Equity Brief: Ratings Changes for November 12th: HES, HIBB, HIW, IHG, IQNT, JCP, JNJ, KLAC, KRC

Mon Nov 12, 2012 10:12am EST

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A number of stocks were upgraded and downgraded by equities research analysts today, as reported by Analyst Ratings Network (http://bit.ly/equitybriefdaily) and Equity Brief:

Howard Weil downgraded shares of Hess Corp (NYSE: HES) from an outperform rating to a market perform rating. Their analysts now have a $55.00 price target on the stock, down previously from $57.00.

Needham & Company upgraded shares of Hibbett Sports, Inc. (NASDAQ: HIBB) from a hold rating to a buy rating. Needham & Company now has a $61.00 price target on the stock.

Bank of America upgraded shares of Highwoods Prop (NYSE: HIW) from a neutral rating to a buy rating. Bank of America now has a $36.00 price target on the stock, up previously from $34.00.

Exane BNP Paribas upgraded shares of Intercontinental Hotels Group (NYSE: IHG) from a neutral rating to an outperform rating.

Morgan Stanley downgraded shares of Inteliquent (NASDAQ: IQNT) from an equal weight rating to an underweight rating. Their analysts now have a $2.00 price target on the stock. They wrote, "In September, IQNT's CFO and COO both resigned. Also, during 3Q12 earnings, IQNT announced a preliminary settlement with a large carrier customer that will result in less favorable rates. New 2012 guidance implies a 4Q12 EBITDA margin of 8.7% at the midpoint, a 1,648 bps Q/Q drop. The settlement also increases IQNT's pass-through costs for terminating calls to the carrier, which may result in other customers leaving due to higher rates. . These results, coupled with capital intensity of ~10% should significantly reduce FCF. Lastly, though IQNT has been attempting to diversify its revenues since 2010 towards data, we see little evidence yet of concrete action."

Credit Suisse downgraded shares of J.C. Penney Company, Inc. (JCP) from a neutral rating to an underperform rating. They wrote, "[O]ur concerns that JCP would not be able to stabilize its business in a timely fashion were mounting, especially after seeing how effective the completion had been in responding to JCP's initiatives. Since reporting a worst case scenario 3Q12, those concerns have only escalated, and we downgrade to underperform (from neutral) and lower our target price to $15 (from $25). Time is no longer on JCP's side, and going into 4Q12 and beyond, we are concerned that JCP's technological overhaul of both its back and front end systems could serve to create an even more challenging internal environment than is the case today."

Jefferies Group downgraded shares of Johnson & Johnson (JNJ) from a buy rating to a hold rating. Their analysts now have a $75.00 price target on the stock, down previously from $78.00. They wrote, "Whilst we still see the potential for J&J shares to outperform through more aggressive capital allocation, we have little evidence to formally model this at present. We had hoped that the MD&D day, which has now been postponed due to hurricane Sandy, could have provided a platform to raise expectations either around capital allocation or balance sheet leverage. We will have to wait for now and we prefer to do this from the sidelines as our current valuation provides limited upside against a worsening environment for reimbursement in both the US and Europe. Our target price of $75 is calculated by placing our 2014E EPS estimate on a 10%-20% premium to the U.S. market PE."

RBC Capital upgraded shares of KLA-Tencor (KLAC) from an underperform rating to an outperform rating. RBC Capital now has a $58.00 price target on the stock, up previously from $49.00.

Bank of America downgraded shares of Kilroy Realty Co. (KRC) from a buy rating to a neutral rating. Their analysts now have a $47.00 price target on the stock, down previously from $51.00.

Lazard downgraded shares of Kayak Software Corp (KYAK) from a buy rating to a neutral rating. Their analysts now have a $40.00 price target on the stock.

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