Almost every morning 24/7 Wall St. issues its Top Analyst Upgrades & Downgrades between 8:00 AM And 8:30 AM EST (today’s report here). Sometimes these calls are important and sometimes they just fall through the cracks due to large market moves. But after looking through our top calls and after looking through the ones we did not include from early in the morning it always turns out there were some highly unusual research reports issued.
Today brought five very unusual research reports: Baker Hughes Incorporated (NYSE: BHI); CYS Investments, Inc. (NYSE: CYS); NetApp, Inc. (NASDAQ: NTAP); RailAmerica, Inc. (NYSE: RA); and Trina Solar Limited (NYSE: TSL). The summary on each call, the price reaction, and why the call was so unusual on each has been outlined below:
Baker Hughes Incorporated (NYSE: BHI) has been cut in half from its highs over the last year. What has been happening though is that the stock has been trying to form a base here in the very low $40-handles after hitting a recent 52-week low of $39.40. Societe Generale decided in its wisdom after the huge drop that has been seen that today was the day to downgrade its rating to HOLD from BUY. Shares are were down 1.8% at $40.95 right before the close, but frankly this is one of those calls that so much bad news has been priced in that we wonder why the call is just today.
CYS Investments, Inc. (NYSE: CYS) hardly budged today but this call really stood out. Bank of America Merrill Lynch reinstated new coverage here with a BUY rating and a price target of $13.75. This is a mortgage REIT for residential agency MBS that pays a double-digit yield as of now and the call suggests that CYS will generate a 15% dividend yield in 2012 and it is only about 1.05-times book value. The call must be solely based upon the dividend though because the stock closed at $13.77 yesterday and the Thursday late-day price was $13.85. How often do you see a “Buy” rating when the price target is under the current price? This analyst call is just highly unusual.
NetApp, Inc. (NASDAQ: NTAP) took several downgrades today after it gave a revenue and earnings warning. We called this a new thing for NetApp as it represents the Death of Growth. Shares were down over 12% in the final hour at $28.72 but a firm named FBN Securities actually likes this pullback and raised its ratings to “Outperform” from “Market Perform.” NetApp traded over 50 million shares as well and hit a new 52-week low of $27.75 Thursday, so this is now a broken high-flyer that is now a battleground stock.
RailAmerica, Inc. (NYSE: RA) was down about 2.2% at $23.49 late in the day after J.P. Morgan cut the rating to Neutral from Overweight based upon valuation. What makes this so interesting is that this is on the heels of buyout interest perhaps from Warren Buffett being reported earlier this week.
Trina Solar Limited (NYSE: TSL) is in the highly unloved solar sector and this stock is down over 75% from ist 52-week high. Things got bad enough that it is now down under $500 million in market value. Still, today brought a gain of 5.2% to $5.84 after Maxim Group simply removed its SELL rating and gave a new HOLD rating in an upgrade. A “Hold” rating is often considered the same as a “Sell” rating by many investors.
JON C. OGG