Benzinga's Top Downgrades With Color for May 11, 2012

Listed below are today's Top Downgrades at Benzinga:

Jefferies said, "We upgraded MAC in March on the thesis that the stock underperformance was unwarranted given MAC also had an attractive domestic portfolio and was ramping up nicely in the outlet business. Since then, the stock has rebounded sharply with MAC making up a lot of the valuation gap versus TCO and SPG. We still like the MAC story, but upside now seems more limited."

Bank of America commented, "We are downgrading shares of Kemet to Underperform from Buy given our view that the road to improvement in earnings will be a long one. We view primary headwinds as (1) slow recovery in Film and Electrolytic (F&E) margins from an unexpected breakeven gross margin in the latest reported quarter, (2) execution risk associated with multiple significant undertakings (restructuring, integration of Niotan, pending stake in NEC-Tokin), (3) increased interest expense from recently issued debt to fund the M&A, and (4) an uncertain macroeconomic environment."

Credit Suisse said, "We are reducing our Best Buy rating from Outperform to Neutral as the non-operating story seems to be creating too much of a distraction at a time that all hands need to be on deck. We are also lowering our target price to $20 from $32, reflecting a P/E multiple of 5.5 times our '12 EPS estimate of $3.65. When we first heard that Mr. Dunn was leaving, while we respected what he had accomplished at the company, we took it as a positive signal that the Board realized that a new direction was needed. Given the strong free cash flow and the potential to improve results through store shrinkage and a better Internet presence, we thought that there was visible upside to this story."

Citi commented in the report, "Windstream reported 1Q results that unexpectedly added some headwinds to the pace of improvement in both revenue and FCF over the next 24 months, despite the core Business & Broadband (B&B) strategy showing positive traction & accelerating revenue growth. We reduced our rating on Windstream to Neutral & reduced our target price to $11. The combination of disclosures as part of the 1Q results has pushed out our expectation by at least a year for WIN to grow revenue and FCF. Revenue growth in its strategic, business and broadband (B&B) category showed nice acceleration for the fourth consecutive quarter, which was a key reason we had been enthusiastic for revenue performance to improve this year. However, the overhang on results and valuation from lower legacy revenue and FCF simply turned out to be larger than we anticipated."