Investment Analysts’ Downgrades for October, 24th (AET, AMAG, AMIGY, AXL, BSFT, CFX, EDU, EGO, EVHC, F)
Aetna (NYSE:AET) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Aetna’s shares outperformed in line with the industry year to date. We expect the company to derive long-term growth from its Government business. Cost-reduction initiatives and growing ACO collaborations pave the way for long-term growth. A strong balance sheet is another positive. Its International expansion is also perceived as an opportunity in the face of increased regulation in the U.S. Following strong second-quarter results, Aetna rasied its earnings guidance which cements investors' confidence in the company. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 6.3% upward over the last 90 days. Aetna has, however, been incurring losses in its public exchange business and has been exiting exchanges to avoid losses from this business. Furthermore, its membership growth remains under pressure. Increasing medical benefit ratios are also likely to hurt margins.”
AMAG Pharmaceuticals (NASDAQ:AMAG) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “AMAG entered into an agreement with Takeda in 2014 to terminate their licensing deal for Feraheme in ex-U.S. territories including Europe, Canada and Switzerland apart from certain other geographic territories. This was a major setback for the company. AMAG’s shares have underperformed the industry year to date. Loss estimates have been stable ahead of the Q3 earnings results. However, the company is making its investments in the launch of Intrarosa, expansion of the label for Feraheme, development work to support the bremelanotide NDA and expected approval and launch of the Makena subcutaneous auto-injector (SQ) .In June 2017, the FDA accepted the sNDA for the Makena subcutaneous auto-injector. The agency has established a Prescription Drug User Fee Act (PDUFA) target action date of Feb 14, 2018. AMAG is focused on expanding the Makena’s label further in a bid to increase its market share.”
Admiral Group (OTC:AMIGY) was downgraded by analysts at J P Morgan Chase & Co from an overweight rating to a neutral rating.
American Axle & Manufacturing Holdings (NYSE:AXL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Zacks Consensus Estimate for American Axle’s quarterly earnings has remained unchanged over the past seven days. The company is anticipated to achieve record sales and profits this year. Also, the company’s efforts at diversifying its customer base are generating incremental revenues. Moreover, American Axle is undergoing significant expansion of its manufacturing footprint, particularly in Asia, where growing demand for vehicles is enhancing production volumes. However, the company is facing pressure from Original Equipment Manufacturers to lower product prices, which is hampering its financial condition. Also, its high dependence on few automakers makes it vulnerable to production cuts by these companies. Also in the last six months, its shares have underperformed the industry it belongs to.”
BroadSoft (NASDAQ:BSFT) was downgraded by analysts at Dougherty & Co from a buy rating to a neutral rating.
Colfax Corporation (NYSE:CFX) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “In the last three months, Colfax's shares underperformed the industry. We believe that geographical diversification has exposed the company to risks arising from adverse movements in foreign currencies and geo-political issues. Also, as it has to procure raw materials from suppliers both in the United States and international markets, it remains vulnerable to price fluctuations associated with policies and issues of the source countries. Lower level of industrial activities and difficult financial conditions in countries where the company operates, will adversely hurt its sales, earnings and cash flow. Moreover, it encounters active competition from players operating in the same line of businesses. Over the last 60 days, earnings estimates on the stock decreased for both 2017 and 2018.”
New Oriental Education & Technology Group (NYSE:EDU) was downgraded by analysts at CLSA from an outperform rating to an underperform rating.
Eldorado Gold Corporation (NYSE:EGO) (TSE:ELD) was downgraded by analysts at TD Securities from a buy rating to a hold rating. TD Securities currently has $2.00 price target on the stock, down from their previous price target of $4.25.
Envision Healthcare Corporation (NYSE:EVHC) was downgraded by analysts at Zacks Investment Research from a hold rating to a strong sell rating. According to Zacks, “Envision Healthcare suffers from high indebtedness, which has led to a spike in interest expense. Also, its operating expense is on rise. The company’s shares have underperformed the industry, year to date. It has also trimmed its 2017 earnings guidance twice so far this year which is worrying. Nevertheless, its differentiated leadership position in each its clinical network solutions provides a pathway to growth. Substantial acquisition activity expected to continue in 2017 will aid performance in the Physician service segment. Envision Healthcare announced organizational changes, which include a realignment of its top brass and a stock repurchase plan. The new leadership is expected to steer the company to new heights.”
Ford Motor (NYSE:F) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “The Zacks Consensus Estimate of Ford’s yearly earnings estimate has been going down of late. The company has been making frequent vehicles recalls to fix safety issues, which is adding to its expenses and is also reducing consumers’ confidence in a brand. It has been making quite a large amount of investment for the development of next generation cars, which can be beneficial in the long-run but, are likely to create short-term strains on the financials of the company. Moreover, year to date, Ford’s shares have underperformed in the industry it belongs.”
First National Financial Corp (TSE:FN) was downgraded by analysts at National Bank Financial from a sector perform rating to an underperform rating. The firm currently has C$25.00 target price on the stock, up from their previous target price of C$23.50.
Fujifilm Holdings Corp. (OTCMKTS:FUJIY) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Over the last three months, Fujifilm’s shares have outperformed the industry. The company reported robust results for first-quarter fiscal 2018. Earnings per American Depositary Receipt (“ADR”) came in at 90 cents, comfortably surpassing the Zacks Consensus Estimate of 21 cents. The company is poised to boost its financials on the back of new business contract wins, strategic Wako acquisition and greater operational efficacy. However, the tepid Document Solutions business remains a major cause of concern. Moreover, headwinds such as adverse foreign currency translation or stiff industry rivalry are expected to thwart the company’s performance in the near term. Over the last 60 days, Zacks Consensus Estimate for the stock has remained unchanged for both fiscal 2018 and 2019.”
Gerdau (NYSE:GGB) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “In the last six months, 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. Also, the stock is currently overvalued compared with the industry.”
GlaxoSmithKline PLC (NYSE:GSK) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Glaxo should continue to see strong performance in its Pharmaceuticals and Vaccines units. We are positive on the company’s efforts to develop its pipeline. Performance of new products has been encouraging. Recent FDA approval for two key pipeline candidates – Shingrix and Trelegy Ellipta – was a major boost. However, persistent challenges like stiff competition, genericization and pricing pressure have been impacting the company’s performance. In particular, pricing dynamics and competitive pressure are hurting sales of its top-selling drug Advair. Meanwhile, Advair is expected to face generic competition next year, which will further hurt sales. The slowdown in sales of the Consumer Healthcare unit this year is also a concern. Glaxo’s shares have underperformed the industry this year so far. Estimate movement has been mixed ahead of Q3 earnings release. The company has a positive record of earnings surprises in recent quarters.”
Huntington Ingalls Industries (NYSE:HII) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Being the nation’s largest military shipbuilder, Huntington Ingalls continues to boast stable financials and regular cash returns to shareholders. It is the sole designer and manufacturer of nuclear powered aircraft carriers in the U.S., with more than 70% of the active U.S. Navy fleet consisting of Huntington Ingalls ships. Its solid capital resources fund its operations, which allow the company to consistently generate improved cash flow from operating activities. It also outperformed the broader industry in past one year. However, Huntington Ingalls' limited commercial exposure and high dependence on the government might be a heavy blow to margins amid uncertain U.S. defense spending trends. Moreover, weakness in Newport News unit weigh heavily on the company's overall results.”
Intuit (NASDAQ:INTU) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Intuit has outperformed the industry over the past one year. We are optimistic on Intuit’s growing SMB exposure and believe that its strategic acquisitions will fortify this segment. Due to the continuously emerging new technologies and current market trends, cloud-based business and financial software solutions have been gaining momentum. As Intuit is already a market leader in this segment, the increased adoption helped it gain new customers, in turn, boosting the overall performance. Moreover, the company’s strategy of shifting its business to cloud-based subscription model will help generate more stable revenues over the long run. Nonetheless, stiff competition from payroll solution providers such as Paycom Software Inc. and Automatic Data Processing is a concern, especially considering the seasonality of Intuit’s tax business and the ongoing economic uncertainty.”
JA Solar Holdings, Co. (NASDAQ:JASO) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “JA Solar stands to gain from its geographically advantageous position in spite of China’s trade war with the United States. In fact, the company’s focus on widening its geographical customer base has resulted in incremental international sales. Again, the company’s shift in focus to solar modules from cells is paying off. Moreover, Trump's walk out from the Paris Climate agreement will boost JA Solar's scope. The company's share price outperformed the broader industry in the last year. However, headwinds like anti-dumping policies by the United States and stiff competition in China, might be a serious threat to its profit.”
Kirkland’s (NASDAQ:KIRK) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Kirkland's shares are improving significantly in the last three months in comparison to the industry. This is the result of narrower-than-expected loss and better-than-expected revenues in second-quarter fiscal 2017. In addition, Kirkland's recorded net sales growth of 7.0% due to increase in store count as well as comps growth. Sales were also driven by improved trends in existing stores, new store productivity and continued momentum in online activities. The growth in e-Commerce revenues were backed by a strong increase in website traffic, conversion and average order value. Despite overall strong sales growth, the company continues to face sluggish sales in Texas and has also been witnessing decline in traffic. Further, lower merchandise margins and higher supply chains costs are denting margins.”
MCAN Mortgage (TSE:MKP) was downgraded by analysts at National Bank Financial from a sector perform rating to an underperform rating. National Bank Financial currently has C$15.50 price target on the stock.
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 continues to bother. Moreover, its weak investment portfolio has been raising concern over past many quarters. Being a property and casualty insurer, its continuous exposure to catastrophe losses remains a major headwind as it significantly weighs on the margins. The company's bottom line also suffers from continuously rising level of expenses. RenaissanceRe will release its third-quarter results after the market closes on Oct 31, 2017.”
Southern Company (The) (NYSE:SO) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Following continued timing and cost overrun issues over two large construction projects – Vogtle and Kemper – we are recalibrating our investment thesis on Southern Company to Sell from Hold. Despite Toshiba’s financial guarantee to help complete the half-finished Vogtle nuclear plant expansion in Georgia, doubts remain about the $20 billion initiative that has gone well over budget and is years behind schedule. Southern is also facing challenges to place its Kemper, Mississippi project in service, which suffered yet another setback with the suspension of all coal gasification operations amid additional cost burden. We believe the financial stress from these projects, together with Southern’s hefty expenses to comply with environmental controls/regulations will cause an underperformance in the utility's shares relative to the market as well as the sector in the coming quarters.”
Taubman Centers (NYSE:TCO) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of Taubman Centers have underperformed its industry, year to date. The Zacks Consensus Estimate for third-quarter and current-year funds from operations (FFO) per share remained unchanged in a month’s time. Notably, with a rapid shift in customers’ shopping preferences and growing online purchases, mall traffic continues to suffer. These have made retailers reconsider their footprint and eventually opt for store closures. In addition, retailers that are not being able to cope with competition are filing bankruptcies. Also, hike in interest rates and unfavorable foreign currency movements increase its risks. Nevertheless, the company’s focus on implementing cost-saving initiatives might support FFO, going forward.”
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