Investment Analysts’ Downgrades for May, 15th (ADP, ARNA, AVEO, CRK, CTAS, ENDP, IMGN, PUMP, SPKE, SQBG)

Investment Analysts’ downgrades for Wednesday, May 15th:

Automatic Data Processing (NASDAQ:ADP) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “ADP’s third-quarter fiscal 2019 earnings beat the Zacks Consensus Estimate but revenues missed the same. Both earnings and revenues improved year over year. The company continues to enjoy a dominant position in the human capital management market through strategic acquisitions. It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. The company continues to innovate, improve operations and invest in its ongoing transformation efforts. A solid balance sheet enables it to continue with its shareholder-friendly activities alongside strategic buyouts and investments on product development. The stock has outperformed its industry in the past year. On the flip side, ADP faces significant competition in each of its product lines. The company ADP is seeing increase in expenses as it continues to acquire companies and invest in transformation efforts.”

Arena Pharmaceuticals (NASDAQ:ARNA) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Arena Pharmaceuticals reported impressive first-quarter results wherein earnings and sales surpassed the respective estimates. The company is focused on developing its two pipeline candidates – etrasimod and olorinab. The company out-licensed ralinepag to United Therapeutics and the fund is being used to support continuation of clinical development of other candidates. Meanwhile, the company’s decision to sell its manufacturing operations to focus on the pipeline is prudent, in our view. However, Arena’s pipeline candidates are in mid-stage development, which is a concern as any setback will have a negative impact on Arena’s prospects. Dependence on Belviq royalties is also concerning as the drug’s performance has been lackluster lately in a competitive market. Shares of the company have outperformed the industry so far this year.”

AVEO Pharmaceuticals (NASDAQ:AVEO) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “AVEO missed on both earnings and revenues in the first quarter of 2019. The company got a huge boost from the approval for Fotivda in Europe regarding the first-line treatment of advanced renal cell carcinoma (RCC).However, AVEO faced a major setback when it had to delay its submission of a new drug application (NDA) for Fotivda in the United States. The company intended to submit the NDA in the first half of 2019 but now interim data will be available during the fourth quarter of 2019, subject to mature OS results. Although, the target market is lucrative, dependence on partners for pipeline development and funds accumulation is a concern. Failure to receive regulatory approvals or the termination of a deal would hamper AVEO’s future prospects. AVEO receives royalties from Fotivda sales in certain European countries. This is a key revenue driver. Shares of the company have underperformed the industry so far this year.”

Comstock Resources (NYSE:CRK) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Comstock's large acreage position in the prolific Haynesville/Bossier Shale play provides a multi-year inventory of low-risk development drilling opportunities that continues to achieve excellent results. Supplemented with a low cost structure, Comstock remains well positioned to maintain a strong output growth trajectory in 2019. Moreover, the Jerry Jones asset contribution has helped Comstock to add oil rich assets to its portfolio as well as simplify its capital structure. However, the precarious liquidity position and high debt load are real concerns. An elevated leverage ratio of more than 68% restricts the financial freedom of the firm. Also, the company faces geographical concentration risk. Further, the weak gas pricing environment makes for a less optimistic outlook. As such, the stock warrants a cautious stance.  “

Cintas (NASDAQ:CTAS) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Over the past three months, Cintas' shares have outperformed the industry. Improved product offerings, solid customer base and effective implementation of enterprise resource planning system will benefit the company in the quarters ahead. Further, the company will gain from the G&K Services buyout. For fiscal 2019, Cintas raised earnings estimates from $7.30-$7.38 to $7.42-$7.48 per share. A strong cash position and focus on rewarding shareholders handsomely through dividends and share repurchases will work in its favor. However, we believe, if unchecked, higher costs and operating expenses will prove detrimental to Cintas’ margins and profitability. Also, the company is exposed to market risks as it procures raw materials from a wide variety of domestic and international suppliers. Further, increases in debt levels can increase its financial obligations.”

Endo International (NASDAQ:ENDP) (TSE:ENL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Endo’s first-quarter earnings and sales beat estimates. The company is looking to transform its business, with focus on Branded Pharmaceutical business in the United States. The company has divested its non-core assets and businesses, and repositioned its generics business in the United States by executing a comprehensive product portfolio and manufacturing footprint rationalization initiative. Endo is on track to launch approximately 15 products in 2019 across its Sterile Injectables, Generic Pharmaceuticals and International Pharmaceuticals segments. However, the generics business is expected to face competitive pressure, resulting in a slowdown in the performance. Moreover, response rates from the CCH trials did not impress the investors. Shares have underperformed the industry in the year so far.”

ImmunoGen (NASDAQ:IMGN) was downgraded by analysts at Guggenheim from a buy rating to a neutral rating.

Asante Solutions (NASDAQ:PUMP) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “ProPetro Holding focuses on growth through a combination of acquisitions and pressure pumping services in the lucrative Permian Basin spread over west Texas and New Mexico. The company’s recent purchase of Pioneer Natural resources assets has significantly boosted its fleet size. The deal's 10-year dedicated service agreement should ensure a stable revenue base in the medium-to-long term. ProPetro is also set to benefit from increased usage of cheap local sand, industry-leading utilization levels and strong client relationships. However, the firm continues to be exposed to the soft pressure pumping pricing in the Permian basin, which constitutes bulk of ProPetro's revenues. The tightness in the upstream companies' investment budget due to low year-end crude prices is an issue as well. Considering these factors, upside from current levels appear limited.”

Spark Energy (NASDAQ:SPKE) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Spark Energy, Inc. is an independent retail energy services company. It provides residential and commercial customers across the United States with an alternative choice for their natural gas and electricity. The company is involved in the retail distribution of natural gas and electricity. It also offers renewable and carbon neutral products. Spark Energy, Inc. is headquartered in Houston, Texas. “

Sequential Brands Group (NASDAQ:SQBG) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Sequential Brands Group Inc. is a licensing and brand management company focused on promoting, marketing and licensing a portfolio of consumer brands. The Company’s brands include William Rast(R) and People’s Liberation(R). It licenses its brands with respect to a broad range of products, including apparel, eyewear, footwear and fashion accessories, including handbags, watches and luggage. Sequential Brands Group Inc., formerly known as People’s Liberation, Inc., is headquartered in Pacific Palisades, California. “

Shotspotter (NASDAQ:SSTI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “ShotSpotter, Inc. is involved in designing and delivering gunfire alert and analysis solutions. The Company’s product consists of ShotSpotter Flex, ShotSpotter SiteSecure and SecureCampus. It operates primarily in United States, Puerto Rico, the U.S. Virgin Islands and South Africa. ShotSpotter, Inc. is headquartered in California, USA. “

Stamps.com (NASDAQ:STMP) was downgraded by analysts at Zacks Investment Research from a hold rating to a strong sell rating. According to Zacks, “Stamps.com is a leading provider of Internet-based postage services. Stamps.com’s service for postage online enables small businesses, enterprises, and consumers to print U.S. Postal Service-approved postage with just a PC, printer and Internet connection, right from their home or office. The Company targets its services to small businesses and home offices, and currently has PC Postage partnerships with Microsoft, EarthLink, HP, NCR, Office Depot, the U.S. Postal Service and others. Stamps.com provides easy, convenient and cost-effective Internet-based services for mailing or shipping letters, packages or parcels. Their PC Postage service is designed to allow individuals, home offices, small businesses or corporations to print US postage using any PC, any ordinary inkjet or laser printer, and an Internet connection. Its PhotoStamps product allows consumers and businesses to turn digital photos, designs or corporate logos into valid US postage. “

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