Equities Research Analysts’ Downgrades for August, 28th (AERI, APOG, COO, CSIQ, FIT, JUNO, KITE, LPT, MSCC, MSI)
Aerie Pharmaceuticals (NASDAQ:AERI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Aerie’s efforts on developing two late-stage candidates – Rhopressa and Roclatan – are encouraging. The company resubmitted new drug application (NDA) for lead candidate Rhopressa in Feb 2017. The FDA determined that the application is sufficiently complete to permit a substantive review and set the PDUFA goal date for the completion of review as Feb 28, 2018. Aerie had earlier withdrawn its NDA that was filed in September A potential approval of Rhopressa in early 2018 and successful commercialization will significantly boost the company’s growth prospects in the global ophthalmic market. Moreover, Aerie’s shares have outperformed the industry in the year so far. The recent data on Roclatan is also positive. However, with no approved product in its portfolio, Aerie depends heavily on a potential approval of Rhopressa.”
Apogee Enterprises (NASDAQ:APOG) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Apogee lowered its fiscal 2018 guidance due to revised cost estimates from the EFCO acquisition. The company now expects revenue growth of 24 to 26% and adjusted operating margin to range between 11% and 11.5% for fiscal 2018. Adjusted earnings per share for the fiscal year are projected to lie between $3.40 and $3.60. Further, Apogee's Architectural services segment's revenues will be affected in fiscal 2018 due to the timing of projects and revenue being shifted to fiscal 2019. Unfavorable foreign currency impact will also hamper Apogee’s results in the near term. The company has underperformed the industry in the past one year.”
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 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. However, the company 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.The Cooper Companies ended second-quarter fiscal 2017 on a solid note, beating the Zacks Consensus Estimates on both lines.”
Canadian Solar (NASDAQ:CSIQ) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Canadian Solar incurred loss in second-quarter 2017, which came in narrower than the Zacks Consensus Estimate of a loss. Revenues surpassed the consensus mark but declined year over year. Meanwhile, solar module shipments in the quarter increased from the year-ago number. The company caters to a geographically diverse customer base spread across both key markets and emerging markets. It is gradually gaining share in Asia, which could soon become a major solar market. Therefore, to enjoy a distinct advantage over its peers, the company has come up with a new diamond module, which has the capacity to withstand extreme weather conditions. Also, Canadian Solar outperformed the broader industry in the last year. Yet, the company is expected to continue experiencing market dislocation in the near term, which will directly impact its 2017 financial performance.”
Fitbit (NYSE:FIT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Fitbit Inc. is a manufacturer of wearable fitness tracking devices. The company reported second-quarter 2017 adjusted loss of 18 cents per share, which was narrower than the Zacks Consensus Estimate. Over the last one year, the stock has underperformed the Zacks characterised Electronic Measuring Instruments Industry. Fitbit’s growth has been slowing down with smartwatches outshining the fitness wearable category, influx of new wearables, lack of upgrades among existing users and lackluster growth in the Asia Pacific region. Management has taken some recovery initiatives that include executive shakeup and cost structuring.”
Juno Therapeutics (NASDAQ:JUNO) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Juno reported wider-than-expected loss in second-quarter 2017 with revenue beating estimates. The company suffered a huge setback with discontinuation of the development of cancer candidate, JCAR015, due to the toxicity witnessed in a phase II ROCKET study. Also, increased competition in the immunotherapy space is a matter of concern for the company as several companies are looking to bring these treatments to the market. Juno’s pipeline candidates are still a few steps away from approval and hence, any setback would weigh heavily on the stock. Shares of the company have also underperformed the industry in the last one year. However, the company remains on track with its pipeline and continues to pursue acquisitions and licensing agreements. The company’s deal with Celgene for global development and commercialization of immunotherapies is encouraging.”
Kite Pharma (NASDAQ:KITE) was downgraded by analysts at BTIG Research from a buy rating to a neutral rating.
Kite Pharma (NASDAQ:KITE) was downgraded by analysts at SunTrust Banks, Inc. from a buy rating to a hold rating.
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. However, the stock has seen the Zacks Consensus Estimate for current year funds from operations (FFO) per share being unchanged over the last 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, adverse near-term impact on earnings from dispositions and rise in interest rates remain concerns.”
Microsemi Corporation (NASDAQ:MSCC) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Microsemi Corporation is an OEM of a broad range of high-reliability and analog/mixed signal integrated circuits. Third-quarter fiscal 2017 non-GAAP earnings beat the Zacks Consensus Estimate while revenues were in line with the same. The company's focus on improving product mix, operational efficiency, and consolidation are driving revenues and margins through 2017. Moreover, we have confidence in the company's strategic positioning, strong fundamentals and growth prospects. Microsemi's scope for margin expansion and decent balance sheet are the other positives. However, pockets of weakness related to product transition at medical customers, push-out of some communications spending in China and a softer oil & gas market continue to impact revenues. Over the last one year, the stock has underperformed the industry it belongs to.”
Motorola Solutions (NYSE:MSI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Motorola Solutions have outperformed its industry in a year. The company has an impressive track record with respect to earnings having surpassed estimates in each of the preceding four quarters. We expect the company to deliver an impressive bottom line performance in the coming quarters as well. Also, the company raised its 2017 guidance for both revenues and earnings per share. In fact, Motorola’s efforts to reward its investors are also encouraging. However, we are concerned about the currency related headwinds arising from Motorola’s acquisition of Airwave Solutions among other factors. Though positive on growth by acquisition strategy, costs associated with the mergers are limiting bottom-line growth. Furthermore, its cash from operations declined substantially in the second quarter due to higher working capital requirement.”
Northern Trust Corporation (NASDAQ:NTRS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Northern Trust’s shares underperformed the industry over the past year. This is backed by disappointing earnings surprise history. The company has missed the Zacks Consensus Estimate for earnings in two of the trailing four quarters. Northern Trust continues to benefit from its strong wealth management operations with diversified products. Also, the rising interest-rate environment has eased margin pressure aiding revenues. Moreover, approval of 2017 capital plan, expected lesser regulations and steady capital deployment activities are other positives. However, despite undertaking cost-savings measures, mounting expenses continue to hurt the company's financials. Moreover, unstable economic environment is a headwind.”
Oracle Corporation (NYSE:ORCL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Oracle is benefiting from significant momentum in the SaaS and PaaS offerings. This has also helped in improving the company's competitive position against salesforce.com and Workday. We believe the company’s growing cloud market share will continue to drive top-line growth for the foreseeable future. The stock has outperformed the industry on a year-to-date basis driven by these factors. We believe the company’s growing cloud market share will continue to drive top-line growth for the foreseeable future. Moreover, Oracle continues to win new customers in HCM, ERP and CX. Meanwhile, estimates have been stable lately ahead of the company's Q1 earnings release. The company has mixed record of earnings surprises in recent quarters. However, higher investments on IaaS will affect gross margin expansion in the near-term. Further, a strong U.S. dollar remains a headwind.”
PACCAR (NASDAQ:PCAR) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “PACCAR’s earnings and revenues beat the Zacks Consensus Estimate in the second quarter. Compared with the year-ago figures, the company’s earnings per share were lower, whereas the revenue was higher. A strong balance sheet has been enabling it to invest in the development of new technologies, enhanced manufacturing facilities and after-market support. A stable market has also enabled PACCAR to project an increase in volume sales for 2017 in comparison to the previous year. However, a decline in used truck prices and a tough competition among peers in the commercial truck market remain a concern. The company’s shares have also underperformed the industry it belongs to over the past six months.”
Pepsico (NYSE:PEP) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “PepsiCo’s shares outperformed the industry to which it belongs in the past 12 months. The company has been doing well on the back of significant innovation, continued momentum in Frito-Lay business, revenue management strategies, improved productivity and cost-saving initiatives, along with better market execution. Moreover, it has been seeing higher volumes and profits in the North American segments due to an improving economy, better industry pricing dynamics and a consistency in positive innovation. It rolled out several products recently which management believes will drive sales and profits in 2017. That said, growing health awareness has been hurting the CSD category, resulting in a 3% volume decline in the first half of 2017 in North America. Again, rising volatility in global markets and increasing currency headwinds may dampen growth.”
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. 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 through various initiatives 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 first quarter of fiscal 2017 marked the tenth successive earnings beat for the company. Estimates too have been going slightly up ahead of its fiscal second quarter earnings release. 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 could impact comps.”
S&P Global (NYSE:SPGI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “S&P Global's strategic portfolio restructuring and focus on core business continues to drive growth. This apart, strategic acquisitions and positive industry trends like surge of new high-yield bonds and leveraged loans, fueled by tight interest-rate spreads, augur well for long-term growth. The company outperformed the industry year to date. Management further increased its guidance on favorable growth dynamics. However, its performance is likely to be hurt by lower volume of debt securities issued in the capital markets. Financial distress could either dent investor’s demand for debt securities or make issuers reluctant to issue such securities. Additionally, increase in interest rates or credit spreads may adversely affect the general level of debt issuance.”
Torchmark Corporation (NYSE:TMK) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Torchmark’s niche market focus, steady capital deployment and strong operating fundamentals should drive long-term growth. The life insurer estimates life and health sales growth in distribution channels. Also, a strong capital position and robust capital management are key positives. Torchmark now expects net operating income between $4.70 per share and $4.80 per share in 2017 banking on better than expected underwriting income and an increase in investment income, life underwriting income to increase between 2% and 4% while health underwriting income to increase between 1% and 3%. The company has also witnessed it estimates moving north in the last 60 days. However, higher administrative expenses, pension costs and investments in IT systems will likely be a drag on Torchmark’s earnings in the near term. Shares of Torchmark also underperformed the industry year to date.”
TransUnion (NYSE:TRU) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “TransUnion is poised for impressive growth in several of its end markets, especially the burgeoning Big Data and analytics market, with an attractive business model, significant operating leverage, low capital requirements and strong and stable cash flows. The company has over 30 petabytes of data, growing at an average of over 25% annually since 2010. Increased risk of identity theft due to data breaches and higher consumer awareness about the usage of credit information are propelling the demand for its consumer solutions. TransUnion has also outperformed the industry year-to-date. However, it is vulnerable to the overall macroeconomic conditions, industry trends, seasonality issues, adverse foreign currency translation effects and developments in the credit market, which limit its profitability to some extent. TransUnion caters to a highly competitive market, such degree of competition restricts its pricing power.”
Tyson Foods (NYSE:TSN) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Tyson Foods’ shares have been underperforming the broader industry over the past six months. While the company’s growth is mainly driven by acquisitions, increased demand of chicken and strong focus in protein packed brands, stressed margins owing to rising costs and higher wages remain its woes. We note that Tyson Foods’ margins remains exposed to rising operational costs as a result of increasing investments to improve supply and higher wage costs. Nevertheless, the acquisition of AdvancePierre, divestment of non-protein businesses, focus on growth categories and channels and the recent investment in the poultry plant are in-line with the company’s strategy to expand its protein-packed brands. The company’s recent upbeat third-quarter fiscal 2017 results also benefitted from the strong performance of its segments, improved availability of cattle supply and higher exports.”
VWR Corporation (NASDAQ:VWR) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “VWR’s second-quarter earnings report was quite impressive, with both the top and the bottom line beating the Zacks Consensus Estimate. Geographically, the company recorded growth in Americas during the reported quarter driven by strong sales of equipment and instrumentation. Management is also looking forward to the long-term synergy benefits from the proposed merger with Avantor. The merger is expected to strengthen VWR’s business across the Americas and Europe. While we await the merger to close in the fourth quarter of 2017 we note that the stock price has already reached close to Avantor’s offer price and hence the short-term upside potential of VWR is limited now. On the flip side, a drop in EMEA-APAC sales was disappointing. Moreover, foreign currency was a major dampener. VWR’s poor margin scenario also raises concern.”
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