These are this Thursday’s top analyst downgrades seen from Wall Street research calls early this morning:
Deere & Co. (DE) Cut to Underweight at JPMorgan.
eHealth (EHTH) Cut to Hold at Argus.
Harmony Gold Mining (HMY) Cut to Underweight at JPMorgan.
Hovnanian (HOV) Cut to Underperform at Credit Suisse.
Repsol (REP) Cut to Underperform at Credit Suisse.
JON C. OGG
These are some of the top pre-market analyst upgrades from Wall Street this Monday morning with well over two hours until the open:
Ameristar Casinos (ASCA) Raised to Overweight at JPMorgan.
Barrick Gold (ABX) Raised to Overweight at JPMorgan.
Blackstone (BX) Raised to Outperform at KBW.
Janus Capital (JNS) Raised to Overweight at JPMorgan.
JPMorgan Chase (JPM) Raised to Outperform at KBW.
Kinross Gold (KGC) Raised to Overweight at JPMorgan.
Repsol SA (REP) Raised to Buy at UBS.
SAP (SAP) Raised to Buy at Deutsche Bank.
Tyco (TYC) Raised to Buy at Citigroup.
Wendy’s/Arby’s (WEN) Raised to Neutral at JPMorgan.
JON C. OGG
It is probably no huge shock that downgrades are coming more than upgrades now that oil has come down so much. Too bad these were not the calls several months ago. Here are some of the downgrades this Wednesday in the oil patch:
Jon C. Ogg
January 14, 2009
Oil company share prices have been in near free fall for the past six months. Exxon Mobil (NYSE:XOM) is off about 20% from its 52-week highs and ConocoPhillips (NYSE: COP) is off about 50%, but both are doing better than a basket of emerging economy stocks. CNOOC Ltd (NYSE:CEO) is down 68% for the past 52-weeks, PetroBras (NYSE:PBR) is off 77%, Repsol YPF (NYSE:REP) is down 57%, and PetroChina (NYSE:PTR) is off 64%. The drop in crude prices, down more than 65% since the July peak, is the main culprit. But even as crude prices continue to slide, share prices for these companies are beginning to make a comeback.
These are ten of the top pre-market early bird upgrades and downgrades we are seeing from analysts this Friday morning:
Jon C. Ogg
November 14, 2008
Repsol YPF (NYSE:REP) is one of the ten largest integrated oil companies in the world. It is based in Madrid, and owns substantial assets in South America. Repsol reported third quarter earnings yesterday, but that’s not the story.
Russia’s vice premier told a news conference yesterday that Gazprom, Russia’s natural gas monopoly, is considering buying a 20% stake in Repsol from Spanish construction company Sacyr Vallehermoso. Sacyr apparently needs cash and is likely to sell its piece of Repsol for about 5 billion euros, nearly 25% less than it paid just two years ago.
These are not the only analyst calls affecting shares of stock this morning, but these are the initial calls that 247WallSt.com is focusing on:
Jon C. Ogg
February 29, 2008
Berkshire Hathaway (BRK/A) may be setting its sights lower as far as the size of a merger it would pursue. Reuters has reported that Warren Buffett gave an interview to a Swiss newspaper called Finanz and Wirtschaft saying the company was primarily interested in large takeovers. Buffett said they would happily buy things in the $5 billion to $20 billion range, although potential targets are rare. Buffett did note that they were confident they would be able to conclude several larger transactions soon in the interview.
We just ran several buyout targets that we widened out to fit the bill for a "whale" of an acquisition on Monday.
If Buffett looks at smaller companies then he will have a lot more to choose from. It is somewhat surprising that Buffett has not looked at the retail and commercial banking sector since there are so many with healthy balance sheets and surpressed prices due to a temporarily inverted yield curve. He has also failed on his promise to go big into power generation operations, and there are perhaps 5 or 6 names he could easily approach in that sector.
The truth is that if Buffett stoops down into the $5 billion to $20 billion range then there will be many opportunities for him. Perhaps the largest reason for looking at larger deals is that he is probably concerned that he will be one-upped in a higher bid for any deal he considers in that $5 billion to $20 billion range.
Regardless of his comments, he needs to remove T-Bills as his single largest public investment at the current time. Being too picky and just sitting on the sidelines for too long can come across as indecisive, even if you have made yourself into one of the world’s richest men.
Jon C. Ogg
May 9, 2007
Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in any of the companies he covers.
Stocks to Watch: BRK/A, MRO, TRV, WM, ALL, LEH, CHA, REP, OXY, DOW, VLO, E, MET, BF, DB, SNP
Warren Buffett was noted this weekend as saying he is tempted to find a "Whale" of an acquisition rather than just trying to catch a big fish. Everyone knows that Buffett has called technology a widget that he wouldn’t buy, so what could this mean?
We screened stocks with some valuations that would entail Berkshire Hathaway (BRK-A) either selling many stakes it holds in public companies or that would require it to raise capital from the markets. In order to do this we looked at the balance sheet and decided that the company cut off mark would be somewhere in the vicinity of $35 Billion for the company to still have ample cash to operate without stretching or minimizing activities. We decided to go up to $80 Billion as the ceiling, thinking that Buffett could probably sell the idea and considering that this amount ‘could’ still occur if he stretched it big time. He has already said that Geography is not a barrier any longer.
The companies that trade at $35 billion to $80 billion have price to book value ratios of Less than 2.5, Price-to Earnings ratios of 15.0 or less, forward Price to earnings ratios of under 14.0. There are many other measures such as discounted cash flows and return on equity that we could have run, but we thought we’d see what comes up.
Companies that did not have ADR’s were screened out, even though this may not be fair. He has mostly stayed away from energy companies, but his PetroChina (PTR) stake made us leave this in. He has stayed away from banks, but since he has been aggressive into insurance we decided to keep this in there.
Here are some of the companies that showed up in the screen:
Marathon Oil (MRO), Travelers (TRV), Washington Mutual (WM), Allstate (ALL), Lehman (LEH), China Telecom (CHA), Repsol (REP), Occidental Petroleum (OXY), Dow Chemical (DOW), Valero (VLO), E N I (E), MetLife (MET), BASF (BF), Deutsche Bank (DB), China Petrolem (SNP).
Here is the problem in evaluating the companies above: If you don’t think Buffett would take on the huge additional risks in insurance or if you think he’d shy away from a bank or brokerage firm, then Buffett would need to go into the chemical companies or into energy and refining. Even if you scale down the size to say $20 Billion, you have the same type of companies in the mix, except you bring in some metal and commodity names.
What is the biggest problem in having roughly $40 Billion in cash and equivalents? It’s obviously trying to put the money to work. Buffett is not under the same pressure as private equity to put his cash to work. His track record speaks for itself, but you have to wonder about the company down the road and what its strategy will be. How far will they diversify? Will they diversify? When your holding period you evaluate a business on is "Forever" it makes for some interesting problems to have.
Jon C. Ogg
May 7, 2007
Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in any of the companies he covers.
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