Shares of industrial supplier Forterra Inc (FRTA) dropped as much as 13.9% in trading Tuesday after a slew of analyst downgrades. At 11:50 a.m. EDT, shares were still down 13% on the day.
Citi and SunTrust lowered their rating on Forterra from buy to neutral, and SunTrust lowered its price target to $14 per share. RBC Capital also lowered its rating to market perform.
These downgrades come a day after the stock plunged because of declining earnings. In the first quarter, new loss was $0.35 per share, and the company showed no organic growth, which is a terrible sign for any business.
Analyst downgrades aren't in and of themselves a reason to change your opinion on a stock, but the fact that they helped drive a slide in Forterra's stock after a weak earnings report isn't great news for the company.
The major concern long term is that Forterra has $1.26 billion in debt, declining margins, and growing losses. That's enough to send me running from a stock whether analysts downgrade it or not.