Longbow Cries Uncle: Downgrades Pentair To Neutral

In a report published Wednesday, Longbow Research analysts downgraded the rating on

from Buy to Neutral, citing deteriorating market conditions. Markets continue to worsen and "there is still downside risk to estimates," despite the company's aggressive cost actions. Pentair has planned aggressive cost cutting to offset the impact of lower sales and has guided to savings of about $40M in 2015 and more than $100M in 2016. However, the analysts believe that positive catalysts are "in short supply" in the upcoming quarters. Pentair reported its 1Q15 EPS at $0.65, in-line with its preannouncement, but substantially below the analysts' previous estimate of $0.77. The miss was on account of a stronger dollar, slower-than-expected oil & gas, further slowing of global capex and de-stocking of customer inventory. Pentair's sales declined 10 percent y/y to $1.5B. Pentair has reduced its adjusted EPS guidance for FY15 from $4.10-$4.25 to $3.80, to reflect increased currency headwind and slower core growth. The company's adjusted EPS guidance for 2Q15 is $0.95-$0.96, significantly short of Longbow Research's prior estimate of $1.04.