Investment Analysts’ Downgrades for September, 26th (ALLY, ASB, BX, CEU, EME, HIW, LAZ, NVR, SPB, SPGI)
Ally Financial (NYSE:ALLY) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Ally Financial have significantly outperformed the industry over the past 12 months. The company also possesses an impressive earnings surprise history, beating the Zacks Consensus Estimate in each of the trailing four quarters. The company’s initiatives to diversify revenue base will likely support profitability in the quarters ahead. Also, improving net interest margin (driven by higher rates and loan growth) will likely aid top-line growth. However, persistently increasing expenses remains a major concern. Further, high debt levels may adversely impact its access to liquidity.”
Associated Banc (NYSE:ASB) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Associated Banc-Corp’s shares have underperformed the industry in the past three months. Yet, the company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in all of the trailing four quarters. Given its inorganic growth efforts and continued investment in franchise, expenses are likely to remain elevated in the quarters ahead, thereby hurting profitability to some extent. Moreover, the company's increased dependence on commercial loans remains a key near-term concern. Nonetheless, higher interest rates, rise in loan demand and the company's inorganic expansion driven by strong balance sheet position it well for the future.”
CES Energy Solutions (TSE:CEU) was downgraded by analysts at National Bank Financial from an outperform rating to a sector perform rating. The firm currently has C$6.50 target price on the stock, down from their previous target price of C$7.00.
Emcor Group (NYSE:EME) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “EMCOR shares have outperformed its industry in the past year. The outperformance was backed by a robust earnings surprise history, beating estimates each time over the trailing six quarters. Earnings estimates for 2018 and 2019 remained stable over the past 60 days. The company is enjoying impressive organic growth driven by U.S. Construction segments, along with solid contribution from its recent acquisitions. Building Services is also expected to gain from sustained growth in the retrofit and energy savings projects. However, weakness in U.S. Industrial Services segment and higher operating expenses raise concerns.”
Highwoods Properties (NYSE:HIW) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of Highwoods have underperformed the industry it belongs to, in the past three months. Moreover, the trend in estimate revisions of current-year funds from operations (FFO) per share does not indicate a favorable outlook for the company. The company’s efforts to expand in high-growth markets, disposition of non-core assets and investing the proceeds for further expansion bode well for long-term growth. However, the significant exposure to office portfolio remains a concern due to rising supply as well as limited demand for additional office space. Moreover, the company’s assets are concentrated in a few markets, which make it vulnerable to economic and political doldrums prevalent in the area. In addition, rate hike remains a concern.”
Lazard (NYSE:LAZ) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Lazard have outperformed the industry over the past year. Further, the company displays an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in all the trailing four quarters. Lazard is well positioned to grow organically, driven by strength in its Financial Advisory and Asset Management segments. However, its dependence on local and global economic conditions for revenue generation and regulatory pressure can hurt top-line growth in the near term. Nevertheless, focus on cost management will likely enhance the company’s profitability.”
NVR (NYSE:NVR) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “NVR is poised to gain traction in 2018 on the current positive housing scenario. Unlike other homebuilders, NVR’s sole business is selling and building quality homes by typically acquiring finished building lots, without the risk of owning and developing land in a cyclical industry. NVR’s disciplined business model and focus on maximizing liquidity and minimizing risk are likely to generate more returns for shareholders. Though homebuilding gross margin was 19.2% in 2017, an improvement of 170 bps year over year, gross margin pressure is likely to pose a threat over the next several quarters owing to cost pressure. Moreover, shares of the company have underperformed the industry in the past year. Estimates for 2018 have also remain unchanged over the past 60 days, limiting upside potential for the stock.”
Spectrum Brands (NYSE:SPB) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Spectrum Brands is benefiting from strategic initiatives, including the sale of Battery Business to Energizer and merger with HRG Group. The HRG merger is likely to create significant value for its shareholders and drive growth across the business. Further, the company's sales and earnings beat in third-quarter fiscal 2018 and robust outlook drive optimism. Earnings gained from gross margin expansion and lower U.S. corporate tax rate, while top line growth mirrored strength across all segments. For fiscal 2018, the company expects sales to improve above category rates for most categories with modest benefit from favorable currency. However, the stock lagged the industry in the last three months due to projections for higher costs. It expects margins to be hurt by adverse impacts from rising commodity and freight costs as well as higher operating costs. Also, Spectrum Brands’ high debt levels pose concerns.”
S&P Global (NYSE:SPGI) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “S&P Global continues to face proceedings, investigations and inquiries with respect to the ratings provided, leading to legal charges, damages or fines. Weak issuance in the U.S. and Asia is weighing on S&P Global’s topline. The initial issuance was so strong that it crowded out issuers capacity to tap re-pricing. Despite such headwinds, shares of S&P Global outperformed the industry over the past one year. The company is benefitting from growing demand for business information services driven by increasing demand for news, information, analytics solutions and risk mitigation. Acquisition is a key growth strategy for S&P Global and it is expected to continue adding advanced technology and data sets through acquisitions, which in turn, should boost the company’s top- and bottom-line growth.”
Trinidad Drilling (TSE:TDG) was downgraded by analysts at National Bank Financial from an outperform rating to a sector perform rating. They currently have C$2.20 target price on the stock.
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