Equities Research Analysts’ Downgrades for April, 16th (AKAM, ANET, BABA, CCK, CI, CLX, CNHI, CR, CTL, CYBR)

Equities Research Analysts’ downgrades for Tuesday, April 16th:

Akamai Technologies (NASDAQ:AKAM) was downgraded by analysts at Zacks Investment Research from a buy rating to a sell rating. According to Zacks, “Akamai is a global provider of content delivery network (CDN) and cloud infrastructure services. The company’s business is being hurt by the Do it yourself (DIY) initiatives of some key clients in the CDN space. Further, increasing bandwidth costs are a headwind. Moreover, unfavorable foreign exchange and seasonal summer traffic are major concerns. Notably, estimates have been stable lately ahead of the company's Q1 earnings release. Nonetheless, Akamai is benefiting from growing influence of its security solutions among media customers, in particular. Additionally, robust over-the top (OTT) content viewing, increasing adoption of mobile data/apps & growing mobile data traffic bode well.”

Arista Networks (NYSE:ANET) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Arista is well positioned with key cloud customers and is focused on expanding its presence across all the verticals. The company continues benefiting from the expanding cloud networking market led by strong demand for scalable infrastructure. Arista aims to sustain revenue growth and healthy cash generation in 2019 and beyond on the back of industry-leading product offerings that enable seamless integration with third-party applications for network management, automation and orchestration. The stock has outperformed the industry in the past year on average. However, Arista faces stiff competition in the cloud networking space, particularly from Cisco. Persistent lawsuits have been a distraction for it. It has been forced to bring down much of manufacturing in the United States, which along with redesigning of products, has led to loss of time and hurt gross margin.”

Alibaba Group (NYSE:BABA) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Alibaba’s contracted consumer spending and an uncertain economy is likely to impact its top-line growth. Also, rising competition from domestic as well as foreign e-commerce companies poses risk. Additionally, the company’s increasing investments and macro headwinds in China are major concerns. However, the strong momentum in both domestic as well as international market remains growth drivers. Moreover, the company’s New Retail strategy is aiding growth in its Tmall Import, Hema fresh food grocery business and Intime Department Stores. Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Notably, the stock has underperformed the industry it belongs to over a year. “

Crown (NYSE:CCK) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Crown Holdings projects first-quarter 2019 earnings per share between $1.00 and $1.10. The company’s results will be hurt by negative impact of foreign currency translation. Going forward, it also expects to incur additional restructuring charges related to its plant closures. The company will also bear the brunt of fluctuations in the price of raw materials due to tariffs. High level of indebtedness and substantial competition also remain matter of concerns.”

Cigna (NYSE:CI) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Cigna’s shares of the company have lost in a year’s time, narrower than its industry’s decline. Moreover, it has witnessed its 2019 earnings estimates move south over the past 60 days. An increase in leverage might pose financial risk.  Rise in operating expenses may weigh on margins. Suspension of share buyback due to the acquisition of Express Scripts might weigh on the bottom line. Nevertheless, its acquisition of Express Scripts, is likely to fuel long-term growth. A robust Global Supplemental business, growing Government business and increasing membership should drive revenues. Along with top-line growth, Cigna has been able to maintain bottom-line profitability as well. Its strong capital position enables investment in business.”

Clorox (NYSE:CLX) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Clorox lagged the industry in a month owing to expectations of higher costs in fiscal 2019, which should dent margins. Elevated commodity, manufacturing and logistics expenses hurt gross margin in second-quarter fiscal 2019. Moreover, the company expects gross margin to remain flat in fiscal 2019 owing to increased costs and adverse foreign currency exchange rates. It also expects EBIT margin to decline, due to flat gross margin expectations, and plans to complete the Nutranext integration and advertising investments to support the innovation plans in the back-half. Unfavorable currency also remains a headwind. However, second-quarter fiscal 2019 earnings beat estimates for the ninth straight quarter. Though sales missed estimates, it improved year over year on solid execution of pricing and cost-saving plans. Further, the company's 2020 Strategy, aimed at bolstering growth of categories and overall market share, remains on track.”

CNH Industrial (NYSE:CNHI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “In 2018, CNH Industrial gained from operating efficiencies, higher sales volume, favorable mix and positive net price realization. For 2019, it expects net sales for Industrial Activities to be $28 billion and adjusted earnings per share to be 84-88 cents, aided by product launches and positive price realization. For long-term growth, it is developing several products and technologies across all the segments to remain at par with technological advancements and new emission-control procedures. Over the past six months, the company’s shares have outperformed the industry it belongs to. However, increasing capital expenses to develop products, rise in raw material costs due to tariffs and foreign currency fluctuations are headwinds for CNH Industrial.”

Crane (NYSE:CR) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Over the past three months, Crane's shares have underperformed the industry. For 2019, the company expects revenues to fall 2%, with core sales likely to be between a 2% decline and 1% growth. For the segments, organic sales are predicted to decline 7% for Payment & Merchandising Technologies and likely to remain flat for Engineered Materials. Moreover, the company’s extensive geographic presence has exposed it to headwinds, arising from geopolitical issues and unfavorable movements in foreign currencies. Notably, forex woes will likely have 1.5% adverse impact on sales growth in the year while rising costs and expenses might be detrimental. In the past 60 days, earnings estimates for the company have remained unchanged for 2019 and decreased for 2020.”

Centurylink (NYSE:CTL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “CenturyLink is focused on transforming its business operations through product evolution and digitizing of customer interactions, which augurs well for healthy revenue growth. The company is working with customers for a seamless transition to 5G roadmaps while expanding its fiber footprint. CenturyLink believes the scale of its global assets alongside innovative product portfolio to be accretive to earnings. However, the stock has underperformed the industry over the past year on average. CenturyLink’s core local phone business has slowed down significantly due to the substitution of traditional wireline telephone services by wireless and other competitive offerings. Accumulating high-debt level remains a potent threat to the company's margin, resulting in a probable liquidity crisis. High R&D costs to develop technologically upgraded products remain another concern for the company.”

Cyberark Software (NASDAQ:CYBR) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “CyberArk is benefiting from growing adoption of its solutions, which is helping it win deals. Increasing demand for privileged access security on the back of digital transformation and cloud migration strategies is a key growth driver. Strong revenue growth across the Americas, EMEA and APJ is benefiting its top line. Estimates have been stable ahead of the company’s first-quarter earnings release. Over the recent quarter, it pulled off positive earnings surprises. Shares have outperformed the industry in the past year. However, increasing OpEx due to various improvement initiatives are expected to hurt the bottom line in the near term. Near-term prospects for CyberArk are not promising as changing customer spending behavior has recently hit several other players in this space. An increase in costs due to seasonal employee expenses and the marquee Americas customer event is expected to be an overhang in the last quarter of this year.”

Donaldson (NYSE:DCI) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Over the past six months, Donaldson's shares have underperformed the industry. Also, it looks significantly overvalued compared with the industry over the same time frame. Rising costs of revenues on account of material price inflation and soaring freight charges remain concerns for near-term margins. It anticipates that continued material price inflation and soaring freight charges will hurt gross profit by $30 million in fiscal 2019. Weakening Gas Turbine Systems business is also weighing on the company. Moreover, increase in debt levels can increase financial obligations. In the past 60 days, earnings estimates for the company have declined for both fiscal 2019 and fiscal 2020.”

Eversource Energy (NYSE:ES) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “In the last three months shares of Eversource Energy have underperformed its industry. Eversource Energy’s prospects will be hurt by the ongoing delay in the approval of Northern Pass project, dependence on third party, stringent regulation, and underperformance of its transmission and distribution system due to breakdown are concerns. Refusal by Connecticut Water will hurt its plans to expand water business through acquisition. However, Eversource’s investments in renewable energy generation, expansion of transmission and distribution systems will help it to provide reliable services to its customers. Start of the new water segment will diversify the source of its revenues. Its regulated investment plans will help boost earnings per share by 5-7% over the 2019-2023 time frame from the 2018 level.”

Harris (NYSE:HRS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Harris depends on federal customers for a major portion of its revenues. So, any loss of relationship or reduction in funding is likely to take a toll on its cash flows. The company is prone to be affected by security breach through cyber attack or insider threats. It is also susceptible to the risk of fluctuations in currency exchange rates owing to its international operations. Increasing cost of operations is likely to contract profitability over the long term. Harris is a highly leveraged company. This is indicated by the fact that the ratio of its long-term debt-to-equity (expressed as percentage) is currently 100. However, the stock has outperformed the industry in the past three months on average. Harris’s business will likely be augmented by its merger with L3 Technologies. The combined firm, L3 Harris Technologies, will be a global defense technology leader, creating more opportunities for employment and investment growth.”

Kellogg (NYSE:K) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Kellogg’s shares declined in the past three months. The company is battling high costs related to brand enhancement, which dented earnings in the fourth quarter of 2018, and also weighed on the outlook for 2019. Markedly, high investments, mix shifts and cost inflation related to expansion of other pack formats and networks are likely to dent adjusted operating profit in 2019. Also, the company is expected to face currency woes. Nevertheless, the company’s sales picture looks bright, owing to its solid buyouts that boosted the top line in the fourth quarter of 2018. Further, Kellogg expects revenues to grow about 3-4% in 2019, backed by Multipro’s consolidation and organic sales growth. Also, the company’s revenue-growth management efforts are likely to fuel volumes and price/mix. Additionally, Kellogg’s savings from productivity enhancement efforts are noteworthy.”

Monroe Capital (NASDAQ:MRCC) was downgraded by analysts at BidaskClub from a hold rating to a sell rating.

Maxim Integrated Products (NASDAQ:MXIM) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Maxim is suffering from sluggish bookings and weakening momentum across its customers. These are affecting the company’s position in the industrial market. Further, it is experiencing seasonal fluctuations in the consumer market which remains an overhang. Also, slowing shipment of 100G optical module is likely to impact the company’s performance in data center market. Notably, the stock has underperformed the industry it belongs to over a year. The company has mixed record of earnings surprises in recent quarters. Nevertheless, Maxim’s solid momentum across the automotive market remains a major positive. Further, the company remains optimistic about its flexible manufacturing strategy which is expected to aid margin expansion. However, Maxim's high dependence on Samsung is a risk to its growth trajectory.”

Ingevity (NYSE:NGVT) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Ingevity has outperformed the industry it belongs to over a year. The company is well placed to gain from the Georgia-Pacific’s pine chemicals business buyout. The acquisition of the Capa caprolactone business should also drive its earnings in 2019. Moreover, positive developments in the U.S. drilling activity is expected to boost performance of its Performance Chemicals division. Shifting to high margin products along with improved TOFA pricing should also lend support to its margins. The company should also gain from the expected activated carbon demand growth based on early adoption by some regions in China. However, planned outages are likely to hurt Ingevity’s margins. The company is also exposed to inflationary cost pressures. The company’s high debt level is another concern.”

NIKON CORP/ADR (OTCMKTS:NINOY) was downgraded by analysts at Zacks Investment Research from a hold rating to a strong sell rating. According to Zacks, “Nikon shares have underperformed the industry in the past year. The company is negatively impacted by stiff competition in the shrinking entry and mid-level DSLR markets. High R&D expenditure, restructuring costs and investments related to the medical business also continues to drag down margins. Nikon lowered revenue guidance for the imaging business, due to struggling camera and chip equipment operations that have been hit by falling demand in China. Moreover, increasing uncertainty over the resolution of the U.S.-China trade dispute has remained an overhang on shares, which have unperformed the industry in the past year. Nevertheless, the company benefits from strong performance of precision and healthcare segments. Moreover, improving demand for D850, Z 7 and D3500 cameras are expected to boost top-line growth.”

Newell Brands (NYSE:NWL) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Newell has underperformed the industry in the past three months. Further, the company lagged sales estimates for the fourth consecutive time, when it reported fourth-quarter 2018 results. Lower core sales, unfavorable currency and adverse impact from the revenue recognition standard have been weighing on the company's top-line performance. Decline in sales at all its segments also hurt overall sales. Moreover, Newell issued soft earnings outlook for 2019, which hurt investors’ sentiments. In 2019, it continues to witness decline in core sales, which might weigh on the overall top line. However, Newell is smoothly executing the Accelerated Transformation Plan through market share gains, point of sale growth, innovation, e-commerce improvement and cost-saving plans, which remains encouraging. Further, the company reversed its negative margins trend in fourth-quarter 2018 owing to the ongoing productivity efforts.”

Penske Automotive Group (NYSE:PAG) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Penske Automotive’s sale of new vehicles is declining, owing to the introduction of the light-vehicle testing procedure called WLTP in Europe. A similar declining trend is expected to continue in the coming quarters as well due to uncertainty and higher taxes on diesel-powered vehicles in the U.K. Further, rising competition among industry peers and increasing price transparency can lead to lower selling prices, thereby, hurting the company’s margin. Over the past three months, shares of Penske Automotive have underperformed the industry it belongs to. It will post first-quarter earnings results on Apr 25.”

Rockwell Automation (NYSE:ROK) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “For fiscal 2019, Rockwell Automation expects adjusted EPS at $8.85-$9.25. The company expects that tariffs will have an unfavorable impact in second-quarter fiscal 2019. Rockwell Automation's operations will be impacted in Europe due to currency fluctuations and increasing oil prices. The company's increased spending to support growth will put pressure on margins in the near term.”

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