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Analyst downgrades 7-03-07: CACH, CAT, HCR and MOVI

Posted Jul 3rd 2007 10:18AM by Kevin Shult (RSS feed)
Filed under: Before the Bell, Analyst Upgrades and Downgrades, Bad News, Caterpillar (CAT)

MOST NOTEWORTHY: Caterpillar Inc (CAT), Movie Gallery (MOVI), Cache, Inc (CACH) and Manor Care, Inc (HCR) were today's noteworthy downgrades:

UBS downgraded shares of Caterpillar (NYSE: CAT) to Reduce from Neutral and lowered their target to $70 from $78 to reflect decelerating revenues in the company's core businesses, global capacity additions in construction machinery, competitive concerns and valuation.

Soleil downgraded Movie Gallery (NASDAQ: MOVI) to Sell from Hold following comments after yesterday's close about missing certain debt covenants.

Suntrust downgraded shares of Cache (NASDAQ: CACH) to Neutral from Buy citing the company's attempt to reconstruct itself in a difficult economic period with tough comps and in a waning trend cycle.

Manor Care (NYSE: HCR) was cut to Market Perform from Outperform at Wachovia, citing the acquisition by the Carlyle Group. Soleil cut Manor Care to Hold from Buy on the news...

OTHER DOWNGRADES:

UBS downgraded BG Group (NYSE: BRG) to Neutral from Buy.

Roth downgraded MRV Communications (NASDAQ: MRVC) to Hold from Buy.

Matrix lowered Brown-Forman (NYSE: BF.B) to Hold from Buy.

JP Morgan cut Liberty International (OTC: LBYIY) to Neutral from Overweight.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Carlyle checks in and buys Manor Care

Posted Jul 2nd 2007 3:14PM by Tom Taulli (RSS feed)
Filed under: Private Equity, JPMorgan Chase (JPM)

Manor Care Inc. (NYSE: HCR) is a major operator of short-term post-acute and long-term care facilities. It has more than 60,000 employees and 500 skilled nursing/rehabilitation centers, outpatient rehabilitation clinics, and hospice and home health care offices.

Well, now the company wants some privacy -- and has agreed to a $6.3 billion buyout. The suitor is the The Carlyle Group.

In the fiscal Q1 quarter, Manor posted a 10% increase in revenues to $959 million and net income was $30 million, or $0.39 per share. Something else that's important -- the company is a cash cow. In Q1, operating cash flows were a juicy $94 million.

The deal wasn't really a surprise though. Back in April, Manor retained JP Morgan Chase & Co. (NYSE: JPM) to review "strategic alternatives." In fact, on the news of the deal, Manor's stock price fell 1.21% to $64.50. The buyout offer is $67 per share.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.