Research Analysts’ downgrades for Tuesday, October 24th:

DexCom (NASDAQ:DXCM) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Over the past year, DexCom has underperformed the broader industry in terms of price. We believe the company’s margins will continue to be under pressure in the coming quarters, owing to high product development costs and rising expenditures on research & development. Specifically, the company is expected to have lower margins on transmitter sales (in spite of the cost reduction initiatives). Additionally, cutthroat competition in the market for blood & glucose monitoring devices is a major headwind. On the brighter side, the glucose monitoring market represents significant commercial opportunity for DexCom. The company has also signed collaborative agreements with several companies, which should not only bring in cash, but also help expand its product portfolio. In this regard, DexCom's recent collaboration with leading wearables brand – Fitbit, desreves a mention.”

Express Scripts Holding (NASDAQ:ESRX) was downgraded by analysts at Zacks Investment Research from a buy rating to a sell rating. According to Zacks, “We are upbeat about Express Scripts’ pharmacy-benefits management long-term outlook. The projection takes the volatile healthcare market trends, inflation, patent expiration and lower industry utilization growth into consideration. Furthermore, Express Scripts should benefit from increased generic utilization, shift toward mail orders, strong specialty growth and an aging population. Branded drugs are becoming increasingly expensive due to double-digit brand inflation. Thus, continued rise in the price of specialty drugs and overwhelming regulatory burden is opening up considerable prospects for generics. However, over the past one year, Express Scripts has underperformed the broader industry in terms of price. Tough competition in the niche space and the persistent drug pricing issue are anticipated to affect the stock.”

Mohawk Industries (NYSE:MHK) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Mohawk’s shares have underperformed its industry in the last six months. Earnings estimate for the current quarter and year have also declined by 0.8% and 0.3% respectively, over the last 60 days. Currency translation is a major concern as Mohawk generates almost one-third of its revenues from customers outside the United States. Currency headwinds hurt sales in 2016 by $69 million and in 2015 by $490 million. Despite the fact that the unfavorable currency impact has lessened, and is expected to improve through the rest of 2017, the net impact of currency headwinds still remains significant. Though, the company is currently exploring numerous investment options for expansion, including Greenfield opportunities and acquisitions to broaden its geographic presence and product portfolio, we await better visibility.”

Dave & Buster’s Entertainment (NASDAQ:PLAY) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Dave & Buster's shares have outpaced the industry over the past year. Although estimates for the current-quarter have moved down, current-year earnings estimates have inched up over the last 60 days. The company’s unique business model with increased dependence on gaming, sets it apart and we expect the company’s entertainment business to carry the growth story forward. Consistent efforts to build sales and improve margins have also been key growth drivers. In this regard, continual opening of stores, menu innovation, launch of games, and the Fun American New Gourmet and beverage options are expected to continue boosting its top and bottom lines. In fact, the second quarter of fiscal 2017 marked the 11th successive earnings beat for the company. However, rising labor costs and a non-franchised business model might hurt profits, while a soft consumer spending environment in the U.S. restaurant space might impact comps.”

ResMed (NYSE:RMD) was downgraded by analysts at Zacks Investment Research from a buy rating to a sell rating. According to Zacks, “ResMed remains exposed to challenges like competitive bidding and reimbursement issues which are expected to continue to plague the stock. Rising operating expenses and a weak operating margin are other major woes for ResMed. We also remain skeptical on certain fundamental factors that may weigh down the stock. On a positive note, over the last six months ResMed has been trading above the broader industry. The company achieved strong global revenue growth over the past few quarters, led by sales of sleep devices, respiratory care devices, mask systems and software solutions. Also, Brightree has acted as a significant contributor to the company’s operating results through 2017. Notably, we believe, ResMed’s product launches and strategies to gain traction in the SDB market are expected to boost its performance further in the near term. Also, its recent published favorable study result on COPD buoys optimism.”

Telephone and Data Systems (NYSE:TDS) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Telephone and Data Systems is looking for lucrative opportunities to bring more fiber in order to better address services, both in its current footprint and adjacent areas. By leveraging on fiber, the telco is trying to respond to customers' growing TV and broadband service demand. The company continues to expand its business in the managed hosting and cloud service market. Launch of Shared Data plans at nominal prices should help the company gain consumers. The company's IPTV is also doing considerably well. It continues to experience strong smartphone demand at its wireless wing, U.S. Cellular. Over the past three months, the stock price grew 0.8% while the industry lost 1.2% in the same time period. However, intense competition, roaming revenues related woes, costs associated with network integration and construction of new cell sites, aggressive equipment pricing, wireless technology upgrades and spectrum licensing are other risks.”

UBS AG (NYSE:UBS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of UBS Group AG have underperformed the industry on NYSE in the last six months. The company’s profitability continues to be challenged by negative interest rates in the domestic economy and strict regulatory framework. Further, stretched valuation limits upside potential for the stock. However, UBS Group remains focused on building capital levels, global expansion and executing restructuring initiatives. Moreover, management anticipates to achieve CHF 2.1 billion in net cost reductions by the end of 2017.”

U.S. Bancorp (NYSE:USB) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of U.S. Bancorp have underperformed the industry, year to date. However, the company boasts an impressive earnings surprise history. The company has surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters. Notably, third-quarter 2017 earnings came in line with the Zacks Consensus Estimate. Easing margin pressure on rising rates and high net interest income was witnessed in the quarter. Average loans and deposits balances also escalated. However, mortgage banking revenues and higher provisions disappointed. We believe the company’s prospects will likely get support from its solid business model, core franchise and diverse revenue streams. However, escalating expenses and litigations remain key concerns. Also, stretched valuation underlines limited upside potential.”

United States Cellular Corporation (NYSE:USM) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “U.S. Cellular’s top priority involves subscriber additions and churn management. The company has taken a number of strategic moves like introduction of a new billing system, continuous rollout of 4G LTE, enhancement of LTE handsets, completion of various spectrum transactions and monetization of non-strategic assets, to achieve its target. U.S. Cellular is optimistic about the growing demand for smartphones, which enjoy significant market penetration, supporting growth in data revenues. However, we remain concerned about the company’s operation in an intensely competitive and consolidated wireless market. Further, costs associated with network integration and construction of cell sites, aggressive pricing by larger rivals and fall in service revenues act as major dampeners. Over the past three months, the stock price declined 3.7% as against the industry's gain of 0.1%.”

Visa (NYSE:V) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Visa have outperformed the industry, year to date. Numerous strategic acquisitions and alliances, technology upgrades and effective marketing have paved the way for the company's long-term growth. Visa is well poised to gain from the growing electronic payment processing and strong international business. A solid balance sheet position ensures effective capital deployment. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 1.8% upward over the last 60 days. However, higher client incentives and forex volatility are some near term headwinds”

Veeva Systems (NYSE:VEEV) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Veeva Systems outperformed the broader industry on a year-to-date basis, on the back of its splendid earnings surprise history. Notably, the company has delivered positive earnings surprise in all the past four quarters. Further, the company remains on track with its commercial cloud platform, which registered multiple contracts around the world. Veeva has also many core CRM projects on track with large pharma companies around the globe. The company has strengthened the recurring part of its revenue mix by marking significant growth in subscription revenues in the last quarter. Moreover, the new launches at the Veeva Vault and the Veeva Coomercial Cloud platforms are encouraging. However, intensifying competition, high operating expenses and a saturating lifesciences market are key concerns.”

Valmont Industries (NYSE:VMI) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Valmont's adjusted earnings for the third quarter missed the Zacks Consensus Estimate while sales beat expectations. Valmont trimmed its annual earnings guidance factoring in the impact of the disruptions caused by recent hurricanes. The company is also exposed to raw material price pressure and continued challenges in its irrigation business. Weak infrastructure spending is also affecting its Engineered Support Structures unit.”

Vertex Pharmaceuticals (NASDAQ:VRTX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Vertex has two cystic fibrosis (CF) drugs – Kalydeco & Orkambi – in its portfolio with blockbuster potential. Its efforts to get the drugs approved for additional indications are encouraging. Label expansion will increase the patient population and boost sales. Vertex’s CF pipeline is quite strong with a broad portfolio of next-generation CF correctors. Investor focus is on triple combination CF regimens, which are crucial for long-term growth at Vertex as they have the potential to treat up to 90% of CF patients.  The stock has also shot up so far this year. Estimates have also gone up slightly ahead of the company’s Q3 earnings release. The company has a positive record of earnings surprises in recent quarters. However, Vertex has faced many challenges with respect to commercialization of Orkambi in ex-U.S. markets due to re-imbursement hurdles. Orkambi’s EU reimbursement remains a key for sales growth in 2H17.”

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