They do not predict a double dip scenario, but see growth slowing for the whole globe.
Comments »Fitch Announces A Potential Downgrade for India
S&P Cuts S&P
A Closer Look at Volatility
Moody’s Downgrades Eight Greek Banks
FLASH: Goldman Ups Apple Price Target to $520
Stock is up 4 to $417
Comments »IMF Cuts Global Growth Outlook; Europe in Deep Mire
Upgrades and Downgrades This Morning
Upgrades
CARB – Carbonite initiated with a Buy at Canaccord Genuity
TW – Towers Watson ests raised at Stifel Nicolaus
SAP – SAP AG upgraded to Outperform from Market Perform at Wells Fargo
MGM – MGM Resorts upgraded to Overweight from Equal Weight at Morgan Stanley
SBSI – Southside Banc assumed with Market Perform at Keefe Bruyette
PER – SandRidge Permanian Trust initiated with a Mkt Perform at Morgan Keegan
JPM – JPMorgan Chase initiated with an Overweight at Evercore
RL – Polo Ralph Lauren upgraded to Outperform from Neutral at Cowen
TRV – Travelers upgraded to Buy from Sell at Goldman
VMW – VMware initiated with a Buy at Merriman
PHM – PulteGroup upgraded to Buy from Neutral at UBS
CHKM – Chesapeake Midstream Partners initiated with Outperform at Credit Suisse
VC – Visteon initiated with a Buy at BofA/Merrill
AWH – Allied World Assurance resumed with a Neutral at Goldman
Downgrades
CVH – Coventry Health Care downgraded to Underperform at Wedbush
MCP – Molycorp downgraded to Neutral from Overweight at JP Morgan
PRU – Prudential target lowered to $66 at FBR Capital
AIXG – Aixtron downgraded to Neutral from Buy at UBS
LINE – Linn Energy initiated with a Neutral at Credit Suisse
TPX – Tempur-Pedic initiated with a Neutral at Goldman
FDX – FedEx ests and target lowered to $120 at Dahlman Rose
FIO – Fusion-io initiated with an Underperform at Sterne Agee
MRVL – Marvell downgraded to Market Perform from Outperform at JMP Securities
SLRC – Solar Capital initiated with a Hold at Stifel Nicolaus
AIXG – Aixtron downgraded to Underperform at Chevreux
HLS – Healthsouth downgraded to Fair Value from Buy at CRT Capital
QSFT – Quest Software initiated with a Hold at Capstone
Comments »Gapping Up and Down This Morning
Gapping up
CISG +5.3%, KONA +15%, RIO +1.9%, SNY +2%, ABX +1.5%, GOLD +1.5%, BBL +1.4%, KEX +3.7%, AEM +2.6%, HL +1.9%,
NOK +2.2%, RCL +3.4%, APD +0.5%, MGM +4%,
Gapping down
LYG -2.3%, GILD -2%, RAH -1.5%, NCT -9.7%, MLNX -3.5%, NFLX -2.6%, JAZZ -4.6%, UBS -1.1%, SLV -1%,HME -4.6%, WES -4.2%, ARAY -4.1%,
Comments »Housing Starts: Prior 604k, Mkt Expects 590k, Actual 571k
Fitch Expects Greece to Default, But Not To Leave the EU
Morgan Stanley Warns of Dire Consequences if the Fed Dissapoints
Part of S&P’s Decision on Italy is Lower Growth Due to Austerity
S&P 500 Estimates Lowered by Wells Fargo and Barclays
Wells Fargo & Co.’s Gina Martin Adams and Barclays Plc’s Barry Knapp cut their forecasts for the Standard & Poor’s 500 Index this year, citing economic uncertainty and a potential decline in earnings estimates.
Adams, the New York-based equity strategist at Wells Fargo, reduced her year-end price forecast for the S&P 500 by 10 percent to 1,250. Knapp, the head of U.S. equity strategy, lowered his to 1,325 from 1,450. Adams also cut her projection for combined profit by companies in the benchmark equity measure in 2011 and 2012.
The combination of Europe’s sovereign debt crisis and weakening U.S. economic data has pushed the S&P 500 down as much as 18 percent from its high this year in April. Strategists at Wall Street firms from UBS AG to Goldman Sachs Group Inc. have slashed their forecasts for the benchmark U.S. equity measure since the beginning of August. In the same period, analysts that cover stocks in the S&P 500 have lifted their profit estimates 0.4 percent to $99.88 a share.
“Micro profit forecasts are likely to play catch-up to soured macro data in coming weeks,” Adams and Peter Chung, an analyst at the firm, said in the note. “While bottom-up forecasters are holding relatively strong to their convictions for strong profits growth to continue, our models suggest earnings growth is likely to reflect the recent economic slowdown over the next few quarters.”
Weekly Losses
The S&P 500 rose 0.7 percent to 1,162.27 at 4 p.m. in New York. The index lost 1.7 percent last week, its sixth drop in the past seven weeks.
Combined earnings by companies in the equity measure will be $93.50 a share in 2011, down from an earlier estimate of $94.40, Adams said in a note dated today. She also lowered her estimate for profit in 2012 to $98.70 a share from $103.50. Knapp kept his predictions for profit by S&P 500 companies at $96 a share in 2011 and $105 in 2012.
“With roughly three quarters behind us, the risks to 2011 earnings are somewhat limited and we’re comfortable with our forecast,” Knapp wrote in a note dated Sept. 9. “However, 2012 is a different story.”
While Knapp still says S&P 500 profit will increase 9.4 percent in 2012 from the prior year, analysts’ expectations for growth have slowed. Financial companies are among the biggest risks to the Barclays earnings estimate for 2012, he said.
Public Policy
“We remain bullish,” he wrote. “Continued public policy uncertainty and the impact of slowing earnings momentum were significant factors in our decision to cut our 2011 year-end price target to a still optimistic 1,325.”
Technology, industrials, materials and consumer- discretionary stocks will lead the 15 percent rally from the S&P 500’s close on Sept. 9 to Barclays’s year-end forecast, Knapp said. Consumer staples and utility companies will lag behind, he said.
Adams said her profit forecasts for financials and energy companies diverged the most from the average estimate of company analysts. She raised her recommendation for consumer staples and consumer-discretionary stocks to “overweight” and utility stocks to “market weight.” She lowered her ratings for technology companies to “market weight,” while also downgrading industrial, energy and material companies to “underweight.”
Recommended Shift
“We are recommending a shift to a more defensive asset allocation,” Adams wrote. Declining commodity prices have allayed concerns that consumer companies will face margin pressures due to higher input costs, she said.
While the move to “overweight” on discretionary stocks may seem contrary to Wells Fargo’s shift to recommending defensive groups, the group won’t suffer as much as other industries in an economic slowdown, Adams said. Industrial and commodity companies would be vulnerable to a slowdown, according to San Francisco-based Wells Fargo.
“Energy, materials, and industrials nonetheless have among the most difficult earnings comparisons but highest expectations for growth over the next several quarters,” Adams wrote. “As the consensus works to catch up to the economic reality, we expect earnings downgrades are likely to weigh on these segments.”
To contact the reporter on this story: Inyoung Hwang in New York at [email protected]
To contact the editor responsible for this story: Nick Baker at [email protected]
Comments »J.P. Morgan upgrads SodaStream $SODA to Overweight
Comments »J.P. Morgan is upgrading SodaStream International (NASDAQ:SODA) to Overweight from Neutral with a $50 price target. Full story…