Rating Wall Street's Ratings

Earnings season brings on a flurry of upgrades and downgrades, and it can be an all-day affair just to get through them all. Today we look at a solar company, an organic-food company, a media conglomerate, and a utility company. Should you heed Wall Street's call?

Company

Rating

Reaction as of 1 p.m. EDT

First Solar (Nasdaq: FSLR  ) Neutral to positive Up almost 3%
Annie's (NYSE: BNNY  ) Coverage initiated at hold Up 2.8%
Viacom (Nasdaq: VIA  ) Reiterated outperform, with price target of $61 Nearly flat
Alliant Energy (NYSE: LNT  ) Downgraded from buy to hold Down more than 1.3%

Source: The Wall Street Journal.

First Solar
Avian upgraded First Solar to positive from neutral.

  • Why? The stock price took a big hit after a major earnings miss for the first quarter, making shares cheap enough to look attractive for the solar manufacturer.
  • Justified? Yes. The company did suffer from only its second loss in its history, but a revised strategy and new top-level management could portend a brighter future for the company.

Annie's
Canaccord Genuity initiated coverage on Annie's at a hold rating.

  • Why? Canaccord likes the company, but the recent IPO has the company trading at a very rich 30 times earnings.
  • Justified? Yes. Annie's is a great company with a strong brand and great growth prospects, but it's simply too expensive right now to be a buy. The company would need years of consistent phenomenal growth to justify the valuation. That may well happen, but it's unclear at the moment.

Viacom
Barrington Research reiterated an outperform rating for Viacom and raised the price target to $61 from $57.

  • Why? Barrington focused on Viacom subsidiary Paramount, which has improved its operating margins and promoted franchise films with some use of Viacom's own TV series.
  • Justified? No comment. Price targets from the research shops and banks tend to change with the wind. Viacom will have a strong year and is most likely a buy, as it's cheaper than, say, CBS. I believe the stock will perform well over the long run, but with no specific price target in mind.

Alliant Energy
Wunderlich downgraded Alliant from buy to hold.

  • Why? The company fell short of expectations on earnings per share and guided toward the lower end of its year-end outlook.
  • Justified? Yes. The adjusted EPS numbers (non-GAAP) are better-looking than the official earnings, as they excluded some of the weather issues the company has faced. The problem is that weather is unpredictable, and similar conditions could continue to hurt the company. Until Alliant can improve operations elsewhere to make up for acts of nature, it is probably a hold.

Ratings are often based on short-term prospects and therefore not relevant to the long-term investor. However, we can use these to dig up useful facts about a company we may not have seen before. It's important not to let the ratings alone color your opinion of a company. As Fools often say, it's better to do the research yourself and come to your own conclusions. Keep an eye on this series to stay in the know and save the rest of your day for coffee and Facebook.

Fool contributor Michael Lewis owns no shares of the stocks mentioned above. Motley Fool newsletter services have recommended buying shares of First Solar. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1881251, ~/Articles/ArticleHandler.aspx, 10/25/2014 3:08:06 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 5 hours ago Sponsored by:
DOW 16,805.41 127.51 0.76%
S&P 500 1,964.58 13.76 0.71%
NASD 4,483.72 30.92 0.69%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2014 7:59 PM
BNNY $0.00 Down +0.00 +0.00%
Annie's CAPS Rating: ***
FSLR $56.44 Up +0.17 +0.30%
First Solar CAPS Rating: **
LNT $60.36 Up +0.27 +0.45%
Alliant Energy Cor… CAPS Rating: ***
VIA $71.99 Up +0.25 +0.35%
Viacom, Inc. CAPS Rating: ****

Advertisement