Analysts Downgrades: Supervalu = junk, cyclicals downgraded

Supervalu Inc (NYSE:SVU), a US grocery chain and food distributor, faced a blanket of downgrades on the equity and credit side. Blaming competitive and economic forces, the company said it would suspend its dividend and issue a profit warning for 2013. The company's debt rating was cut by Fitch from B to CCC, hitting the dreaded junk status, due to the company's deteriorating operatings and the company's high debt. Although one equity analyst upgraded the stock last week due to the company's 'emergency recovery plan', most others heavily punished the company with an average 24 percent downgrade following the stock's two-day free fall of 55 percent last week. Analysts have now have a target price of 4.92 while the stock is currently trading around 2.30.

European and Chinese growth fears are impacting cyclical stocks as analysts have massively downgraged Cummins Inc (NYSE:CMI), the engine manufacturer, on macroeconomic fears and a lowering of its quarterly and full-year 2012 guidance. Although the company's stock was up more than 3 percent on Friday, analysts have downgraded the stock 11.7 percent, from 126 to 111. On the same note Alcoa (NYSE:AA) was also downgraded by 4 percent as the company is also facing the same macroeconomic concerns. As the economy slows, expect more downgrades of cyclical and industrial stocks such as Alcoa and Cummins.

The UK's second largest soft drinks maker, Britvic Plc (LON:BVIC) had to recall its children drinks due to a packaging error. The recall will cost up to £25 million for the company, and in addition to this the industry faced poor weather conditions and low consumer spending meaning that the company will most likely not achieve its full year guidance. Because of this analysts lowered their target price for the company by 21 percent from to 292 from 370.

 Other notable downgrades are shown below.

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

For news about the latest upgrades see my colleague Sverir Sverrison's post: Analysts’ Upgrades: MRK's green light on drug; PMO explores oil.

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