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Abengoa SA Downgraded to Strong Sell on Bleak Outlook

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Zacks Investment Research downgraded Abengoa SAABGB to a Zacks Rank #5 (Strong Sell) on Sep 24. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market.

Why the Downgrade?

Market sentiments have been weak for Abengoa SA, with its share price plunging 105.2% since the company released first-half 2015 results on Jul 31. The free cash flow guidance for 2015 was reduced to a range of €600−€800 million from the earlier projection of €1,400 million, thus disappointing investors and the market at large.

In addition, Abengoa SA lowered its revenue forecast for 2015 to €7,300−€7,700 million from the prior expectation of €7,750−€7,850 million. Also, the company predicted a more leveraged balance sheet, with consolidated net leverage ratio of 4.3x−4.6x, up from 3.9x recorded in 2014.

Bleak prospects, coupled with Abengoa SA's sudden announcement of a €650-million share issuance plan and increase of asset divestiture to €500 million (from €400 million earlier) on Aug 3, weakened investors' confidence in the stock. Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 21.2% to $1.19 per American Depository Shares ("ADS") for 2015 and 64.5% to 82 cents per ADS for 2016.

Stocks to Consider

Abengoa SA currently has a market capitalization of $9.5 billion. Better-ranked players in the industrial products/services sector include Multi-Color Corp. LABL , ACCO Brands Corporation ACCO and Codexis, Inc. CDXS . While Multi-Color Corp. sports a Zacks Rank #1 (Strong Buy), both ACCO Brands and Codexis carry a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ACCO BRANDS CP (ACCO): Free Stock Analysis Report

CODEXIS INC (CDXS): Free Stock Analysis Report

ABENGOA SA (ABGB): Free Stock Analysis Report

MULTI-COLOR (LABL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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