Today: Today: Stock Analysts’ Downgrade for November, 28th (CNAT, CRH, CSCO, CTRN, DFS, DKS, FDS, MKC, PH, PPL)

Today: Stock Analysts’ Downgrade for November, 28th (CNAT, CRH, CSCO, CTRN, DFS, DKS, FDS, MKC, PH, PPL)

Stock Analysts’ downgrades for Monday, November 28th:

Conatus Pharmaceuticals (NASDAQ:CNAT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Conatus’ third-quarter results were encouraging with the company reporting a narrower-than-expected loss. The company’s progress with its lead candidate, emricasan, has been encouraging. Emricasan is in phase II development for the treatment of chronic liver disease, including NASH fibrosis under the ENCORE program. Conatus also plans to initiate studies on emricasan targeting different types of NASH patient populations. Given that there are currently no approved therapies for NASH and the significant market opportunity, the company’s efforts to develop emricasan are promising. Moreover, the company’s plans to evaluate partnership opportunities for emricasan outside North America could be rewarding, if successful. However, emricasan is still several years away from entering the market, if at all. Any development/regulatory setback could hamper the company’s prospects and impact the stock adversely.”

CRH Medical Corp (TSE:CRH) was downgraded by analysts at RBC Capital Markets from an outperform rating to a sector perform rating. RBC Capital Markets currently has C$8.50 price target on the stock, up from their previous price target of C$7.00.

Cisco Systems (NASDAQ:CSCO) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Cisco Systems is the leading provider of IP-based networking and other products. The modest first-quarter results and the disappointing guidance will weigh on the stock price in the near term. Intensifying competition from several smaller players, slowing order growth from service providers and challenges in the emerging markets are the primary headwinds. Nonetheless, we believe Cisco’s expanding footprint in the rapidly growing security and data center market are promising. Moreover, partnerships with the likes of Pure Storage, salesforce.com and IBM will help Cisco to gain signficant traction in the data center, cloud and Internet of Things (IoT) market in the long haul. Further, continued share buyback and dividend hikes are positive.”

Citi Trends (NASDAQ:CTRN) was downgraded by analysts at Zacks Investment Research from a hold rating to a strong sell rating. According to Zacks, “After posting a beat in the last quarter, Citi Trends reverted to its negative earnings surprise trend in third-quarter fiscal 2016. The company delivered a loss in the quarter, which compared unfavorably with the earnings reported in the year-ago period and our estimate. Further, sales lagged estimates and comps dipped year over year, due to soft average units sold and external factors like the Hurricane Matthew and unseasonably warm weather, which weighed upon demand for fall products. However, trends seemed to improve as the weather normalized, boosting fourth-quarter comps. Also, the company remains impressed with its Home division’s performance which is expected to deliver a robust show in the final quarter. Given these factors and a solid inventory position at the start of the fourth quarter, Citi Trends remains optimistic about its ongoing comps momentum. Nonetheless, the lowered gross margin view and the drab third quarter hurt estimates.”

Discover Financial Services (NYSE:DFS) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Discover Financial shares have outperformed Zacks categorized Consumer Loan industry year to date. The company's third quarter earnings per share beat the Zacks Consensus Estimate mainly on higher revenues. The company remains well positioned for growth given its strength in credit card business. The U.S. consumer finance industry remains healthy amid a declining unemployment and improving housing sector. Discover Financial, with strong brand recognition, product innovation and customer acquisition strategies, will continue to benefit from the broader favorable trends.  Management anticipates total loan portfolio which comprises credit card loans, personal loans and private student loans to grow in the range of 4–6% for 2016. However, stiff competition, lawsuit damages and regulatory challenges as well as weakness in the Payment Services segment and escalating expenses remain headwinds.”

Dick’s Sporting Goods (NYSE:DKS) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Scoring a hat trick with earnings beat, DICK’S Sporting posted solid third-quarter fiscal 2016 results, driven by robust comps, gross margin expansion and tough inventory management. Further, the company is gaining from bankruptcy declared by major rivals like the Sports Authority, which is also expected to benefit its ongoing performance. Based on the robust results and expectations of market share gains in the future, the company’s management raised its fiscal 2016 view. However, the company’s guidance for the fourth quarter remained bleak, hinting at a weaker-than-expected holiday season – toning down investors’ optimism. Also, the company remains prone to macroeconomic challenges and stiff competition, which remain threats. Nonetheless, DICK’S Sporting’s constant shareholder-friendly moves, as well as focus on store expansion and undertaking investments in omni-channel business, bode well.”

FactSet Research Systems (NYSE:FDS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “The Global business information service provider, FactSet’s estimates are moving down off late. Competition from Bloomberg L.P., Dow Jones & Company Inc., MSCI Inc. and Thomson Reuters, which are also introducing substitute products at competitive prices, is a headwind. Furthermore, FactSet’s soft guidance for the forthcoming quarter makes us suspicious about a potential slowdown coming for the company. Nonetheless, we opine that its sustained focus on product innovation across segments with an emphasis on financial services to expand the customer base will continue to help it keep floating despite the current macroeconomic challenges. Moreover, FactSet’s strategy of growing through acquisitions is praiseworthy.”

McCormick & Co. (NYSE:MKC) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Estimates have remained unchanged McCormick delivered better-than-expected results in the third quarter of fiscal 2016. In fact, the company has been delivering better-than-expected earnings in the last four consecutive quarters. McCormick has been witnessing rising demand for spices, herbs and seasonings over the last few years, which is boosting its sales. Product innovation, brand marketing support and expanded distribution, as well as pricing actions also led to sales growth, offsetting the negative impact of material costs and currency. It is encouraging that McCormick is focusing on building sales through acquisitions, and expects strong sales momentum to continue in fiscal 2016. Its cost sa
vings initiatives are also appealing. The company has thus raised its financial guidance for fiscal 2016 driven by strong year-to-date performance and current projections for the fourth quarter.”

Parker-Hannifin Corp. (NYSE:PH) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Parker-Hannifin has a robust earnings surprise history, with consecutive earnings beats in the four trailing quarters. The company has been recording bottom-line growth, largely driven by the new Win Strategy. It believes this strategy will help deliver a compound annual growth rate of 8% in earnings per share, over the next five years. Going forward, Parker-Hannifin expects to gain some traction from improving demand and incremental savings from its realignment actions. However, on the flip side, prolonged sluggishness in the natural resources market, particularly oil and gas, agriculture, mining and construction equipment, as well as softness in key end-markets are proving to be major concerns for the company. In addition, strengthening of the U.S. dollar and escalating restructuring charges are expected to hurt the company’s financials in the near term.”

PPL Corp. (NYSE:PPL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “PPL Corporation’s diverse asset portfolio and business model allow it to perform in and adapt to different market conditions. PPL Corp.’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. The company projects total capital expenditure of approximately $15.4 billion in the 2016–2020 timeframe. PPL Corp. has reestablished its hedge levels to shield itself from any near-term decline in the GBP. Nevertheless, volatile commodity prices and regulatory risks pose challenges to PPL Corporation’s growth. The price of the company's shares dropped compared with an increase in the broader industry share price in the last twelve months. PPL Corp.’s operations are also subject to service disruptions in form of breakdown of equipment, natural calamities and sudden outages.”

Prudential Financial (NYSE:PRU) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Prudential remains well poised for growth on the back of its high performing asset management business, widespread international operations and deeper reach in the pension risk transfer market. It has been growing its pension risk transfer business and has more than $75 billion in pension account values. It strives to build its leadership position in the pension risk transfer market which has great potential and is an excellent fit for its group annuity management skills. Expanded international presence, mainly in Japan, Korea and China, provides it with better organic growth opportunities than peers. Also, a strong balance sheet and efficient capital management are tailwinds. However, exposure to low interest rates, unfavorable currency impact and regulatory control remain headwinds. With respect to quarterly results, its third-quarter 2016 earnings surpassed the Zacks Consensus Estimate and also improved year over year, mainly due to higher revenues.”

Sina Corp. (NASDAQ:SINA) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “SINA Corp. posted third-quarter 2016 results wherein non-GAAP earnings of $0.56 per share and net revenue of $274.9 million grew 43.6% and 21.5% year over year, respectively. The upside was driven by a 21% rise in advertising revenues, primarily due to continued strength in Weibo offerings. The company is taking a number of initiatives to further increase monetization on Weibo. It has already initiated live video streaming on the platform, which is expected to be an important growth factor as mobile users in China are on the rise. Recently, to unlock more value for SINA shareholders, the company announced that it will give away its Weibo stock on a pro rata basis. Apart from Weibo, other key growth drivers include a strong product pipeline and a robust user base for its e-commerce offerings. However, the company’s business is likely to be impacted by soft macroeconomic conditions in the region.”

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 shares have outperformed the Business Information Services industry year to date. The company continues to impress investors with better-than-expected earnings for the 15th consecutive quarter and surpassed revenues estimate for the second straight quarter with strong performances across S&P Global Ratings and S&P Global Market Intelligence. The company raised its 2016 earnings guidance on the back of healthy growth dynamics. The accretive acquisition of SNL Financial also augurs well for the long-term growth of the company. Over the years, the company has consistently returned significant cash to its shareholders through dividends and share repurchases. However, financial distress could either dent investor’s demand for debt securities or make issuers reluctant to issue such securities. High volatility and stiff competitive pressures remain additional headwinds for S&P Global.”

SunTrust Banks (NYSE:STI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “SunTrust shares have substantially outperformed the Zacks categorized Major Regional Banks industry over the last three months. Its initiatives to enhance revenues through growth in loan and deposit balances are impressive. In Oct 2016, the company announced a deal to buy Pillar Financial, which is likely to improve Wholesale Banking segment revenue by $90 million in 2017. Also, the gradually stabilizing energy sector will aid the company’s credit quality in the near term. However, significant exposure to risky loan portfolios and stringent regulatory requirements are major cause of concerns. Further, pressure on margin is expected to continue in absence of notable rate hike.”

Constellation Brands (NYSE:STZ) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Constellation Brands boasts a portfolio of well-known brands and is the largest wine company in the world, which gives it a competitive edge and bolsters its solid market position. The company’s focus on brand building and efforts to include new products in its wine and spirits portfolio are key growth drivers. Also, it remains committed to expanding operations directed toward achieving business growth, as is evident from its numerous acquisitions. These factors, coupled with strong beer business also helped the company to post its eighth and sixth straight earnings and sales beat, respectively in the last reported quarter. The company also raised its fiscal 2017 view, highlighting its solid prospects. However, the risk of increasing taxes continues to be a concern for the company. Intense competition, currency fluctuations and seasonal nature of the company’s business can also dent its operating performance.”

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