Downgrades Hit Merck, Google, Chevron, Anheuser, Wal-Mart and More

Andrew Klips |

Downgrades Hit Merck, Google, Chevron, Anheuser, Wal-Mart and MoreMonday was rough on the markets in general with the Dow Jones Industrial Average and S&P 500 retreating from five-year highs as investors took the opportunity to dock profits from a multiple week run.  The week also brought a handful of analyst downgrades to some house hold names that chipped-away at valuations.

Drug maker Merck & Co. (MRK) was downgraded by Leerink Swann from outperform to market perform following Merck reporting a 7.3 percent drop in fourth-quarter earnings on Friday and a delay in a New Drug Application submission for osteoporosis drug Odanacatib.  Morgan Stanley (MS) also slapped Merck with a downgrade from equal weight to underweight.  Shares of MRK fell 2.34 percent to $40.85.

Internet giant Google, Inc. (GOOG), which is coming off of fresh all-time highs last week, was downgraded to market perform from outperform by BMO Capital Monday morning, citing a shift in investor sentiment “as the market becomes more comfortable with cost-per-click declines.”  Seeing a Google downgrade is an exception to most analysts, although the heavy valuation is nearing consensus price targets, hamstringing the company’s upside to a degree.  Shares of GOOG were lower by 2.14 percent to $759.02.

Chevron (CVX) weighed on the energy sector Monday with a fresh downgrade from buy to neutral at UBS AG (UBS).  Analysts cited Chevron outperforming its competitors by more than 10 percent in the last year as the reason.  Shares of CVX closed down by 1.12 percent at $115.20.

Beer king Anheuser-Busch InBev (BUD) was downgraded by Bank of America (BAC) from buy to neutral as analysts are concerned that the U.S. Justice Department trying to block the company’s acquisition of almost 50 percent of Mexico’s Grupo Modelo that it doesn’t already own will either stop the purchase or cause the deal to take six to twelve months to make happen.  Shares of BUD needed a drink at the closing bell as they were down 5.0 percent at $87.67.

Wal-Mart Stores Inc. (WMT) was downgraded from overweight to neutral by JP Morgan as well as a price target cut from $84 to $75, citing growing economic concerns that could halt the world’s largest retailer’s momentum that has it near record highs.  JPM Analyst Christopher Horvers also noted that Wal-Mart will take a hit from increased payroll taxes that went into effect in January.  Shares of WMT slipped 1.22 percent at $69.63.

A couple other notables include Goldman Sachs (GS) dropping The Hershey Company (HSY) from conviction buy to neutral and TheStreet Ratings lowering its ratings of United Parcel Service Inc. (UPS) Class B shares from buy to hold.  Shares of HSY and UPS were down by 0.56 percent and 0.08 percent, respectively.

Tough day for blue chips as the Dow shed 129.71 points, the S&P 500 unloaded 17.46 points and the Nasdaq dumped 47.93.

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Companies

Symbol Name Price Change % Volume
UPS United Parcel Service Inc. 116.35 -0.08 -0.07 2,088,702
CVX Chevron Corporation 113.00 -0.29 -0.26 6,167,368
WMT Wal-Mart Stores Inc. 70.88 0.21 0.30 6,674,206
TWX Time Warner Inc. New 93.80 -0.34 -0.36 3,837,971
GS The Goldman Sachs Group Inc. 223.36 -3.27 -1.44 5,297,420
BAC Bank of America Corporation 21.23 -0.27 -1.26 128,468,708
GOOG Alphabet Inc. 750.50 2.58 0.34 1,452,484
BUD Anheuser-Busch Inbev SA Sponsored ADR (Belgium) 101.39 1.48 1.48 2,559,242
HSY The Hershey Company 97.08 0.80 0.83 825,619
MRK Merck & Company Inc. (new) 61.13 0.37 0.61 7,993,092

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