Analysts' Actions: Cliffs Natural, Kraft Foods, Lilly, Whole Foods

NEW YORK (TheStreet) -- RATINGS CHANGES

Franklin Resources (BEN) was downgraded at Citigroup to neutral from buy. Twelve-month price target is $59. Estimates were also cut, as the company lacks near-term catalysts, Citigroup said.

BOK Financial (BOKF) was upgraded at BMO Capital to market perform from underperform. Twelve-month price target is $66. Estimates were also increased, as the company is realizing higher sales growth, BMO Capital said.

Cliffs Natural Resources (CLF) was upgraded at Bernstein to market perform from underperform. Twelve-month price target is $16. Company is slashing costs and the activist investor now has a majority of the board, Bernstein said.

Ecolab (ECL) was upgraded at J.P. Morgan to overweight. Company is seeing higher volume expansion than its peers, J.P. Morgan said.

Global Eagle Entertainment (ENT) was downgraded to sell at TheStreet Ratings.

Hospira (HSP) was upgraded at Deutsche Bank to buy from hold. Twelve-month price target is $61. Real sales, margin and cash flow recovery appear underway, Deutsche Bank said.

Kraft Foods (KRFT) was downgraded at Deutsche Bank to hold from buy. Twelve-month price target is $59. Company is facing a challenging fundamental environment, Deutsche Bank said.

Eli Lilly (LLY) was downgraded at Citigroup to neutral. Alimta risks are underappreciated in the market, Citigroup said.

MeadWestvaco (MWV) was downgraded at UBS to sell from neutral. Twelve-month price target is $37. Valuation call based on high market expectations, UBS said.

Qualcomm (QCOM) was downgraded at Bernstein to market perform from outperform. Twelve-month price target is $80. China solution remains uncertain, Bernstein said.

SM Energy (SM) was downgraded to hold at TheStreet Ratings.

Whole Foods Market (WFM) was downgraded at UBS to neutral from buy. Twelve-month price target is $41. Reacceleration requires more patience, UBS said.

Whole Foods was downgraded at J.P. Morgan to neutral from overweight. Estimates were also cut, as the company lacks near-term visibility, J.P. Morgan said.

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Now let's look at TheStreet Ratings' take on some of these stocks.

TheStreet Ratings team rates WHOLE FOODS MARKET INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate WHOLE FOODS MARKET INC (WFM) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • WFM's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
  • WHOLE FOODS MARKET INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WHOLE FOODS MARKET INC increased its bottom line by earning $1.47 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.53 versus $1.47).
  • 38.47% is the gross profit margin for WHOLE FOODS MARKET INC which we consider to be strong. Regardless of WFM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WFM's net profit margin of 4.27% compares favorably to the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the Food & Staples Retailing industry average, but is less than that of the S&P 500. The net income has remained constant at $142.00 million when compared to the same quarter one year ago.

TheStreet Ratings team rates LILLY (ELI) & CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate LILLY (ELI) & CO (LLY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for LILLY (ELI) & CO is currently very high, coming in at 75.90%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.86% trails the industry average.
  • LLY, with its decline in revenue, underperformed when compared the industry average of 6.3%. Since the same quarter one year prior, revenues fell by 16.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • LILLY (ELI) & CO's earnings per share declined by 38.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LILLY (ELI) & CO increased its bottom line by earning $4.31 versus $3.66 in the prior year. For the next year, the market is expecting a contraction of 35.7% in earnings ($2.77 versus $4.31).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 39.2% when compared to the same quarter one year ago, falling from $1,206.20 million to $733.50 million.

This article was written by a staff member of TheStreet.

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