CUT FOR ARCTIC CAT
Mark Smith covers Arctic Cat as a senior research analyst for Minneapolis-based Feltl and Co. He has recommended the recreational vehicle maker for a long time ("buy" or "strong buy" since 2011), but this week downgraded his rating from "buy" to "hold." The Plymouth-based maker of snowmobiles and all-terrain vehicles reported third-quarter results that exceeded Smith's estimate for the quarter but were below the consensus among all analysts. In addition, Arctic Cat lowered its revenue goal for fiscal 2015 as the company's new CEO Christopher Metz pledged to help dealers reduce inventories.
"We think the new CEO is taking the proper steps to repair a fractured relationship with dealers, but think this will take time and dollars," Smith wrote.
He is recommending investors look elsewhere for the next several quarters but added: "We would turn more favorable if the company can improve dealer inventories more quickly and less expensively than we now expect."
All eyes on integration at Medtronic
Last week, Medtronic and Covidien finalized their multibillion-dollar merger. Now analysts and others viewing the company will start examining how well the companies integrate to form one organization. JPMorgan analyst Michael Weinstein thinks the new company can grow its top line and bottom line faster than the old Medtronic. He expects revenue to grow 4 percent and profits to grow 10 percent, above the 3.3 percent and 5.4 percent growth he was forecasting for Medtronic to grow on its own. "While a transaction of this size brings with it certain risks and uncertainties, we believe it also represents an opportunity for the combined company to leverage this superior breadth, to maximize its value to customers in the evolving health care environment," Weinstein wrote.