Analysts Downgrades: SPLS down 14%, LMI hurt by platinum strike

Staples (NASDAQ:SPLS)

The office products company was hit hard by investors and analysts alike last week after it reported poor Q2 results.

The company reported EPS of USD 0.18, a drop of 18% from Q1. Analysts were expecting EPS of USD 0.22. The negative surprise sent the shares tumbling more than 15%. The EPS decline was led by a 6% overall decrease in global sales along with softness in the American market. Due to the weaker-than-expected quarter, the company is reducing its full-year sales outlook to flat from prior year. 

After the share fall on Wednesday of last week, analysts toned down their target price for the stock, reducing it by 13.8% to 13.82, as well as reducing the stock to ‘Overweight’ from ‘Hold’. Analysts expect EPS USD 0.46 for Q3 due to the strong effects of back-to-school spending. Should the company disappoint on that end, the stock will surely tumble further.

Lonmin PLC (LON:LMI)

The UK-based mining company, which is the 3^rd biggest platinum producer in the world, has been in the news recently because a protest in its South African Nickel and Platinum Marikana mine resulted in 44 people losing their lives. The halt to mining operations there has pushed Lonmin to consider, according to rumors, a USD 1bn rights issue due to losses it has sustained and to keep debtors at bay. Should the company decide to proceed with a rights issue of USD 1bn it would greatly dilute the company’s shareholder base, given that the company’s market capitalization is only GBP 1.24bn.

Some analysts have revised their target price for the company down by as much as 13%, from 852.96 to 738.58. A full 50% of the analysts having a sell rating on the company. The stock is down 18% since the beginning of the strikes at its Marikana mine.

Agilent Technologies (NYSE:A)

Agilent Technologies missed its Q3 sales and earnings guidance, which resulted in the company’s stock price slumping 8% after the earnings release on Wednesday. Analysts were expecting EPS USD 0.83 on USD 1,787bn of revenues, but the company only delivered revenues of USD 1,723 and EPS of USD 0.79.

In the industrial segment, the company saw a 10% decline from a worse than expected economic demand. But there were a couple of bright spots for the company, including communications revenues, which were up 7% from smartphone demand as well as its Forensics and Diagnostics segments, which were up 17% and 14% respectively.

Due to the quarterly miss, analysts lowered their target price for the company by 6.2%, from USD 50.59 to USD 47.43.

Other notable downgrades include a couple of European banks, such Commerzbank and Bankia, and Applied Materials, as shown below.

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

You can read about this week's analyst downgrades in my colleague Sverrir Sverrisson's post,  Analyst upgrades: Retailers ANF, TJX and ROST up on earnings.

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