Research Analysts’ Downgrades for October, 8th (CA, CERN, HTGC, LPT, MGI, MPWR, NLY, O, PBCT, SWKS)

Research Analysts’ downgrades for Monday, October 8th:

CA (NASDAQ:CA) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “CA is benefiting from higher Mainframe new sales. Solid demand for its recently launched Trusted Access Manager for Z, a Mainframe solution, is a tailwind. Additionally, the company’s “go to market” sales strategy integrating the commercial functions of sales, marketing, brand management, pricing and consumer insight, is helping it in lowering costs, thereby improving the bottom line. Estimates have been stable lately ahead of the company’s Q2 earnings release. Nonetheless, intensifying competition and currency volatility are headwinds. However, shares have demonstrated solid momentum post Broadcom’s acquisition proposal of $18.90 billion, which is expected to close in the fourth quarter of calendar 2018. The company has mixed record of earnings surprises in recent quarters.”

Cerner (NASDAQ:CERN) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Cerner underperformed its industry in a year’s time. The company’s Subscription and Reimbursed travel revenues are declining. A significant drop in operating income and margin is worrisome. High long-term debt is another concern. Competition in the global MedTech space adds to the woes. However, Cerner saw consistent growth in its Electronic Health Record platform and Revenue Cycle Management solutions. Cerner Millennium and Cerner ITWorks continue to drive results. Growth in Licensed Software and Professional services is noteworthy. Cerner’s CommunityWorks organization continues to perform well in the small hospital market space. Solid international growth also raises hopes. Management is optimistic about solid booking contributions from Australia, Canada, Middle East and Europe in the second half of 2018. A positive guidance for 2018 is encouraging. In recent times, Cerner has seen a slew of developments.”

Hercules Capital (NYSE:HTGC) was downgraded by analysts at Zacks Investment Research from a buy rating to a sell rating. According to Zacks, “Shares of Hercules Capital have underperformed the industry so far this year. The company’s earnings have surpassed the Zacks Consensus Estimate in two of the trailing four quarters. Further, increase in expenses, primarily due to the efforts toward improving originations, is expected to hurt near-term bottom-line growth. While it is likely to witness growing demand for customized financing, based on market optimism for public equities and an improving economic environment,  the concentration risk will likely continue to be a concern for the company.”

Liberty Property Trust (NYSE:LPT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Liberty Property have outperformed its industry over the past six months. Notably, leveraging on the strong fundamentals of the industrial real estate market, the company is focusing to expand its industrial portfolio through strategic acquisitions and development projects. Further, it is disposing non-core office properties to pursue such expansion opportunities. Moreover, it is actively investing in development projects. Such efforts to refine portfolio and capitalize on value creation opportunities are expected to drive the company’s long-term growth. However, large scale dispositions will likely have a dilutive impact on the company’s earnings in the near term. Further, with rising supply of industrial real estate space, there is lesser scope for robust rent and occupancy growth.”

Moneygram International (NASDAQ:MGI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “MoneyGram continues to see strong growth in its mobile and online businesses. Its investment in innovative products and services, particularly in Digital/Self-Service solutions, would help to enhance revenue growth and diversify its product offerings. Its partnership with Ripple will allow it to use cryptocurrency to speed up the company's remittance settlement time and lower money transfer costs. However, weakness in the Money transfer business remains a challenge to the company’s top-line growth. High compliance costs and economic instability in some parts of the world continue to exert business volumes. Its shares have underperformed the industry in the past year.”

Monolithic Power Systems (NASDAQ:MPWR) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Monolithic designs, develops and markets high-performance power solutions. The company generates majority of revenues from a limited number of customers. Customer concentration lowers the company’s ability to hike price, which is a major concern. Further, intensifying competition from peers is expected to keep profitability under pressure in the near-term. Moreover, lack of geographic diversity in terms of end-customers is a significant headwind. However, robust demand in high-end consumer markets, including the likes of IoT based products, lighting and home appliances, is growth drivers. Higher dollar content in new servers based on Purley platform is expected to drive top-line growth. Notably, the stock has outperformed the industry in the past one year.”

ANNALY Cap Mgmt/SH (NYSE:NLY) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of Annaly have underperformed the industry in the past six months. While the company aims at investment in more credit-focused asset classes, any adversity in the macro-economic condition is likely to result in a widespread de-leveraging of the financial markets, forcing Annaly to sell its mortgage assets at unattractive prices. Further, Annaly’s performance also depends on the broader financial market environment. This makes it susceptible to economic downturns and geopolitical doldrums. Also, competition from other financial institutions and rising interest rates add to the company’s woes. Nonetheless, a strong financial position has enabled Annaly to maintain a consistent dividend payout for 20 consecutive quarters.”

Realty Income (NYSE:O) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Realty Income have outperformed its industry in the past six months. Further, the trend in estimate revisions of 2018 funds from operations (FFO) per share indicates a favorable outlook for the company. In September, the company announced its 98th dividend hike since the company’s NYSE listing. Notably, this freestanding retail REIT derives more than 90% of its annualized retail rental revenues from tenants belonging to service, non-discretionary and low-price retail business. Such businesses are less susceptible to economic recessions, as well as competition from Internet retailing. In addition, accretive acquisitions and solid balance sheet strength augur well for its long-term growth. However, generation of notable rental revenue from assets leased to drug stores and rate hike remain concerns.”

People’s United Financial (NASDAQ:PBCT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of People’s United have underperformed the industry in the past six months. Yet, the company possesses a decent earnings surprise history, beating the Zacks Consensus Estimate in two of the trailing four quarters. People’s United is steadily growing through acquisitions, which is likely to continue in the near future, given its strong balance-sheet position. Recently, it acquired First Connecticut Bancorp, with an aim to further build its presence in Connecticut. Also, the company remains committed to enhance shareholders’ value through active involvement in capital-deployment activities. However, escalating expenses, despite undertaking initiatives to curb costs, remain a concern.”

Skyworks Solutions (NASDAQ:SWKS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Skyworks designs, manufactures, and markets a broad range of high performance analog and mixed signal semiconductors that enable wireless connectivity. Escalating operating expenses, are anticipated to limit margin expansion in the near-term. Further, significant pricing pressure, stiff competition from peers and high concentration risks are other headwinds. Notably, Skyworks stock has reported a wider loss in its value compared with the industry's decline in the past year. However, the company benefits from strong demand of its wireless communications engines. Skyworks’ expanding product portfolio, growing clout in the connectivity solutions and 5G markets are positives. The emergence of connected homes, autonomous vehicles, AI, AR, wearables and network infrastructure are aiding the company. The company is expected to benefit from strong demand for Wi-Fi, Zigbee and LTE solutions.”

The Western Union (NYSE:WU) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Western Union’s shares have declined in a year's time comparing unfavorably against its industry’s gain. Its Business Solutions unit has been underperforming, creating a drag on revenues. The company has been facing high compliance-related and restructuring charges, which weigh on its margins. The company is faced with a number of global economic headwinds, including foreign exchange volatility weakness in some of the economies, which have been limiting its profitability. Its Consumer to Consumer segment remains attractive and investment in technology bodes well for growth. A strong balance sheet position and accretion from business improvement initiatives are the other positives. Its International business also holds promise.”

Alleghany (NYSE:Y) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Shares of Alleghany have outperformed the industry in a year’s time. Alleghany’s strong performance across insurance and reinsurance operations will continue to boost its premium revenues. It strives to grow via both acquisitions and organic means as these not only diversify and strengthen its portfolio but also expand its global footprint. A solid balance sheet supports the company’s shareholder-friendly moves and its growth initiatives. It continues to expect compound book value per share growth of 7-10% over a long term. However, exposure to cat loss induces volatility in underwriting results while rising expenses weigh on the margin expansion. Alleghany is set to report third-quarter results on Nov 1. While a Zacks Rank #3 increases the predictive power of ESP, an Earnings ESP of 0.00% makes prediction difficult. The Zacks Consensus Estimate is pegged at $7.68, reflecting a year-over-year increase 134.9%.”

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