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Stock Downgrades: Lowe's Left High and Dry


Wall Street ratings agencies set the tone for today's stock market.

Home-improvement retailer Lowe's (NYSE:LOW) today hears a four-letter word that is hardly ever uttered in Wall Street research departments: "Sell." Concerns include shares that trade at a premium multiple by historical standards, the company's uncertain growth outlook, and a patchy housing market.
With summer now unofficially upon us, casual footwear is understandably all the rage. Although the sartorial smart set is advising against flip-flops in Washington, on Wall Street the style is everywhere. Gurus who prophesied doom only in April are, well, standing corrected come May. Truth be told, you don't need a Gartman Letter to get a check in the mail, especially when Aéropostale (NYSE:ARO) - utterly unloved on Friday - suddenly bounced back to the tune of 14.96% as the S&P 500 (INDEXSP:.INX) rose to another record. Ex-Dow (INDEXDJX:.DJI) component Bank of America (NYSE:BAC) gained 3.40% after The Thundering Herd met the blundering word, with a $4 billion accounting error related to its acquisition of Merrill Lynch now being blamed on a change in the Fed's grammar. Equities earlier got a boost from a 0.8% increase in durable goods, again blindsiding expensively compensated economists who called for a decrease of 0.7%. An odd time, then, for Pimco to appoint Paul McCulley its first-ever chief economist. At least Bill Gross, after his Mohamed El-Erian mess, has finally found his heir apparent. Or should I say hair, for Mr. McCulley's legendary locks are head and shoulders above anything else in the financial industry.
Speaking of the dismal science, it's quite a quiet day in economic data, but expect quarterly earnings announcements out of Michael Kors (NYSE:KORS), Palo Alto Networks (NYSE:PANW), Popeyes Louisiana Kitchen (NASDAQ:PLKI), and Toll Brothers (NYSE:TOL).
Now let's look at this morning's rating reductions, an eclectic bunch that features a British telecom titan, Dutch supermarket stock, and Swiss watchmaker in addition to our headline equity Lowe's.

Ahold (OTCMKTS:AHONY): The grocery giant from Holland is moved to Market Perform from Outperform at Raymond James.
Dollar General (NYSE:DG): Deutsche Bank downgrades DG to Hold from Buy at Deutsche Bank. Its target price is also taken lower, by $5 to $60.
Hillshire Brands (NYSE:HSH): The stock, which yesterday jumped an NYSE-best 22.07% on takeover talk, is today taken to Perform from Outperform by BMO Capital. Its amended price objective is $49.
Live Nation Entertainment (NYSE:LYV): Sterne Agee lowers LYV to Neutral from Buy.
Lowe's: Shares get slashed to Sell from Hold at Canaccord Genuity, which also cuts its target by $10 to $37.
Nautilus (NYSE:NLS): Due to valuation issues, shares are now Neutral from Buy at B. Riley & Co.
Swatch (OTCMKTS:SWGAY): Société Générale slashes the Swiss watch stock to Hold from Buy.
Vodafone (NASDAQ:VOD): The British phone firm is downgraded to Hold from Buy by Berenberg.

Also see:

New Stock Coverage: Pfizer Profits From Purple Pill Poppers

Stock Upgrades: Twitter's Bluebird Is the Bee's Knees
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No positions in stocks mentioned.
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