full-year 2017, Sprint has raised its outlook. Over the past one month, the stock price underperformed its industry. However, high cash burn from promotional offers and discounts, debt-laden balance sheet and decreasing cash flow have led to losses for Sprint. Further, Sprint operates in a highly competitive wireless market.”
Skechers USA (NYSE:SKX) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “After posting earnings beat in first-quarter 2017, Skechers succumbed to a negative earnings surprise in the second quarter. Although the company's top line improved, it failed to act as a savior for the bottom line that fell 20.8% due to increased operating expenses and higher effective tax rate. Investors remain apprehensive about Skechers’ bottom line that has been declining for five straight quarters and also missed the Zacks Consensus Estimate four times in the said period. Further, soft third quarter earnings projection also raises concern. On the contrary, net sales beat the consensus mark for the third quarter in row and management also provided an encouraging outlook for the same. We believe greater emphasis on new line of products, cost containment efforts, inventory management and global distribution platform may help cushion the stock that has underperformed the industry in the past three months. Estimates are stable lately.”
Sunesis Pharmaceuticals (NASDAQ:SNSS) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Sunesis Pharmaceuticals is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule therapeutics for oncology and other serious diseases. It has built a broad product candidate portfolio through internal discovery and in-licensing of novel cancer therapeutics. It is advancing its product candidates through in-house research and development efforts and strategic collaborations with leading pharmaceutical and biopharmaceutical companies. “
Spectrum Pharmaceuticals (NASDAQ:SPPI) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Spectrum's low product sales remain a cause of concern. Moreover, gaining market share is challenging for Spectrum as it competes with several companies with greater financial strength. However, the company’s lead pipeline candidate, Rolontis, is progressing well. A BLA is expected in 2018 and a potential approval will help the company compete better. However, Spectrum’s efforts to gain approval for Qapzola (bladder cancer) in the U.S. suffered a setback with the FDA issuing a complete response letter (CRL) in Nov 2016. Additional issues on the regulatory/development front could affect the stock. Also, low product sales remain a cause of concern. On the flip side, with the company entering into out-licensing agreements for a number of products, it will now be able to focus on Evomela and the development of its pipeline candidates. Spectrum’s shares have significantly outperformed the industry so far this year.”
SPX Corp (NASDAQ:SPXC) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “SPX Corporation is a global supplier of infrastructure equipment. The company, SPX supplies infrastructure equipment serving the heating and ventilation (HVAC), detection and measurement, power transmission and generation, and industrial markets in the United States, China, South Africa, the United Kingdom, and internationally. It operates through three segments: HVAC, Detection and Measurement, and Engineered Solutions. The HVAC solutions offered by its businesses include package cooling towers, residential and commercial boilers, heating and ventilation products. Its detection and measurement product lines encompass underground pipe and cable locators, and inspection equipment. Within its power platform, it is a manufacturer of medium and large power transformers, as well as equipment for various types of power plant, including cooling equipment, heat exchangers and pollution control systems. SPX Corporation is headquartered in Charlotte, North Carolina. “
Square (NYSE:SQ) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Square has outperformed the industry on a year-to-date basis. The company’s comprehensive commerce ecosystem, accelerated business growth and focus on integration, automation, and platform are key catalysts. The company's plan to open a wholly-owned brick-and-mortar bank is positive in our view. Meanwhile, automation is enabling the company to increase reach of financial system to more people, scale up its own operations and help sellers with advanced CRM tools. Moreover, the company displays consistent business growth through balancing investment and margin expansion. However, it’s currently a loss making enterprise, which doesn't augur with investors. Moreover, vulnerability to intense competition and changing technology, industry standards and seller and buyer needs pose signficant challenges.”
Stericycle (NASDAQ:SRCL) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Stericycle’s acquisition binge is leading to higher overheads and integration-related expenses, which are weighing on margins. Furthermore, many acquisitions have lower gross margins and higher selling, general and administrative expenses that often negate the positives. In addition, 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 also continue to be a headwind for Stericycle. Moreover, a challenging macroeconomic environment and volatility in foreign exchange are affecting the profitability. Evolving rules and regulations impose new compliance requirements and further erode margins. Stericycle underperformed the industry year to date. However, Stericycle has a competitive edge with the largest collection and transportation network in the industry, which allows it to compete effectively on both service and price perspectives.”
Stamps.com (NASDAQ:STMP) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Stamps.com provides easy, convenient and cost-effective Internet -based services for mailing or shipping letters, packages or parcels anywhere in the United States and at anytime. Their core mailing and shipping services are designed to allow individual consumers or employees of small businesses or larger enterprises to select a carrier, print US postage or shipping labels from multiple carriers, schedule a pick-up, track a package and apply enterprise-wide business rules to manage and account for mailing and shipping costs. “
Sterling Construction (NASDAQ:STRL) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Sterling Construction Company, Inc. is a holding company which has historically operated as a wholesale distributor to the automotive aftermarket and construction through two subsidiaries, Steel City Products and Dowling’s Fleet Service. “
Summit Materials (NYSE:SUM) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Summit Materials, Inc. is a construction material company. The company supplies aggregates, cement, ready-mix concrete and asphalt primarily in the United States and western Canada. Summit Materials, Inc. is headquartered in Denver, Colorado. “
Summer Infant (NASDAQ:SUMR) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Based in Woonsocket, Rhode Island, SUMMER INFANT, INC. is a designer, marketer and distributor of branded durable juvenile health, safety and wellness products (for ages upto three years), which are sold principally to large U.S. retailers. The Company currently sells proprietary products in a number of different categories, including nursery audio/video monitors, safety gates, durable bath products, bed rails, infant thermometers and related nursery, health and safety products, booster and potty seats, soft goods, bouncers, strollers, travel accessories, highchairs and swings. “
Solar Senior Capital (NASDAQ:SUNS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Solar Senior Capital Ltd. operates as a business development company under the Investment Company Act of 1940. The Company invests primarily in senior secured loans, including first lien, unitranche and second lien debt instruments, made to private middle-market companies whose debt is rated below investment grade. “
Sunworks (NASDAQ:SUNW) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Sunworks, Inc. provides solar power solutions. The company focused on the design, installation and management of solar power systems for commercial, agricultural and residential customers. Sunworks, Inc., formerly known as Solar3D, Inc., is based in Roseville, United States. “
Teledyne Technologies (NYSE:TDY) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Teledyne Technologies Incorporated provides instrumentation, digital imaging, aerospace and defense electronics in the United States, Canada and internationally. The Company’s segments include Instrumentation, Digital Imaging, Aerospace and Defense Electronics, and Engineered Systems. Instrumentation segment provides monitoring and control instruments for marine, environmental, industrial and other applications, as well as electronic test and measurement equipment. Digital Imaging segment includes sensors, cameras and systems, within the visible, infrared, ultraviolet and X-ray spectra. Aerospace and Defense Electronics segment provides electronic components and subsystems and communications products, including defense electronics. Engineered Systems segment provides systems engineering and integration and technology development, as well as manufacturing solutions. The company markets and sells its products and services through sales forces, third-party distributors, and commissioned sales representatives. “
Telecom Argentina Stet – France Telecom (NYSE:TEO) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “TELECOM ARGENTINA holds a license to provide basic telephone service and fixes telecommunications links in the northern region of the Argentine Republic. The Company contributes to the country´s economic and social development by means of incorporating the latest technological advances achieved to-date in the field of telecommunications world-wide. “
Teleflex (NYSE:TFX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Teleflex Inc. designs, develops, manufactures, and supplies single-use medical devices for common diagnostic and therapeutic procedures in critical care and surgical applications worldwide. The company offers its products to hospitals and healthcare providers through its direct sales force and distributors. Teleflex was founded in 1943 and is headquartered in Wayne, Pennsylvania. “
TriNet Group (NYSE:TNET) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “TriNet Group, Inc. is a provider of a comprehensive human resources solution for small to medium-sized businesses. It offers payroll, tax administration, risk protection, performance management, compensation consulting, and employee benefit plans. The Company serves banking and financial services, biotech and life sciences, technology, non-profits, professional services, venture capital, and advertising and marketing industries. TriNet Group, Inc. is headquartered in San Leandro, California. “
Tullow Oil (OTC:TUWLF) was downgraded by analysts at Jefferies Group LLC from a hold rating to an underperform rating.
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