Investment Analysts’ Downgrades for August, 11th (ACHN, APEI, BNTGF, CBAY, EBS, EFN, GOLF, IT, MYGN, NKTR)
Achillion Pharmaceuticals (NASDAQ:ACHN) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Achillion generated no revenue in Q2 while loss was in line with estimates. The company has no approved product in its portfolio and focuses on developing small molecule therapeutics to treat infectious and complement-mediated diseases. The complement-mediated space is highly crowded as biotech companies are working on bringing these treatments to market. However this area has potential for commercial opportunity. Meanwhile, Achillion’s deal with J&J for its HCV portfolio provides the company with a strong and experienced partner and will also bring in funds. The HCV market also represents huge commercial potential. However, Merck is also developing similar therapy for HCV genotype infections. Also, we remain concerned about the early-stage nature of the complement Factor D pipeline and dependence on collaboration for funds.”
American Public Education (NASDAQ:APEI) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “American Public reported second-quarter 2017 earnings per share of $0.23, which were in line with the Zacks Consensus Estimate. Earnings decreased a considerable 43.9% year over year due to declining revenues, owing to sluggish enrollments.Total revenue surpassed the consensus mark by 3.1% but decreased 5.9% year over year, owing to lower contribution from the American Public Education segment. Completion rates of undergraduate students using FSA at APUS increased approximately 19% year over year. The company is witnessing improving student success and overall quality of its offerings as is evident from the completion rates. However, net course registrations of new students using Federal Student Aid declined 29%.Total enrollment at the Hondros College Nursing Programs declined 3% year over year. Moreover, the company’s third-quarter outlook is quite discouraging with revenues and net course registrations expected to decline.”
Brenntag Ag, Muehleim/Ruhr (OTCMKTS:BNTGF) was downgraded by analysts at Credit Suisse Group from an outperform rating to a neutral rating.
CymaBay Therapeutics (NASDAQ:CBAY) was downgraded by analysts at Ifs Securities from a strong-buy rating to an outperform rating.
Emergent Biosolutions (NYSE:EBS) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Emergent reported lower-than-expected earnings in the second-quarter of 2017, with revenue missing estimates. The company’s follow-on contract with the CDC and deals with the BARDA for BioThrax and NuThrax (the next-generation anthrax vaccine candidate) bodes well for growth. NuThrax’s approval will be a huge boost for the company. We are also positive on Emergent’s spin-off of its biosciences business into a separate publicly traded company as it is expected to result in a reduced cost structure. On the flip side, the company’s sole dependence on BioThrax for its revenue is concerning. Meanwhile, Emergent faces competition from a number of companies with Biodefense products. Shares of the company have underperformed the broader industry so far this year. However, the U.S. government is the primary purchaser of BioThrax which is a big boost to the company.”
Element Fleet Management Corp (TSE:EFN) was downgraded by analysts at Credit Suisse Group from an outperform rating to a neutral rating.
Golfsmith International Holdings (NASDAQ:GOLF) was downgraded by analysts at DA Davidson from a buy rating to a neutral rating.
Gartner (NYSE:IT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Gartner reported strong second-quarter 2017 results with double-digit growth in revenues and total contract value. With a diligent execution of operational plans, Gartner has recorded double-digit growth in key metrics for over a decade. The company has a vast, untapped market opportunity worth an estimated $61 billion. The acquisition of CEB further reinforces Gartner’s market strength and is likely to be accretive in the future. The company has also outperformed the industry year to date. However, Gartner has to continually invest in value drivers to fend off competition that increase its operating costs and contract margins. Some of its services are cyclically sensitive. In addition, revenue from the federal government business is exposed to lengthy approval times and other austerity measures, which often increase operating risks and undermine the long-term growth potential of the company to some extent.”
Myriad Genetics (NASDAQ:MYGN) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Myriad Genetics ended fiscal 2017 on a solid note, with its fourth-quarter numbers exceeding the Zacks Consensus Estimate. The company particularly observed strong growth in EndoPredict and GeneSight testing revenues. Also, the company witnessed a third consecutive quarter of rise in hereditary cancer volumes. We are also upbeat about the receipt of positive final Local Coverage Determination to expand Medicare coverage of the Prolaris test. Also, it received provincial reimbursement in Quebec for EndoPredict. Recently, the company presented positive data for its BRACAnalysis CDx test. Over the last three months, the company has been trading above the broader industry. On the flip side, a dull operating margin scenario owing to a rise in operating expenses is disappointing. Currency fluctuations and stiff competition are other major headwinds for the company.”
Nektar Therapeutics (NASDAQ:NKTR) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Nektar reported wider-than-expected loss in the second quarter of 2017 with revenue missing estimates. The launch of its drugs, Movantik and Adynovate, has been on track with both the products performing impressively. Additionally, regular partnerships have enhanced the company’s financial position. Nektar stands to receive significant sales milestone plus royalties for Movantik under the license agreement with AstraZeneca, which might substantially boost its financial position. Also, its recent co-development deal with Lilly for NKTR-358 is also encouraging. However, Nektar relies heavily on partners for revenues. Partnership-related setbacks may weigh heavily on the company, while disappointing products sales could leave an adverse impact on its financial results. Nektar also has a promising pipeline, with several updates lined up for the next several quarters. The company’s shares have outperformed the industry in the year so far.”
Proofpoint (NASDAQ:PFPT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Proofpoint is a leading security-as-a-service provider that focuses on cloud-based solutions for threat protection, compliance, archiving & governance, and secure communications. The company’s sustained focus on launching new products, acquisitions and partnerships have helped it to register over 40% revenue growth continuously for the last few quarters. According to a Markets and Markets report, the cyber security market will touch $202.36 billion in 2021 from $122.45 billion in 2016, representing a compounded annual growth rate of 10.6%. The favourable trend in the space is likely to aid Proofpoint’s financial results. Notably, Proofpoint has outperformed the broader industry over the last three months. Nonetheless, intensifying competition and an uncertain macroeconomic environment add to its woes.”
Twilio (NYSE:TWLO) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Twilio recently reported strong results for second-quarter 2017, wherein the top line came ahead of our expectations, while the bottom line matches the same. Also, the company witnessed year-over-year improvement on both the counts. The recently reported robust quarterly results clearly indicate that the company has been able to mitigate the loss of revenues from Uber. The company’s key initiatives, which include product innovation, global expansion and acquisitions, are helping it in gaining customers, which bodes well for long-term growth. We opine that proliferation in cloud and mobile penetration across the globe will continue to fuel Twilio’s customer growth over the long run. Nonetheless, intensifying competition in the communications market and growing prevalence of in-app push notifications are major concerns. Notably, the stock has underperformed the industry in the last one year.”
Unilever PLC (NYSE:UL) was downgraded by analysts at Royal Bank Of Canada from a sector perform rating to an underperform rating.
Wendy’s Company (The) (NASDAQ:WEN) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Wendy’s shares have outpaced the industry year to date. The company’s second-quarter 2017 adjusted earnings of $0.15 per share topped the Zacks Consensus Estimate by 15.4%. Notably, earnings jumped 50% year over year (y/y) owingto the company’s system optimization initiative. Meanwhile, revenues of $320.3 million surpassed the consensus mark by 7.2% but slumped 16.3% y/y. Revenues have been declining y/y over the past few quarters due to reduced number of company-operated restaurants. Though Wendy’s transition to a franchise-based business model has been weighing on revenues, it is expected to lower the company’s G&A expenses, thereby boosting earnings, 2017 onwards. Initiatives like its Image Activation program along with focus on menu innovation delivery, technology-related offerings and global expansion also bode well. Yet, higher labor and commodity costs as well as a soft industry backdrop remain concerns.”
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