Benzinga's Top Downgrades With Color for May 4, 2012
Listed below are today's Top Downgrades at Benzinga:
Stifel Nicolaus comments, "We are downgrading BioMed Realty to a Hold rating as we think: 1) BMR is fully valued with an Implied NOI/Cash Flow/CF less G&A cap rates of 6.4%/5.5%/4.8%, 2) BMR is trading below our 7.0%-7.5% Net Asset Value range estimate, 3) we think the ability to grow FFO via occupancy gains will be somewhat offset by rent roll-downs and lower rents (low yields) on space that has been vacant for an extended period of time, 4) which results in only 2.5% FFO growth for 2010 through 2013, and 5) full $435/SF relative to gross/adjusted replacement cost of $357/$323/SF."
Ladenburg Thalmann commented, "While results seem to have come up below expectations, we view the quarter as largely in-line. The company raised capital twice during the quarter and the increased share count was a drag on earnings as the fresh capital was being deployed. On its conference call, management noted that the proceeds have now been fully invested. The proceeds from the January raise were primarily deployed in non-Agency, while the proceeds from the February raise were deployed in multiple asset classes."
Miller Tabak commented in the report, "While we think there are considerable long term growth opportunities ahead, the stock has largely accomplished our short term price objective of $28 a share. We think the shares are fairly valued at 13 times our current fiscal 2013 EPS estimate of $2.20, a level which may not be achieved should Rio Nance volume sensitive manufacturing efficiencies and Anvil acquisition-related synergies not be realized."
Dougherty & Company said, "The March quarter demonstrated major deterioration in fundamental performance, while the outlook for 2H suggests the risk for further slowdown in portion pack demand, declining attachment rates, and a lack of fundamental visibility and predictability for the company and the investment community."
Deutsche Bank commented, "Our U/G last Oct was predicated on growth in the core business stabilizing in the 3% to 3.5% range, and much greater potential earnings upside / multiple expansion from an accelerating M&A trend. We acknowledge that it is still early in MD's anesthesia M&A trajectory. Yet, we fear the co's slower pace of deals, coupled with a change in the co's margin profile due to the mix of acquired businesses, will lead to less multiple expansion than originally thought."
Brean Murray Carret & Co. mentioned, "Despite met coal markets recently showing signs of improvement, we decided that the company's earnings profile on our current met coal price deck of $225/MT in 2H12 and 2013 for benchmark quality coal does not provide enough upside to justify a Buy rating at this point in time. We are now estimating EBITDA of roughly $860 million in both 2012 and 2013, which on a 7.0x EV/EBITDA multiple provides a fair value estimate of roughly $16 per share, an upside below our threshold for Buy rated stocks."
Piper Jaffray said, "We continue to believe PVH is a best-in-class operator with a strong portfolio of global brands, but near-term earnings upside could be more limited given ongoing challenges in Europe and moderating trends in Asia. As such, we are reducing our price target from $99 to $93 and our rating from Overweight to Neutral. Specifically, a reduced full year outlook from Warnaco, Calvin Klein's largest licensee, could weigh on PVH's licensing revenue over the next few quarters. We are making no changes to our EPS and maintain a positive bias to estimates given the conservatism in management's guidance, but believe a more neutral stance is warranted at this time."
Piper Jaffray commented, "We are lowering our rating on shares of BODY from Overweight to Neutral tied to our belief that the current apparel recovery cycle is less favorable for the mall-based, Fast Fashion retailers given the sequencing of how we think the consumer will rewardrobe. Simply stated, with newness in bottoms for the first time in several years, we believe the consumer is spending his/her incremental discretionary dollars on rebuilding the wardrobe, from the bottom up. As such, sales trends in the near term could be challenging for the mall-based, Fast Fashion group given that they index higher in tops/jewelry/dresses vs. the dual-gender specialty retailers."
Jefferies & Company Downgrades DragonWave (NASDAQ: DRWI) to Hold: Jefferies mentioned, "Dragonwave reported FQ4 (Feb) with weaker GM due to pricing pressure. We expected a big inflection in FQ1 (May), but guidance was weak due to the NSN deal and Sprint ramp being delayed. Longer-term the revenue and earnings trajectory from the NSN deal and Sprint ramp will likely be flatter than we had hoped. We are cutting our estimates, cutting our target to $3, and downgrading to a Hold." Versant Partners Downgrades Open Text (NYSE: OTEX) to Neutral: Versant Partners said, "While partially telegraphed, license was still worse than our expectations – it fell 10% YoY despite the contribution from the Global 360 (closed on July 13, 2011) and Metastorm (closed on February 18, 2011) acquisitions. The primary cause of this shortfall was sales execution issues in North America and within the BPM group. In addition, the lack of integration of the BPM acquisitions further compounded sales efforts. We are concerned that management would embark on another acquisition (EasyLink) before fully addressing these issues. The company needs to execute on a clear vision that balances organic growth with strategic acquisitions - the latter more focused on platforms for growth." All of Benzinga's Analyst Ratings news can be viewed here.
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