Benzinga's Top Downgrades With Color for April 26, 2012
Listed below are today's Top Downgrades at Benzinga:
JP Morgan commented, "Although our reduced YE2012 price target of $68/share still suggests 33% potential upside, we do not believe valuation alone will be sufficient to serve as a catalyst. We believe marginal capital may well wait for increased certainty on 2012 production—especially in the Bakken—and the outlook for capital spending. With updates not anticipated until July's mid-year conference call, we believe there could be several months of lackluster share price performance as investors look for confirmation on the near-term outlook and results to support guidance."
Piper Jaffray commented, "We are downgrading shares of CNH from Overweight to Neutral as we believe moderating growth will limit valuation multiple expansion over the course of the next year. There were several positives in CNH's 1Q results – and we believe management's guidance is likely to prove conservative – however, we believe visibility is much cloudier as we look ahead to 2013. We are forecasting sales and EPS to be roughly flat in 2013. While this projection represents outperformance relative to our modeling on DE and AGCO, we believe that lower visibility and the prospect of weaker industry volumes will constrain valuations."
Credit Suisse writes, "HES underperformed in 2H11 on the back of several factors outside management control. Today's strong negative stock reaction is a response to lower production guidance and higher capex guidance just one quarter into the year. There are other upstream companies outspending cashflow, but when companies which are outspending also lose the confidence of the broad investor universe, it is difficult for the stock to re-rate, no matter how low the multiple."
Goldman Sachs writes, "We are downgrading shares of Dana to Neutral from Buy, as we see downside risk to the company's current EBITDA guidance on the back of softening data points on NA truck demand and as international builds likely remain weak particularly in Brazil and China. While longer-term fundamentals are still sound, in our view, and valuation is far from stretched, we believe shares could languish in the face of weaker 2Q truck production and possible downward estimate revisions. Since adding DAN to the Buy List on 1/8/10, shares are up 27% vs. 22% for the S&P 500. Over the last 12 months, DAN shares have fallen 17% vs. a 4% gain in the S&P."
Guggenheim writes, "We estimate Leap sold around 1 million smartphones in 1Q, with ~70% going to new smartphone users. We do not believe investors should be opposed to the company's spending on subsidies to drive ARPU growth. Leap may well be making the right strategic choice for the long term, but we think investors could be disappointed with near-term results as the business model transitions—especially as we enter into the seasonally slower summer period."
Oppenheimer writes, "PCS reported a very weak first quarter, which is especially troubling in light that this is its seasonally strong period and the company faces incremental pressures going into the higher churn summer months. We are downgrading PCS from an Outperform to a Perform rating, accordingly eliminating our PT. On top of regular seasonality, we believe the company will be incrementally pressured next year by a multitude of factors, including: 1) Shortage of spectrum; 2) Expensive LTE phones; 3) Higher churn in its 2G smartphones; 4) Unlikely to get acquired in the next few years, and in our opinion, is likely to merge with LEAP to gain scale; 5) Most importantly, we expect competition to dramatically increase as larger competitors free up legacy networks."
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