Mattel: Pain in Toyland
Mattel Inc. (NASDAQ: MAT) remains a company under great concern because it is one of our 11 companies that have lost control over their narratives. After earnings did not help, more downgrades were seen. On August 3, D.A. Davidson cut its rating to Underperform from Neutral, after other analysts trimmed their targets after earnings in late July. Even after a dividend cut, a multiyear lower revenue trajectory has proved hard to overcome in a toy industry that may just be too crowded for the number of toy choices when kids just want to play on their smartphones.
Mattel’s stock was under $18 late in the week of August 11, down from a 52-week high of $34.20.
National Oilwell Varco: Under-Loved Oil Recovery Prospects
National Oilwell Varco Inc. (NYSE: NOV) was downgraded to Sell from an already-cautious Hold rating at SunTrust Robinson Humphrey on August 7. The firm’s price target also was slashed to $29 from $40 in that call. The stock was at $31.79 ahead of the downgrade, and it fell 50 cents on the call and then ended up being down a full dollar lower at $30.79 two days later. National Oilwell Varco has a 52-week trading range of $30.29 to $43.63, and it is still one of the leaders in oilfield equipment and components. SunTrust called it a great company with great leadership and a great balance sheet, but warns that the recovery in its rig systems won’t be the same in the next five or more years.
Regeneron Pharmaceuticals: Did a Top Biotech Peak?
Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) has become a range-bound biotech stock in the past year after rising tenfold since 2011. Now it is a $460 or so stock with close to a $49 billion market cap valued at almost eight times 2018 revenues. On August 1, Robert W. Baird’s team downgraded Regeneron to Underperform from Neutral and the price target went down to $408. Shares were at $491.62 ahead of the downgrade. Other analysts have raised targets ($580 at Leerink and $471 at Jefferies), but that is what makes a market.
Regneron’s 52-week range is $325.35 to $543.55, and the consensus analyst target is $493.00.
Teva Pharmaceutical: Generic and Branded Drug Woes
Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) may be a global leader in generic drugs, but that isn’t worth much these days. Teva was a $31.25 stock on August 2, but poor results took its stock down to $23.75, and a wave of more news and downgrades only added pain to a battered ADS that is known around the globe. Two more firms threw in the towel here. Morgan Stanley cut its rating to Underweight from Equal Weight (and slashed the target to $16 from $36) and RBC slashed its rating to Underperform from Outperform (and the target went to $21 from $37).
Teva shares even went under $18 by late in the week of August 11, as no one has any faith in a new management nor of its ability to have pricing power in this tough political environment. This is down from a 52-week high of $55.39.
Windstream: Death to the Dividend!
Windstream Holdings Inc. (NASDAQ: WIN) has been a painful stock recommendation for Merrill Lynch. The firm had a Buy rating with an $8 price objective, but after an unexpected dividend elimination (rather than a cut), the firm surrendered on August 3 and assigned a new Underperform rating and $2.50 price objective. The firm warned that Windstream’s inline results had no read through for the balance of the sector. With the firm’s target yield of 7.5% going down to zero, it believes that the “valuation premise” for the company has materially changed. Now short sellers do not have to be worried that they will have to pay a double-digit dividend yield on top of their cost of borrowing this stock.
Windstream shares were at $3.72 prior to the dividend cut, and the stock lost more than one-third of its value and fell to $2.38 immediately after that news. And the stock dropped to a 52-week low of $2.00 before recovering to $2.10 late in the week of August 11. The 52-week range now is $2.00 to $10.46.
Zions Bancorp: Is All the Good Bank News Priced In?
Zions Bancorp. (NASDAQ: ZION) has seen its shares greatly recover over the past year, but the team at Robert W. Baird thinks the good news is now priced in. Zions was downgraded to Underperform from Neutral with a $43 price target on August 7, versus a prior $46.12 closing price. That might not seem like much downside, but this stock was under $45 late in the week of August 11, while the consensus target price is $49.39. Other firms have raised their target prices despite the Baird team telling clients that the best of the run has been seen and that the doubling of its dividend into next year is already factored into the value.
Zions shares have a 52-week trading range of $27.77 to $48.33.
24/7 Wall St. has included a chart montage from StockCharts.com showing how each stock has performed over the past six months.