Analysts' Downgrades - Barclays hit by LIBOR trouble; Man hurting

Man Group – The investment company has been hit with a large number of downgrades as investment flows into the company’s funds are slowing due to volatility and a lack of direction in the equity markets. The reduction in AUM, an expected 12%, will impact the Man Group’s revenues directly through the fees it charges for its investment management services. The downgrade is mostly due to the difficulty in the markets and the lack of risk appetite. The stock trades much like a leveraged version of the general equity markets. The stock's target price was lowered 13.8% and the consensus rating was changed from overweight to hold.

Western Digital Corp. (WDC) the hard drive manufacturer’s target price was cut by 5.6%. The main driver for the downgrade was WDC’s competitor Seagate Technology's (STX) pre-earnings announcement that it had trouble obtaining materials from one of its suppliers which prompted downgrades in STX as well as WDC. Western Digital consensus rating was changed from ‘Overweight’ to ‘Hold’.

The LIBOR scandal prompted the Barclays (BARC) CEO to resign as well as analysts to issue a rash of target price downgrades resulting in a consensus target price reduction of 4.6% and a negative ratings change to ‘Hold’ from ‘Overweight’. Analysts highlighted added political risk to the company as it tries to appease policy makers and regulators over the large scale fraud. In addition to the stock downgrade, the bank’s bank credit was also put on a negative outlook citing the possibility that political and regulatory forces would prompt a change in the company’s business model which is highly dependent on investment banking earnings.

 Some other interesting downgrades are shown below: 

For additional details on these stocks, take a look at Saxo Bank’s Equity Research offering here.

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