Equities Research Analysts’ Downgrades for October, 12th (ABT, ACHC, APH, ARNC, ENDP, ERJ, GS, HES, IPG, IVZ)
Abbott Laboratories (NYSE:ABT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Over the past three months, Abbott has been trading above the broader industry. Abbott’s second-quarter 2017 performance was promising. The raised guidance is indicative of brighter prospects. In fact, the guidance raise was backed by the company’s expectations to gain more synergies from the St. Jude merger. Overall, we look forward to Abbott’s plans to expand in core therapeutic areas. Recently, the company's FreeStyle Libre Flash received the FDA approval. Also, the company has received FDA approval for magnetic resonance-conditional labeling for its Ellipse implantable cardioverter defibrillator recently. On the flip side, Abbott’s sluggish pediatric business in China continues to dent growth. Management is also concerned about the economic problems in Venezuela that are expected to remain unresolved for some time. Meanwhile, we await the closing of the Alere buyout, slated for close on Oct 3.”
Acadia Healthcare (NASDAQ:ACHC) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of Acadia Healthcare outperformed the industry year to date. The company suffers from high debt, escalating interest expenses and foreign exchange fluctuation. Substantial integration risks associated with its frequent acquisitions are major headwinds. The company is, however, well positioned for long-term growth on the back of its inorganic strategies. Its latest Priory acquisition has substantially enhanced its asset base, making it the largest independent provider of mental health services in the U.K. Its mixed product portfolio has helped in intensifying business risk. The company’s strong balance sheet, with increasing cash flow is another positive.”
Aphria (TSE:APH) was downgraded by analysts at Canaccord Genuity from a speculative buy rating to a hold rating. They currently have C$8.25 price target on the stock, up from their previous price target of C$7.00.
Arconic (NASDAQ:ARNC) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Arconic has outperformed the industry it belongs to year to date. The company should gain from its cost-cutting and productivity actions in 2017. Arconic is also seeing strong demand trends in the automotive market. The company is well placed to capture the growing demand for aluminum sheet stemming from the transition of the North American auto industry to lightweighting. Major contract wins in aerospace are also expected to support its results. However, Arconic faces pricing pressure and weakness in certain end-markets including the heavy-duty truck and trailer market in North America. We are also concerned about its high balance sheet leverage.”
Endo International PLC (NASDAQ:ENDP) (TSE:ENL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Endo’s top line should continue to benefit from robust performance of Xiaflex and sterile injectables. Endo has centralized and streamlined its supply chain, quality and compliance organization in order to create a more cohesive and efficient structure. Endo divested its non-core assets such as Belbuca and restructured its pain franchise to focus particularly on specialty branded business. This restructuring is intended to better match manufacturing capacity to projected future demand. However, headwinds in the form of declining generics base business and the legacy branded pain franchise remain. In a major setback, Endo withdrew opioid pain medication Opana ER (oxymorphone hydrochloride extended release) from the market following FDA’s request in June. The drug represented 4% of total 2016 revenues. Shares have significantly underperformed the industry in the last six months.”
Embraer-Empresa Brasileira de Aeronautica (NYSE:ERJ) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Embraer operates in a highly competitive commercial aircraft manufacturing industry, which requires it to invest heavily in technology and performance enhancement to meet growing demand in this industry. It is also hurt by the weakening Brazilian real against the U.S. dollar. The soft Defense and Security business is also a headwind. Moreover, Embraer’s share price underperformed the industry’s gain in last year. On the brighter note, The company continues to lead the 70- to 130-seat commercial jet market. Moreover, Embraer sees more room for growth given the rising air traffic.”
Gluskin Sheff + Associates (TSE:GS) was downgraded by analysts at CIBC from an outperform rating to a neutral rating. CIBC currently has C$18.00 target price on the stock, down from their previous target price of C$21.50.
Hess Corporation (NYSE:HES) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Hess is among the leading producers of crude in the Bakken oil shale play in North Dakota. With crude prices improving from last year’s historical low marks after OPEC decided to curb output, we believe that Bakken play should contribute to the company’s production growth in the long run. The company’s effort to downsize its business will go a long way in the current market of volatile commodity prices. As part of this initiative, it is focusing more on the U.S. as it exits some countries due to size disadvantages. Hess has also increased its 2017 capital budget by about 18% year over year to $2.3 billion. Although increasing capital spending amid improving oil prices looks attractive, the history for ROC investment is not at all favorable for investors. Moreover, the company’s price chart reveals that shares have underperformed the broader industry, over the last three months.”
Interpublic Group of Companies, Inc. (The) (NYSE:IPG) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Interpublic’s digital capabilities, diversified business model and geographic reach offer a distinctive competitive advantage. The Group’s best-in-industry talent and tools are expected to offer optimal and affordable solutions, thus rendering an edge over its peers. The company’s efforts in reducing costs, continuous margin improvement, stronger balance sheet and better capital structure should improve its profitability. Interpublic also outperformed the industry year to date. However, constrained marketing budgets from big clients are expected to slow down organic growth and lead to account loss headwinds. Interpublic is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members post the Brexit referendum. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering its productivity.”
Invesco PLC (NYSE:IVZ) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Invesco’s shares have underperformed the industry so far this year. Yet, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters. With an aim to enhance its exchange-traded funds (ETF) operation, the company has inked a deal to acquire the ETF business of Guggenheim Partners LLC. Strong balance sheet position along with cost savings efforts, improving assets under management (AUM), diverse product offerings and alternative investment strategies should continue supporting growth. However, high-debt levels will likely hinder the company from procuring additional finance. Further, amortization of the company’s goodwill and intangible assets could have an adverse effect on its profitability.”
Kirkland Lake Gold (TSE:KL) was downgraded by analysts at Desjardins from a buy rating to a hold rating. Desjardins currently has C$20.00 price target on the stock, up from their previous price target of C$19.00.
Kirkland Lake Gold (TSE:KL) was downgraded by analysts at Scotiabank from an outperform rating to a sector perform rating. Scotiabank currently has C$17.50 target price on the stock, up from their previous target price of C$17.00.
Mullen Group (TSE:MTL) was downgraded by analysts at Scotiabank from an outperform rating to a sector perform rating. They currently have C$17.50 price target on the stock, down from their previous price target of C$18.00.
Netflix (NASDAQ:NFLX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Netflix is benefitting from its focus on original programming and international expansion. The strength in content portfolio will help it to gain more subscribers across the globe. Going ahead, the company expects to add 0.75 million subscribers in the domestic streaming segment and 3.65 million subscribers in the international segment in the third quarter. The company’s efforts to attract viewers through investing in more regional programming should also boost user base. Plus, the company expects to report profits from International operations in the third quarter. In the past one year, Netflix shares have vastly outperformed the industry. Estimates have remained stable ahead of the upcoming earnings release. But, investments in original/acquired content remain a drag on profitability.”
Phillips 66 (NYSE:PSX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “In terms of size, efficiency and strength, Phillips 66 is a leading player in each operational segment – refining, chemicals and midstream. The company is working on fortifying its position by streamlining its asset portfolio and investing extensively. We appreciate Phillips 66’s intention to allocate money to higher margin business units like Midstream and Chemicals instead of extensive refining and marketing operations. However, exponential increase in debt since the beginning of 2012 is a serious concern. As of the end of Jun 2017, the company’s balance sheet had only $2.2 billion of cash balance, while total debt of $10 billion is significantly higher.”
Pioneer Natural Resources (NYSE:PXD) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Pioneer remains focused on the Permian Basin, which is among the lucrative oil shale plays with less risk for operation. The region has been growing production even with reduced investment. The company’s low level of debt is also noteworthy. The company has an encouraging earnings surprise history. The oil & gas exploration and production firm was able to beat the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 46.74%. However, we are concerned about the high exploration expenses incurred during the second quarter of this year. Also, we see limited upside potential for shares, taking into consideration Pioneer’s sensitivity to gas/oil price volatility, as well as its drilling results, costs, geo-political risks and project timing delays.”
RLI Corp. (NYSE:RLI) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of RLI Corp underperformed the industry year to date. Exposure to catastrophe losses and escalating expenses raise concerns. Nonetheless, RLI Corp. boasts one of the industry’s most profitable P&C writers, with an impressive track record of underwriting profits in 37 of the past 41 years (particularly the last 21 years). Its ability to consistently increase dividend, announce special dividends, maintain combined ratios at favorable levels as well as a solid capital position are other positives. Continuous strategic investments to fortify Casualty segment bode well. The company also remains focused on strengthening its underwriting results and has decided to drop underperforming products in the property business. The company is set to release third quarter results on Oct 18. A Zacks Rank #4 combined with Earnings ESP of 0.00% makes prediction difficult.”
Shaw Communications (TSE:SJR.B) (NYSE:SJR) was downgraded by analysts at Scotiabank from an outperform rating to a sector perform rating. The firm currently has C$30.00 price target on the stock, down from their previous price target of C$32.00.
Sun Life Financial (NYSE:SLF) (TSE:SLF) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Sun Life’s aggressive re-designing of products, improved pricing, and focus on segments with higher growth and return complemented by market factor of reduced interest rate and market risk bode well. A strong balance sheet and effective capital deployment in growth initiatives will fuel earning, ROE and enhance shareholders’ value. The company continues to forge ahead with its digital and wealth initiatives in Canada, strong sales momentum in Asia, the scaling and integration of its U.S. operations, and strong long-term investment performance in asset management businesses. It targets medium-term EPS growth between 8% and 10%. The company also witnessed estimates moving north over the last 60 days. However, exposure to macro headwinds, regulatory uncertainties and low rates are headwinds. Also, shares of Sun Life Financial underperformed industry year to date.”
State Street Corporation (NYSE:STT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of State Street have outperformed the industry, over the past six months. This performance was supported by the company’s impressive earnings surprise history. It has surpassed the Zacks Consensus Estimate for earnings in all the trailing four quarters. Further, the company remains on track to improve efficiency through its multi-year restructuring plan. New business wins, synergies from GE Asset Management deal and easing margin pressure are likely to aid top-line growth. However, mounting expenses mainly owing to higher compensation and employee benefit costs are expected to hurt its profitability.”
Suncor Energy (NYSE:SU) (TSE:SU) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Suncor is one of the best positioned companies in the energy space given its access to abundant resources, rich operating experience and technical know-how. The company's steady dividend growth and share buyback plans have boosted the confidence of the investors. Further, SU's integrated business model reduces commodity price exposure within its upstream unit. We appreciate the improved full-year production forecast, significant generation of free cash flow and enhanced margins. However, poor operating history and frequent unplanned outages in its Syncrude project have led to an increase in the forecasted operating costs for the year. This might have a negative effect on Suncor’s potential earnings. As it is, extracting crude from the oil sands is a costly affair and as such, hampers profit margins. Therefore, we take a cautious stance on the prospects of the stock.”
Stornoway Diamond (TSE:SWY) was downgraded by analysts at Royal Bank Of Canada from a sector perform rating to an underperform rating. The firm currently has C$0.60 price target on the stock, down from their previous price target of C$0.90.
AT&T (NYSE:T) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “AT&T is planning to spread its 5G technology trials to three new cities – Waco, Kalamazoo, South Bend by 2017 end. Deployment of G. fast based services complements its high-speed broadband services. AT&T’s NetBond is gearing up to offer multiple cloud-to-cloud connections. The company is targeting customers by offering a combo of wireless and video services. Meanwhile, AT&T is reportedly exploring a strategic option to sell a major part of its Latin American pay-TV operations. AT&T has unveiled its own Android tablet, Primetime. The AT&T-Time Warner pending deal awaits nod from Brazil and United States. However, AT&T operates in a competitive and saturated wireless U.S. market. Losses in access lines, operating expenses, marketing costs associated with attractive discounts, regulatory norms and union issues are other major risks. Over the past three months, the stock grew 5.5% as against the industry's 6.2% gain.”
Textron (NYSE:TXT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Textron’s geographically diverse network of businesses negates any specific business risk. Its systematic inorganic growth strategy, along with its focus on strengthening international presence, will improve its growth trajectory. Also, Textron’s latest acquisition of Arctic Cat has boosted its position in the power-sports segment as well as utility vehicle market, courtesy of Arctic Cat’s established dealer network. In terms of product innovation, the company has started delivering its new ELiTE series lithium golf cars, of late. However, the company’s Aviation segment has been exhibiting weak performance due to lack of orders for a few of its products. Also Textron needs to invest substantially in order to sustain in a highly competitive market. Moreover, it underperformed its broader industry in last one year.”
Canopy Growth Corp (TSE:WEED) was downgraded by analysts at Canaccord Genuity from a hold rating to a sell rating. Canaccord Genuity currently has C$11.00 price target on the stock, up from their previous price target of C$9.50.
Zafgen (NASDAQ:ZFGN) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Zafgen, Inc. is a biopharmaceutical company. The Company develops therapeutics for patients suffering from obesity and obesity-related disorders. Its lead product candidate includes Beloranib, an injection that is in Phase II clinical trials for the treatment of various indications comprising obesity and hyperphagia in Prader-Willi Syndrome patients, craniopharyngioma-associated obesity, and severe obesity in the general population. Zafgen, Inc. is headquartered in Cambridge, Massachusetts. “
Receive News & Ratings for Abbott Laboratories Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Abbott Laboratories and related companies with MarketBeat.com's FREE daily email newsletter.