Analysts’ Downgrades for August, 29th (AFG, DG, DLTR, DNB, DPZ, EDPFY, FMX, GGB, GOL, HAE)
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. Estimates for 2017 and 2018 also moved north over the last 60 days. 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.”
Dollar General Corporation (NYSE:DG) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Dollar General remains committed toward better price management, merchandise initiatives and cost containment. The company’s recent deal to acquire 322 stores from a small multi-price point retailer is also encouraging. We believe that the company’s strategic endeavors have helped it to deliver better-than-expected results for the second straight quarter, as it posted first-quarter fiscal 2017 financial numbers. Upbeat performance and the news of recent store buyout deal, prompted management to raise its sales outlook. As a result the stock has outperformed the industry in the past six months. Meanwhile, Trump’s suggestion of reducing food stamps program by $193 billion, which is nearly 25% of the budget for the program, will have a detrimental effect. Cut in SNAP benefit will hamper the company’s performance as people with low income will have less money to spend and could restrict their spending to low margin products.”
Dollar Tree (NASDAQ:DLTR) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Dollar Tree raised its fiscal 2017 view after posting strong numbers for the second quarter. Further, Dollar Tree has been gaining from its integration of Family Dollar, which is contributing significantly to the company’s results. This has helped the stock to surpass the industry year to date. It also helped Dollar Tree to achieve comps growth for the 38th straight time in the second quarter, wherein both the top and bottom line grew year over year and topped the Zacks Consensus mark. Apart from solid performance at stores, growth of the company’s online business – Dollar Tree Direct also fueled results. Moreover, reduced merchandise and freight costs, as well as lower markdowns boosted margins. Based on these results and expected benefits from Family Dollar, management remains confident of the second half. However, volatile consumer behavior remains a concern for Dollar Tree. Also, significant global exposure may pose threats.”
Dun & Bradstreet Corporation (The) (NYSE:DNB) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “We continue to expect that Dun & Bradstreet will benefit from its high-margin business model and strong product portfolio. Its partnerships with big players have also helped it bring many more customers into the fold. Plus, the company is also well-positioned to gain from its strategic acquisitions and alliances. The company’s focus on expanding analytics capabilities is also a positive. Plus, cost savings resulted in a strong operating margin performance in the last reported quarter. Management has now raised the lower end of its operating margin growth for the year. However, stiff competition, weak DNBi business and high debt continue to remain areas of concerns. Shares have underperformed the broader market in the past one year.”
Domino’s Pizza (NYSE:DPZ) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Domino's shares have outpaced the industry year to date. The company’s solid brand positioning should continue to boost sales in the upcoming quarters. Also, efforts to accelerate its presence in high-growth international markets bode well. Notably, the company’s revenues and earnings surpassed the Zacks Consensus Estimate in each of the trailing five quarters. In fact, second-quarter 2017 marked the 25th and 94th consecutive quarter of positive same-store-sales domestically and internationally, respectively. Going forward, Domino'sinitiatives on the digital front, focus on re-imaging and other sales boosting strategies are expected to help sustain the momentum. Yet, higher costs and negative currency translation are likely to hurt profits. A soft consumer spending environment in the U.S. restaurant space might limit revenue growth too.”
EDP-Energias de Portugal, S.A (OTC:EDPFY) was downgraded by analysts at Berenberg Bank from a buy rating to a hold rating.
Fomento Economico Mexicano S.A.B. de C.V. (NYSE:FMX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “FEMSA outperformed the broader industry in the year so far. The company is on track to drive growth through strategic measures, including increasing store count, diversifying business portfolio and focusing on core business activities. Further, its exposure in various industries including beverage, beer and retail, gives it an edge over competitors. Also, FEMSA's strong cash flow generation capacity enables it to make incremental investments in business expansion. However, second-quarter 2017 results marked its fourth consecutive earnings miss, while sales lagged estimates for the second straight time. Moreover, the company continued to witness margin pressures due to decline in margins at Coca-Cola FEMSA and lower-margin businesses growth at FEMSA Comercio, as well as higher operating expenses at Coca-Cola FEMSA and FEMSA Comercio’s Health division. Nevertheless, FEMSA's focus on achieving growth via acquisitions bode well.”
Gerdau (NYSE:GGB) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Year to date, Gerdau's American Depository Receipts (ADR) have outperformed the industry. We believe that the company's product portfolio, manufacturing techniques and international diversity will help it grow over the long term. Also, its strategy of disposing loss-making assets/businesses will enable it to focus on the profitable ones. Going forward, any investment by the government in infrastructure improvements will boost steel demand in Brazil, thereby creating favorable conditions for the company. However, it is exposed to risks arising from higher raw material costs, foreign currency fluctuations, huge debt levels and cyclical nature of the industry. In second-quarter 2017, the company's adjusted net income declined 19.1% year over year due to 10.6% fall in revenues, forex woes and higher income tax expenses. Also, the stock is currently overvalued compared with the industry.”
Gol Linhas Aereas Inteligentes (NYSE:GOL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of GOL Linhas have outperformed its industry in the last six months. Ushering in further good news, the company reported better-than-expected results in the second quarter of 2017. Moreover, the top line improved significantly year over year. The carrier's view for full-year 2017 is also encouraging. An improving Latin American economy is also aiding GOL Linhas. We expect the company’s focus on capacity discipline to result in increasing yields, going forward. However, the carrier's earnings per share declined significantly in the second quarter due to higher expenses on aircraft fuel. Moreover, total volume of departures fell 5.1%, while total number of seats available declined 4.1% in the quarter. GOL is also highly dependent on the products of certain big suppliers and operates in a competitive Latin American airline space.”
Haemonetics Corporation (NYSE:HAE) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Over the last month, Haemonetics has been trading above the broader industry. The company swung to operating income in the last reported first quarter from losses in the year-ago quarter. Also the year-over-year increase in reported sales and gross margin buoys optimism. Meanwhile, the company’s strong cash position boosts investors’ confidence. The company is also optimistic about strong market adoption of its NexSys PCS plasmapheresis system which recently received FDA approval. On the flip side, despite the encouraging growth in the Plasma and Haemonetics Management franchises, the underperformance at BloodCenter was quite a dampener in the last reported quarter. Moreover, currency headwinds and tough competitive landscape may continue to pose challenges for the company going forward.”
Intel Corporation (NASDAQ:INTC) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Intel’s second-quarter 2017 results demonstrated the company’s growing focus on the data-centric part of the business. The recent launch of Xeon Scalable is anticipated to benefit its footprint in the data center as well as AI and IoT space, going forward. Further, anticipated improvement in cost structure and lower spending, primarily due to improving operational efficiency will aid in expansion of margins going forward. Additionally, aggressive share buyback will boost the bottom line in 2017. However, we note that Intel has underperformed the industry on a year-to-date basis, which can be attributed to growing competition from AMD in the data center space. We also note that the top-PC makers like HP, Lenovo, and Asus are set to launch PCs based on Qualcomm’s ARM-based Snapdragon processor, which intensifies competition for Intel. We believe that this is a significant headwind amid declining PC shipments.”
CarMax (NYSE:KMX) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “CarMax’s focus on the used-car market helps it to outperform the industry. The company is among the strongest operators in its peer group. Also, its aggressive store-expansion is expected to benefit the company. Its stock has also outperformed the industry it belongs to, in the last three months. Moreover, share repurchases will boost shareholder returns. However, significant cash outflows from operations, volatility in used car prices and increasing capital expenditures are few headwinds the company is facing.”
Kroger Company (The) (NYSE:KR) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Stiff competition, falling comps, volatility in food prices, aggressive promotional environment and waning store traffic are making things tough for Kroger that has underperformed the industry in the past six months. This is evident from first-quarter fiscal 2017 results, wherein bottom line continues to decline year over year for the third straight quarter, despite an increase in the top line fueled by recent buyouts. Subsequently, management trimmed its earnings per share projection for fiscal 2017, and now expects the same to fall in the second quarter with marginal improvement in the third quarter. Nevertheless, a dominant position among grocery retailers enables Kroger to sustain sales growth, expand store base and boost market share. It has also kept its long term earnings per share growth rate target of 8–11% intact and expects it to attain on the back of customer 1st strategy, effective cost management and share buyback activities.”
Polaris Materials Corp (TSE:PLS) was downgraded by analysts at Eight Capital from a buy rating to a neutral rating. The firm currently has C$2.79 price target on the stock, up from their previous price target of C$1.15.
Raymond James Financial (NYSE:RJF) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Raymond James have outperformed the industry over the past three months. This performance was supported by the company’s impressive earnings surprise history. It surpassed the Zacks Consensus Estimate for earnings in all the trailing four quarters. The company remains well positioned to grow via acquisitions. In April, it announced a deal to acquire Scout Investments and Reams Asset Management division. In 2016, the company acquired U.S. Private Client Services unit of Deutsche Asset & Wealth Management, which along with the prior transactions should help in expanding its market share. However, elevated expenses and concentration risks arising from significant dependence on U.S. operations for revenues remain major concerns for the company.”
RLI Corp. (NYSE:RLI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “RLI Corp. boasts one of the industry’s most profitable P&C writers, with an impressive track record of underwriting profits in 37 of the past 41 years (particularly the last 21 years). Its ability to consistently increase dividend, announce special dividends, maintain combined ratios at favorable levels as well as a solid capital position are other positives. Continuous strategic investments to fortify Casualty segment bode well. The company also remains focused on strengthening its underwriting results and has decided to drop underperforming products in the property business. Estimates for 2017 and 2018 moved up by a cent each over the last 60 days. However, exposure to catastrophe losses and escalating expenses raise concerns. Share of RLI Corp underperformed the industry year to date.”
State Street Corporation (NYSE:STT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of State Street have significantly outperformed the industry, over the last six months. This performance was supported by the company’s impressive earnings surprise history. It hasn’t missed the Zacks Consensus Estimate for earnings in any of the trailing four quarters. Further, the company remains on track to improve efficiency through its multi-year restructuring plan. New business wins, synergies from GE Asset Management deal, easing margin pressure and potential lesser regulations are likely to aid top-line growth. Further, given a solid liquidity position, the company is expected to continue with its capital deployment activities. However, mounting expenses (owing to higher compensation and employee benefit costs) might hurt profitability in the near-term.”
Tokuyama Corp (NASDAQ:TKYMY) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Tokuyama Corporation manufactures and sells chemicals, specialty products, cement and functional materials. Chemicals segment offers soda ash, caustic soda, calcium chloride, silicate soda, vinyl chloride resin, propylene oxide, isopropyl alcohol and methylene chloride. Specialty Products segment offers multicrystalline silicon, wet silica, metal cleaning chemicals, high-purity chemicals for electronic industry, environmental-related equipment and others. Cement segment offers portland cement, ready-mixed concrete and cementitious solidified materials. Life Amenity segment offers polypropylene film, resin sashes and others. Tokuyama Corporation is based in Chiyoda-Ku, Japan. “
TELE2 AB (NASDAQ:TLTZY) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Tele2 AB provides telecommunication services to residential and business customers. The Company offers mobile services, fixed broadband and telephony, data network services and content services. It operates primarily in Sweden, the Netherlands, Kazakhstan, Croatia, Lithuania, Latvia, Estonia, Austria, Germany and internationally. Tele2 AB is based in Stockholm, Sweden. “
Tullow Oil (OTC:TUWLF) was downgraded by analysts at Jefferies Group LLC from a buy rating to a hold rating.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.