Benzinga's Top Downgrades With Color for May 7, 2012
Listed below are today's Top Downgrades at Benzinga:
Wunderlich Securities notes, "The company disclosed on Friday that a growing deferred tax balance would slow the expected growth in Wisconsin regulated rate base through 2014, which will in turn slow the projected earnings growth. We now expect 5% annual earnings growth off of a 2011 EPS base, rather than the 7% we expected previously. Though this growth still has below-average regulatory risk, a similar impact on Iowa rate base is possible when the rate freeze expires in 2013."
Brean Murray Carret & Co. commented, "We are downgrading Murphy Oil to Hold because the company's first quarter results highlight ongoing technical difficulties at its key property in Malaysia, while countervailing oily exploration catalysts appear skewed to the second half of 2012. Murphy's first quarter results were disappointing; Murphy missed on liquids volumes by 6% vs. our estimate, mostly due to shortfalls at its flagship Kikeh property in Malaysia, and lowered full‐year 2012 guidance by 3.5%, although overall first quarter production came in at 196.2 MBoe/d vs. 195 MBoe/d 1Q guidance."
Citi said, "We are downgrading to Neutral, despite 1Q12 report that was better than our estimates, for three reasons. First, we believe the margin decline in Brazil will drive down the consensus and Friday's conference call was less convincing on a 2H12 pickup. Second, we would like to see a margin recovery, not the decline implied by the re-affirmed 2012 guidance. Finally, we believe the aggressive monetary easing in Brazil, although accelerating economic growth, could translate to a weaker exchange rate, complicating ARCO's USD results and ability to meet 2012 guidance."
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