Benzinga's Morning Downgrade Summary for June 1, 2012

Listed below are today's Top Downgrades covered by Benzinga:

Jefferies said, "This downgrade is simple: sales are slowing and margins are not expanding which is not a good sign for a growth story. While we are admittedly late to call this one and have been wrong thus far, we are still choosing to take the hit now as we see few catalysts to get the stock moving in the near term."

Citi mentioned in the report, "We cont. to believe in the long-term sustainability of product & differentiated growth prospects across channels but are lowering our rating to Neutral (from Buy) with $24 price target as we believe stock may not go higher in near-term given: work through of inventory in indirect channel, high 4Q EPS growth need to make FY guidance (we model +34%), cannibalization risk as indirect still remains a large percentage of total (~50%), and decelerating comp store sales (but still +DD on 2-yr stack we acknowledge). Key controversy overhang: can VRA manage to grow in Indirect while expanding direct through new stores, new dept stores, & eComm."

CICC said, "YGE is fully aware that its China-focused strategy will leave it extremely susceptible to pricing pressures, yet it bets on the volume being large enough to warrant a profit on an EBIT level. While the visibility on shipments has been favorable, the management is somehow reluctant to give a clear roadmap for silicon cost reductions. We see YGE's slower margin recovery as a major overhang to share performance over the next 6~12 months and believe it no longer deserves a BUY rating, which was largely based on anticipated solid cost leadership after posting a US$135.3mn provision on long term poly supply contracts in 4Q11."

Citigroup said, "After trading between $6.97 and $8.29 in April, Synacor's stock is now at $14.50+, or up 75% in May. While earnings on April 24th were good and suggested fundamental growth drivers remain strong, the exceptional performance in May appears to be driven by positive commentary from two retail-focused investor services, the National Inflation Association and Jonathan Ledbed's newsletter. We aren't aware of any fundamental changes to the story that would drive such strong outperformance."

BMO Capital Markets said, "We are downgrading our rating of Leap stock to Underperform (from Market Perform) on relative valuation and the deteriorating outlook for margins, profitability and free cash flow exacerbated by the new iPhone deal. This outlook is further challenged by the company's aggressive push into the margindilutive MVNO and Muve Music businesses."

Bank of America commented, "We are lowering Synacor to Underperform from Neutral due to the stock's recent rapid price increase. Since being featured in various investor newsletters, SYNC has experienced heavy trading volume and the stock has increased 66% from $8.84 on May 1st to $14.70 yesterday. Bloomberg reports short interest of 2.3mn shares, or 28.7% of float, up from 633k a month earlier. We previously viewed Synacor as an undervalued growth investment but with the stock trading at 14x our 2013 EV/EBITDA estimate vs. media peers at 8x, we are lowering to Underperform."

Jefferies says, "Despite HP's solid position in cloud computing and its recently nnounced cost cuts, we believe most of HP's businesses will be challenged in the near to medium term. Specifically we think tablets will hurt PCs (and Windows 8 will not help), smartphones will hurt printers, and European uncertainty will hurt enterprise IT spending. We trim our estimates, cut our target from $30 to $23, and downgrade to a Hold."