On Sep 5, 2013, we downgraded our long-term recommendation on
Jones Lang LaSalle Inc.
) to Underperform from Neutral based on lower-than-expected
second-quarter 2013 results, stressed environment along its
operating footprint and leasing revenue declines in China, India,
Why the Downgrade?
While the economic conditions are improving in the U.S,
transaction volumes are yet to reach the pre-recession peak
levels. Also, the cautious attitude of investors is limiting the
demand for opportunistic or speculative products.
Structural and political issues have slowed down the pace of
development in certain Asian economies, such as China and India.
Moreover, the confidence on the European market is yet to be
reinstated. Alongside, the cut-throat competitive environment and
exposure to unfavorable foreign currency movements remain
Moreover, Jones Lang posted a negative earnings surprise of 18.4%
in the second quarter of 2013. The company reported adjusted
earnings of $1.15 per share, substantially missing the Zacks
Consensus Estimate of $1.41 per share due to higher expenses.
Also, the company experienced leasing revenue declines in China,
India and Australia.
Therefore, we believe with the tepid economic recovery, revenue
headwinds in the Asian markets and competitive pressure, it would
be wise to avoid the stock currently.
Over the last 30 days, the Zacks Consensus Estimates for 2013 and
2014 remained unchanged at $5.93 and $7.03 per share. However,
the Zacks Consensus Estimate for 2013 FFO per share moved south
6.6% and 4.0% over the last 60 days. The stock currently has a
Zacks Rank #5 (Strong Sell).
Other Stocks to Consider
Other stocks in the same industry that are performing better and
are worth a look in the same industry include
), that carries a Zacks Rank #1 (Strong Buy) as well as
CBRE Group, Inc.
), both carrying a Zacks Rank #2 (Buy).
CBRE GROUP INC (CBG): Free Stock Analysis
FIRSTSERVICE CP (FSRV): Free Stock Analysis
HFF INC-A (HF): Free Stock Analysis Report
JONES LANG LASL (JLL): Free Stock Analysis
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