Analysts’ Downgrades for February, 12th (ABM, AFSI, CR, CSII, CSRA, DE, GRPN, NEM, NVR, NYT)

Analysts’ downgrades for Monday, February 12th:

ABM Industries (NYSE:ABM) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “ABM has developed a platform to deliver an end-to-end service model to its clients by realigning its operational structure to an on-site, mobile and on-demand market based structure. This realignment has improved its long-term growth prospects and higher margin opportunities by enabling it to better deliver end-to-end services to its clients. ABM remains focused on driving sustainable profitability by effectively allocating resources to high margin services and business verticals with a strong competitive edge. However, ABM has underperformed the industry in the last three months due to macroeconomic concerns. The company is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members post Brexit referendum. Strong competitive pressures could further limit ABM’s success rate in bidding for profitable businesses and its ability to increase prices in accordance with rising costs.”

AmTrust Financial Services (NASDAQ:AFSI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “AmTrust Financial’s leadership position in commercial small business, expansion of other segments and an impressive inorganic growth story poise it well for growth. The company also aims to build an investment portfolio that returns in line with the sector. The slow but improving rate environment also raises optimism. Plus, a strong balance sheet facilitates growth initiatives and effective capital deployment. The company also witnessed the Zacks Consensus Estimate for 2018 moved 5.2% north over the last 60 days. However, a high level of debt increases interest burden and escalates expenses, thereby hurting margin. Exposure to cat environment induced volatility in underwriting results. Shares of AmTrust Financial have underperformed the industry in a year's time.”

Crew Energy (TSE:CR) was downgraded by analysts at CIBC from an outperform rating to a neutral rating. CIBC currently has C$2.50 target price on the stock, down from their previous target price of C$4.50.

Cardiovascular Systems (NASDAQ:CSII) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Cardiovascular Systems exited second-quarter fiscal 2018 on a solid note with year-over-year increase in revenues at both CAD and PAD businesses. Also, the expansion is gross margin was impressive. Moreover, the company is putting efforts in product innovation through R&D investments. The market is also looking forward to the recently-launched coronary device in Japan, reflecting the company’s focus on international expansion. On the flip side, Cardiovascular Systems faces cutthroat competition in the niche space. Coming to profitability, Cardio Vascular incurred net loss in the recently-reported second quarter. In fact, the company has a long history of net losses since inception. Also, the lowered revenue guidance for fiscal 2018 is discouraging. Over the past year, Cardiovascular Systems has been trading below the broader industry.”

CSRA (NYSE:CSRA) was downgraded by analysts at Wells Fargo & Co from an outperform rating to a market perform rating.

Deere & Company (NYSE:DE) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Deere is poised to gain from the Wirtgen acquisition. The buyout will aid Deere’s North America-centric construction business and also catapult it to the position of an industry leader in global road construction. The company expects that its disciplined cost management and continued investment in innovative technology and solutions will drive its near term results. Recovery in the dairy and livestock sectors will drive growth in the EU28 region. Further, Deere’s acquisition of Blue River Technology remains a tailwind. The stock has outperformed the industry in the last year. Its estimates have also been revised upward lately. However, Deere will bear the brunt of expected decline in agricultural production in Brazil, elevated expenses as well as geopolitical disruptions around the world.”

Groupon (NASDAQ:GRPN) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Groupon operates a website that offers daily discount deals. Due to company’s operating model it has to continue spending on generating awareness about its offerings which ensures recurring expenditure weighing down profitability. Moreover, revenue growth has slowed down in the last couple of years. Reduced international footprint will continue to hurt top-line growth at least in the near term. Moreover, intensifying competition is a significant headwind. Shares of the company have also underperformed the industry over the past three months. However, the company’s partnership with Grubhub and ongoing brand awareness programs are anticipated to boost revenues. Moreover, the company’s policy of launching new products on a regular basis is a positive.”

Newmont Mining (NYSE:NEM) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Newmont’s shares have outperformed the industry it belongs to in the past three months. The company is making notable progress with its growth projects. We are also impressed with its  efforts to reduce debt and improve efficiency. Moreover, the acquisition of CC&V represents a significant opportunity. However, Newmont is exposed to a highly volatile gold price environment. It also faces headwinds from high production costs. The company's falling gold reserve base is another concern.”

NVR (NYSE:NVR) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “NVR exhibited mixed performances in fourth-quarter 2017 wherein earnings missed the Zacks Consensus Estimate by 11.3% and decreased 24% from the year-ago level. However, total revenues (Homebuilding & Mortgage Banking fees) increased 3.7% year over year, on account of higher housing revenues (up 21%). New orders, settlements and backlog of homes also climbed 18%, 5% and 23.9%, respectively, in the quarter. Gross margin expanded 150 basis points on a modest improvement in pricing along with moderating construction costs. Meanwhile, NVR's shares have outperformed its industry in the past year. Estimates for 2018 has also moved up significantly over the last 60 days, reflecting analysts’ optimism surrounding the stock.”

New York Times (NYSE:NYT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “The New York Times Company’s strategic initiatives have helped propelled the stock that has outpaced the industry in a year. The company is diversifying its business, adding new revenue streams, strengthening its balance sheet and restructuring its portfolio. It had offloaded assets in order to re-focus on its core newspapers and pay more attention to its online activities. These endeavors have helped the company to post sixth straight quarter of positive earnings surprise, when it reported fourth-quarter 2017 results. Total revenue also came ahead of the consensus estimate. Notably, both the top and bottom lines grew year over year. The quarter marked an increase in digital subscribers, rise in digital advertising and subscription revenues but a fall in print advertising revenue. Total advertising revenue slid 1.3% during the quarter. Management expects the same to decline in the mid to high-single digits in the first quarter of 2018.”

Quality Systems (NASDAQ:QSII) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Quality Systems had an unfavorable run on the bourses over the last year. Of the major concerns, intensifying competition in the HCIT markets is likely to keep the company’s margins under pressure. Further, the company expects software license and hardware revenues to remain under pressure for the remainder of the fiscal. Operating expenses are also high for Quality Systems due to acquisition-driven costs. Continued acquisition poses integration risks for the acquiring company.However, Quality Systems ended the third quarter on a positive note, wherein adjusted earnings came in line with the Zacks consensus estimate. Acquisitions have significantly expanded Quality Systems’ product line over the last couple of years. the company’s solid recurring revenue base is a key catalyst. Revenues are also expected to be benefitted from EagleDream software platform, which has been enjoying favorable market response.”

Silicon Motion Technology (NASDAQ:SIMO) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Although, Silicon Motion’s fourth-quarter top and bottom line surpassed the Zacks Consensus Estimates, it however declined on a year over year basis. Going forward, first-quarter sales guidance was also tepid due to falling NAND prices and seasonal decline in SSD solutions. Operating margin is also expected to decline due to higher spending on research and development in the first-quarter. The company faces macroeconomic risks like political, economic and social instability and certain industry-specific regulations in geographies where the company operates. Further, intensifying competition in the USB flash drive controller market remains a major headwind. Going forward, dip in smartphones sales will prove to be a drag on the revenues. Nonetheless, the company expects the increase in the availability of 64 layer 3D NAND to bring down high NAND prices, which will eventually improve results.”

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