Unshaken by yesterday’s intraday weakness and perhaps encouraged by Thursday’s rebound headed into the close, on Friday the bulls picked up where they left off to drive a big gain into new-high territory. The S&P 500 advanced 1.64% to end the session at 2022.1.
It wasn’t a great day for all stocks, though. Servicemaster Global Holdings Inc (NYSE:SERV), Vale SA (ADR) (NYSE:VALE) and Cliffs Natural Resources Inc (NYSE:CLF) posted more-than-modest losses to end the week.
Here’s the deal.
Cliffs Natural Resources Inc (CLF)
The good news is, another analyst has taken enough notice of mining company Cliffs Natural Resources to open up analytical coverage of CLF. The bad news is, the coverage opened up with a rating of “Underperform.”
Credit Suisse did the deed, with analyst Curt Woodworth explaining:
“Credit Suisse is bearish on medium-term iron ore fundamentals, forecasting prices of $35/tonne in 2H-16 as Chinese demand remains structurally weak and a new wave of supply enters the market. We also believe volume trends remain bearish in the US owing to significant structural challenges facing integrated producers. We note that CLF faces debt maturities of $294mm in 2018 and ~$1.7 billion in 2020.”
The analytical firm also set a price target of $1.00 for CLF, 57% below is closing price of $2.34 (which was roughly 10% less than Thursday’s closing price).
Servicemaster Global Holdings Inc (SERV)
Cliffs Natural Resources wasn’t the only company to take one on the chin thanks to a downgrade. Home Services outfit Servicemaster Global Holdings saw its stock plunge more than 6% today following a downgrade from Robert W. Baird — Baird lowered its stance on SERV from an “Outperform” to a “Neutral”. Baird also lowered its target price for SERV from $45 to $42 per share.
The company did well enough in its fourth quarter, growing the bottom line and topping income estimates of 31 cents per share with the bottom line of 33 cents per share. It’s just not enough to impress Baird, however.
The fact that Chief Marketing and Strategy Officer Mark Berry recently announced his retirement may have a small part in Baird’s downgrade, but it’s likely that the research house simply doesn’t like the opportunity it foresees for Servicemaster.
Vale SA (ADR) (VALE)
Last but not least, for the fifth time in a month, Brazilian iron ore company Vale SA has earned a spot on the daily “Worst 3” list, closing only a little less than 1% lower today, but ending the week down by 12%.
There’s no brand new prod for the pullback from VALE today. Rather, a newcomer used the old prod to beat the stock down. Specifically, Stifel lowered its grade on Vale from a “Buy” to a “Hold,” and canceled its $8 price target on the stock altogether. The downgrade was driven by expectations that the recent iron ore price surge won’t hold up.
The concern from Stifel echoed something similar stated by Goldman Sachs (among others) on Tuesday, making Vale a relatively easy target.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
