Benzinga's Top Downgrades With Color for May 21, 2012
Listed below are today's Top Downgrades at Benzinga:
Canaccord Genuity said in the report, "We believe earnings momentum is starting to slow for ROST and TJX. From Q1/09-Q3/11, both companies had beaten the high end of initial guidance by about 20%. Over the last two quarters, upside to guidance has averaged 7%-9%. Our Q2 and 2012 EPS estimates are below consensus. For ROST our forecasts of $0.75 for Q2 and $3.33 for 2012 are in line with guidance, versus consensus at $0.76 and $3.39, respectively. We forecast Q2 EPS of $0.50 for TJX, which is in line with guidance and $0.01 below consensus. Our FY13 estimate of $2.37 matches the high end of TJX's outlook and is $0.05 below consensus. We expect SSS growth to decelerate, and our full-year estimates for ROST and TJX represent the slowest rates of growth for both companies since 2008."
Goldman Sachs said, "We downgrade XL to Sell, relative to our Attractive coverage view, with 3% upside to our new $21, 12-month price target vs. 12% average upside for the sector. We believe XL's professional liability-heavy book, along with the ramp in hiring we saw last year, will make it difficult for XL to see margin expansion from the moderate improvement in pricing that we expect will remain mostly confined to commercial lines. Without a broad, significant turn in overall pricing (including professional lines) – which we do not expect – we think margin improvement at XL will lag peers with a lower expense load or without books of business that require fixing."
JP Morgan said, "We expect enterprise investment activity to moderate owing to escalating risk associated with the European sovereign debt crisis, the US fiscal cliff, and slower China GDP growth. Zebra's hardware sales are sensitive to shifts in enterprise sentiment, and we therefore are trimming 2012 revenue growth and margins slightly, though we still expect a modest acceleration in growth in 2013. We still like ZBRA with a long-term perspective, but this may not be the time to add to positions owing to incremental cyclical risks, so we downgrade to Neutral."
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