Analysts’ downgrades for Monday, August 21st:
American Financial Group (NYSE:AFG) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of American Financial have outperformed the industry year to date. The company is well poised to benefit from impressive inorganic growth and restructuring initiatives. Better industry fundamentals, with strong pricing and a higher renewal ratio, should drive overall growth. Consistent price increase in property and casualty business, combined ratio that compares favorably with industry average, a strong balance sheet, low leverage cost, and disciplined capital management are positives. Based on strong operational performance, it raised core net operating earnings of $6.40–$6.90 per share in 2017. However, American Financial’s exposure to cat loss is a risk to underwriting results. A still soft interest rate environment is expected to weigh on desired upside in investment results.”
AMTEK (NYSE:AME) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “AMETEK is a leading manufacturer of electronic appliances and electromechanical devices. The company posted better-than-expected second-quarter 2017 results surpassing the Zacks Consensus Estimate on earnings and revenues. AMETEK continues to reap the benefits from the execution of its four core growth strategies of operational excellence, global market expansion, investments in product development and strategic acquisitions. This, in combination with a strong portfolio of differentiated businesses, is expected to help the company post better results, going forward. However, weakness in its balance sheet and integration issues and an overly high goodwill associated with an aggressive acquisition strategy are concerns. Foreign exchange headwinds remain. Notably, over the last one year, the stock has underperformed the Zacks Electronic Test Equipment industry.”
Cooper Companies, Inc. (The) (NYSE:COO) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “The Cooper Companies generates a significant part of its revenues in foreign currencies. Thus, the ongoing unfavorable currency translation is expected to negatively impact the company’s top-line growth in 2017. Furthermore, intensifying competition in the contact lens will continue to increase pricing pressure for the company. Also, the stocks overvaluation reflects a relatively dull scenario that might be a cause for investors’ concern. However, the company ended second-quarter fiscal 2017 with the Zacks Consensus Estimates beating on both lines. On a positive note, the company outperformed the broader industry in terms of price performance over the past six months. The Cooper Companies have always had an impressive show from its CooperSurgical business segment. The CooperVision segment also delivered strong sales in the last quarter, buoyed by robust performance by Toric.”
CSRA (NYSE:CSRA) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “CSRA is the largest pure play government IT service provider. The company’s deep domain knowledge and expertise in next-generation IT services is aiding it to win new contracts on a regular basis. This was evident from the recently announced first-quarter results. Additionally, partnerships with technology companies like Microsoft, Amazon and Oracle is a key growth driver. Moreover, anticipated improvement in federal spending is a positive for the company. However, near-term uncertainty over the renewal of Greenway contract and delay in TSA contract are headwinds. The lower recompete win rate is a concern in our view. Notably, the company has underperformed the industry on a year-to-date basis.”
E.I. du Pont de Nemours and (NYSE:DD) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “DuPont’s adjusted earnings for second-quarter 2017 topped the Zacks Consensus Estimate. Revenues also rose year over year and beat expectations. DuPont has outperformed the industry it belongs to over the past three months. DuPont is well placed to gain from its cost-cutting and productivity improvement measures. The company's aggressive actions to cut operational costs should continue to lend support to its earnings. Its agriculture business is also gaining from new product launches. The company has numerous new products in its pipeline that should contribute to top line growth. DuPont is also moving forward with its planned mega-merger with Dow Chemical, which is expected to create significant synergies. However, DuPont is exposed to raw material cost pressure and currency headwind and also faces certain challenges in its nutrition & health and electronics businesses. Its agriculture business is also not out of the woods yet.”
Liberty Property Trust (NYSE:LPT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Liberty Property have outperformed the industry it belongs to, year to date. Its estimates for third quarter and full-year 2017 funds from operations (FFO) per share have been steady over the past seven days. In July, the company delivered a better-than-expected performance with respect to FFO per share and revenues. Recently, the company announced that it would develop a 220,000 square foot industrial building for global conveyance solutions leader, Intralox, at 7157 Ridge Road, in Hanover, MD. The company is poised for growth as fundamentals of the industrial real estate market remain solid, backed by growing demand, resulting in solid rent increase, enhanced occupancy and development opportunities. However, anticipated increase in supply of industrial real estates, adverse near-term impact on earnings from dispositions and rise in interest rates remain concerns.”
Mastercard (NYSE:MA) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Mastercard’s stock has outperformed the industry over the past one year. The company is well positioned for growth given its solid market position, ongoing expansion and digital initiatives, and significant opportunities from the secular shift toward electronic payments. The acquisition of VocaLink and NuData Security, complement the company’s efforts to participate in new payment flows and enhance its safety and security offerings. During the most recently reported quarter, its earnings surpassed the Zacks Consensus Estimate, mainly driven by strong transaction, higher cross border volumes and gains from the Vocalink acquisition. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 1.5% upward over the last 30 days. It, however, continues to face escalating costs, a volatile forex environment and legal issues. Also, higher incentives and rewards will put pressure on the bottom line.”
Royal Caribbean Cruises (NYSE:RCL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Royal Caribbean shares have outpaced the industry year to date. The company expects strong revenue growth in 2017 given solid booking trends. Notably, the company’s sailings in the U.S., Europe, Alaska, Baltic and Asia, are likely to continue performing strongly, going forward. Royal Caribbean thus remains positioned to witness another record year and achieve its targets under the Double-Double program. While, its capacity growth should aid in meeting increased demand, ship innovation and technology investments should lead to higher yields. The company has also been successful in dealing with the volatility in fuel prices given its environmental efforts. Yet, higher costs in the near-term and adverse forex translations might hamper its profitability. Despite growth opportunities, lingering global uncertainties in key operating regions are likely to affect its international profits.”
Royal Bank of Canada (TSE:RY) (NYSE:RY) was downgraded by analysts at Scotiabank from an outperform rating to a sector perform rating. Scotiabank currently has C$100.00 price target on the stock, down from their previous price target of C$102.00.
T. Rowe Price Group (NASDAQ:TROW) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “T. Rowe Price’s shares outperformed the industry over the last six months. The company’s second-quarter 2017 adjusted earnings outpaced the Zacks Consensus Estimate. Higher revenues and assets under management (AUM) were positives. However, elevated expenses were a concern. Given the strategic initiatives, management estimates operating expenses to grow 10% for 2017. Also, the regulatory pressure across the investment management industry remains another key concern. However, the company’s planned strategic initiatives like investment in technology and advisory services, strengthening distribution platform, along with introduction of products, will likely stoke long-term growth. Further, the company remains debt-free with sufficient liquidity and is focused on boosting shareholders’ confidence through steady capital deployment activities. Recently, the company recorded improved AUM for July 2017.”
