KeyBanc Downgrades Regal Beloit to Sector Weight After Weak Q1 Results, Outlook Cut

KeyBanc has downgraded Regal Beloit Corp

to Sector Weight from Overweight after the company's first quarter results missed consensus estimate and cut the full-year outlook. Shares of the electric motor maker plunged 14.4 percent after its first quarter adj. EPS of $0.95 and revenue of $818.2 million missed Street view of $1.07 and $851.52 million. KeyBanc had expected EPS of $1.06 on revenue of $848.3 million. "Given inconsistent execution and a lower near-term earnings trajectory, we are moving to the sidelines as RBC's discounted valuation appears warranted," KeyBanc analysts wrote in a note. Sales from Commercial and Industrial Systems fell 17 percent, and Climate Solutions dropped 14 percent. However, Power Transmission Solutions revenue rose 15 percent. The Beloit, Wisconsin-based company cut its FY16 EPS guidance to $4.40-$4.80 from $4.80-$5.20. The brokerage also slashed its full-year EPS view to $4.55 from $5.00, while Street estimates earnings of $4.95 a share. "We were particularly concerned with the magnitude of Climate Solutions weakness, which we think could likely rekindle investor concerns of share loss in this space," the analysts added. At the time of writing, shares of Regal Beloit fell 9.42 percent to $57.33.