Research Analysts’ Downgrades for May, 21st (DAL, DKS, FMC, GIII, ITT, JCI, LLY, PCAR, PPG, PPL)

Research Analysts’ downgrades for Tuesday, May 21st:

Delta Air Lines (NYSE:DAL) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Shares of Delta have outperformed its industry so far this year. Solid demand for air travel has led to an uptick in passenger revenues, which account for bulk of the company's top line. As an evidence, Delta’s passenger count rose 6.6% in April 2019. Delta expects current-year top line to increase in the 5-7% range mainly owing to upbeat passenger revenues. Additionally, the company's efforts to reward its shareholders through dividends and buybacks are impressive. Delta has returned in excess of $12 billion to its shareholders over the past five years.  However, technological glitches have lately been hampering Delta's operations and profitability. Additionally, the uptick in fuel prices might hamper Delta's bottom-line growth in the second quarter. The company anticipates economic fuel cost between $2.10 and $2.20 per gallon in the second quarter compared with $2.05 reported in first-quarter 2019.”

Dicks Sporting Goods (NYSE:DKS) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “DICK’S Sporting underperformed the industry year to date. Further, the company witnessed soft margins in fourth-quarter fiscal 2018 due to lower merchandise margin, higher occupancy costs, and increased freight, shipping and fulfillment expenses. Moreover, a calendar shift in fiscal 2018 and an extra week in fiscal 2017 led earnings and sales to decline year over year in the fiscal fourth quarter. In addition, it has been witnessing soft comps trend due to troubles at its hunting and electronics categories. Nevertheless, management exited the electronics business and plans to eliminate the hunting category from nearly 125 underperforming stores in fiscal 2019. This is likely to aid comps. Further, the company’s positive earnings surprise trend remains encouraging. Strength in core business, and double-digit growth in e-commerce and private brand sales also aided quarterly results.”

FMC (NYSE:FMC) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “FMC Corp’s adjusted earnings and sales for the first quarter of 2019 topped the respective Zacks Consensus Estimate. The company raised its guidance for 2019. FMC Corp has outperformed the industry it belongs to over the past six months. The acquisition of a major portion of DuPont's Crop Protection business has provided a significant growth platform for the company's Agricultural Solutions business. Synergies from the buyout will drive the company’s earnings in 2019. Strong demand for herbicides and insecticides across North and Latin America should also drive sales. The company should also gain from its efforts to expand product portfolio and boost its market position. FMC Corp also remains committed to return value to shareholders leveraging healthy cash flows. However, FMC Corp is exposed headwind from unfavorable currency translation and higher raw material costs. The company's high debt level is another concern.”

G-III Apparel Group (NASDAQ:GIII) was downgraded by analysts at Zacks Investment Research from a strong-buy rating to a hold rating. According to Zacks, “Shares of G-III Apparel have underperformed the industry in the past three months. We note that the company is witnessing sluggishness in the retail category of late stemming from weak brands and store closures. Although the company has been striving to improve retail operations, such efforts are yet to yield results. Also, stiff competition and adverse currency fluctuations pose threats. However, the company boasts a robust earnings surprise trend. In fact, fourth-quarter fiscal 2019 results marked the company’s eight straight bottom-line beat, courtesy of robust wholesale business and strength in DKNY stores. Additionally, the company has been making efforts to expand these banners globally, mainly by augmenting licensing capabilities. Driven by a strong quarter and continued business momentum, management provided an encouraging view for the first quarter and fiscal 2020.”

ITT (NYSE:ITT) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Over the past year, ITT's stock has outperformed the industry. The company expects that strength in the chemical, mining, commercial aerospace and defense businesses, and higher demand for connectors and growth in automotive friction orders will drive revenues in the quarters ahead. Also, operational execution, fall in functional corporate costs, increased productivity and stronger sales volume are expected to boost the company's near-term profitability. In addition, the company intends to become more competent on the back of innovation investments. However, an increase in cost of sales mainly due to tariffs can hurt its margins. Also, given the company's extensive geographic presence, its financial performance is subject to various risks like foreign currency exchange rate fluctuations, interest rates and hyperinflation in foreign countries.”

Johnson Controls International (NYSE:JCI) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “In second-quarter 2019, Johnson Controls’ earnings surpassed the Zacks Consensus Estimate. Also, it improved year over year. The reported quarter witnessed solid organic revenue growth. The company actively takes part in acquisitions and mergers to provide customers with world-class technologies through strong complementary brands and channels. Strong cash flow helps the company to pay regular quarterly dividends and engage in share repurchase programs. Over the past three months, shares of Johnson Controls have outperformed the industry it belongs to.”

Eli Lilly And Co (NYSE:LLY) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “Lilly beat estimates for earnings in the first quarter.  However, Lilly lowered its sales guidance for 2019.  Revenue growth in 2019 is expected to be driven by higher demand for its newer drugs including Trulicity, Jardiance, Taltz, Verzenio and new migraine drug, Emgality as some older drugs like Cialis face generic competition. Lilly has made significant pipeline progress in the past year with several positive late-stage data readouts, multiple approvals and regulatory submissions. Lilly also added promising new pipeline assets through business development deals. The stock has outperformed the industry in the past year. However, competitive pressure on Lilly’s drugs is expected to rise in 2019. Generic competition for several drugs including Cialis, rising pricing pressure, currency headwinds and the impact of the failed Lartruvo study are expected to put pressure on the top line.”

PACCAR (NASDAQ:PCAR) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “In first-quarter 2019, PACCAR’s earnings and revenues surpassed the Zacks Consensus Estimate. Moreover, earnings and revenues improved year over year. The company’s quarterly results are backed by strong global truck markets and solid aftermarket parts’ results. In fact, its class 8 truck retail sales are rising primarily due to a robust economy and strong freight demand. Also, it is well positioned in the key markets, owing to strong cash flow, enabling it to undertake capital investments, and research and development expenses. However, rising commodity prices, and material and labor costs are concerning the company. Also, PACCAR faces tough competition from industry peers — along with declining price of used trucks, owing to rise in supply — are other headwinds.”

PPG Industries (NYSE:PPG) was downgraded by analysts at Zacks Investment Research from a buy rating to a hold rating. According to Zacks, “PPG Industries’ adjusted earnings for the first quarter of 2019 beat the Zacks Consensus Estimate, while sales trailed the same. The company reaffirmed its sales and adjusted earnings growth targets for 2019. It is executing an aggressive cost cutting and restructuring strategy. Cost savings from restructuring actions is likely to boost the company’s margins in 2019. Also, the company is committed to deploy cash on acquisitions and share repurchases. PPG Industries is also taking steps to grow its business inorganically. Acquisitions should contribute to its sales in 2019. The company has also outperformed the industry it belongs to in the past one year. However, PPG Industries faces headwinds from raw materials cost inflation and unfavorable currency translation. Soft industrial activities in China and weak demand in Europe are also expected to affect sales volumes. “

PPL (NYSE:PPL) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Shares of PPL Corporation have underperformed the industry in the past twelve months. PPL Corporation's operating expenses are increasing at a high rate compared with increase in revenues, which is hurting margin. Ongoing changes in environmental regulations as well as costs of compliance with environmental laws are significant and change consistently. Higher debt level is a headwind for the company. However, PPL Corporation is poised to gain from capital investment plan that focuses on infrastructure projects for generation, transmission and distribution. The company expects to recover 70% of the investment within six months and 80% within a year. It has re-established its hedge levels to shield itself from any near-term decline in the GBP. The company’s asset portfolio and business model can adapt to various market scenarios.”

Saratoga Investment (NYSE:SAR) was downgraded by analysts at Zacks Investment Research from a hold rating to a sell rating. According to Zacks, “Saratoga Investment Corporation, formerly known as GSC Investment Corp., is a specialty finance company that invests primarily in leveraged loans and mezzanine debt issued by U.S. middle-market companies, both through direct lending and through participation in loan syndicates. The Company has been elected to be treated as a business development company. “

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