Review Of Analyst Downgrades This Week - Part I

by: The Value Investor

Analysts have been sending out their research reports to their clients again this week. In the following, a review of the most important downgrades of the week of April 9 - 13.


Barclays lowered it advice for Nokia (NOK) from overweight to equalweight and lowered its price target to $4. Shares in Nokia lost 21% this week trading at $4, at fair value according to Barclays, after the Finnish mobile phone manufacturer cut its first quarter outlook as it struggles to compete in the smart phone segment.


Barclays also lowered Polycom's (PLCM) advice from overweight to equalweight with a price target of $15. Simultaneously, RBC Capital Markets lowered its price target to $19 after Polycom ended the week 25% lower at $13.62 as the provider of videoconferencing solutions reported first quarter results which missed estimates by far.


Keybanc Capital Markets lowered the advice for Amphenol (APH) from buy to hold. The broker did not specify a target price for the manufacturer of electrical cables, optic connectors and interconnect systems. Analysts point out that shares trade at all time highs and believe an entry point for the shares is best served waiting for. Despite being removed from the buy list, shares fell merely 1% for the week.

First Horizon National

RBC Capital Markets lowered its advice for First Horizon National (FHN) from market perform to underperform with a $9 target price. At Friday's close the bank holding company operating in Tennessee had 8% downside potential, according to RBC. Shares have rallied in recent months on the back of a strong recovery throughout the financial sector, but RBC points out that First Horizon missed on first quarter earnings in January. Shares ended the week 4% lower.


RBC Capital Markets furthermore lowered its advice for Intermune (ITMN) from outperform to sector perform with a $17 target price. The biotechnology focused on development and commercialization of therapies in pulmonology and fibriotic diseases saw its shares fall over 25% this week after the company said the key clinical trial for its "Esbriet" drug has been delayed by 6 months, until the end of 2012.


With a correction in general stock markets taking place analysts see some downside potential in some names. While downgrades of Nokia, Polycom and Intermune came after bad company specific news, the downgrade of Amphenol and First Horizon National are on the back of valuations. Notably the downgrade of First Horizon did not fell good in a market in which financials were already under pressure, proving once again that analysts can move stocks with their announcements.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.