In a week that saw the markets continue to march higher, some of the top Wall Street firms that we cover lowered the boom with Sell ratings on some very high profile names. Most equity strategists have conceded that we have turned the corner and are in a secular bull market for the first time in almost 15 years. When stocks underperform and underdeliver when times are seemingly better, the analysts can be quick on the draw with a Sell rating.
We wanted to look back at the top five analyst Sell ratings for the week. It will be interesting to see ultimately the overall effect on the stocks that were cut to Sell.
Baker Hughes Inc. (NYSE: BHI) was rated as a new Sell at Guggenheim. The firm is very negative on the prospects for the oil services giant, as well as the overall prospect for oil prices the rest of the year. The firm drops its price target on the stock from $55 to $45. The Wall Street consensus price target is $64.02. Baker Hughes was trading Friday just over $60. Investors are paid a 1% dividend.
Deere & Co. (NYSE: DE) has been a Key Call Sell at UBS and remains on the list. The analyst’s main concern is that farm fundamentals (and equipment orders), commodity prices, land values and income will deteriorate as the second half unfolds, which is the base case, and weakness could continue into 2015. Investors are paid a 2.3% dividend. The UBS price target for the stock is now $75, up from $72. The consensus target is $87.05. Deere was trading Friday at $85.95.
PetSmart Inc. (NASDAQ: PETM) is a Sell at Deutsche Bank, which sees a drop in pet adoptions hurting the retailer. Declines in pet adoptions suggest that the stores will be seeing weaker traffic, which will result in lower sales. The analysts believe that the company does about 400,000 adoptions a year and estimate that new pet parents spend perhaps $500 in the first year, meaning that adoption-driven sales could be $200 million, or 3% of total sales. Investors are paid a 1.2% dividend. The Deutsche Bank price target falls from $65 to $60. The consensus target is much higher at $72.83. PetSmart was trading Friday at $64.97.
Seattle Genetics Inc. (NASDAQ: SGEN) is a high-flying name that gets a Sell rating from Cantor Fitzgerald. While the stock has rallied on the positive Adcetris sales and news, the Cantor Fitzgerald team feels that the valuation is not justified, especially when that one product comprises the lion’s share of overall corporate valuation. The Cantor Fitzgerald price target is an eye-popping $24. The consensus target is $44.33. The stock was trading Friday at $51.25.
Sodastream International Ltd. (NASDAQ: SODA) is a Sell at Stifel, despite the gorgeous Scarlett Johansson being the new spokesperson. Rumors have swirled around Wall Street that Pepsi may be looking to buy the company. Some logic says that move would just cannibalize its own sales. The Stifel team thinks that it is highly unlikely. They have a $29 price target for the stock. The consensus figure is a very bullish $54.29. Sodastream was trading Friday at $41.35.
All five of the top analyst Sell-rated stocks at one time or another have been top-rated Buys. Which shows you, that despite success at one point or another, any stock is capable of losing traction and turning in some bad numbers. The question for investors is at what point some of these names turn their ships around and become candidates to be bought?
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