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Goldman Sachs and Barclays Downgrade Harman International


Nov. 17 2016, Updated 10:04 a.m. ET

Price movement

Harman International Industries (HAR) has a market cap of $7.8 billion. It fell 0.21% to close at $109.49 per share on November 15, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 28.4%, 37.6%, and 18.3%, respectively, on the same day.

HAR is trading 32.9% above its 20-day moving average, 32.9% above its 50-day moving average, and 37.8% above its 200-day moving average.

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Related ETF and peers

The Guggenheim Raymond James SB-1 Equity ETF (RYJ) invests 0.73% of its holdings in HAR. The ETF tracks an equal-weighted index of US-listed stocks expected by analysts to achieve 15% total return and outperform S&P 500 over the next six to 12 months. The YTD price movement of RYJ was 14.5% on November 15.

The market caps of HAR’s competitors are as follows:

  • Delphi Automotive (DLPH) — $18.2 billion
  • Lear Corporation (LEA) — $8.9 billion

Harman’s rating

Harman International saw the following downgrades in its rating:

  • Goldman Sachs has downgraded Harman International’s rating to “neutral” from “buy.”
  • Raymond James has downgraded Harman International’s rating to “outperform” from “strong buy.”
  • Barclays has downgraded Harman International Industries’ rating to “equal weight” from overweight” and also set the stock’s price target at $111.00 per share.

Moody’s reported, “Moody’s Investors Service (“Moody’s”) placed Harman International Industries, Inc.’s (“Harman”) Baa3 senior unsecured rating under review for upgrade. This follows yesterday’s announcement that Samsung Electronics Company, Ltd. (“Samsung”) plans to acquire Harman for $112 per share in cash or about $8.0 billion for the equity, excluding transaction expenses.”

Performance of Harman International in fiscal 1Q17

Harman International (HAR) reported fiscal 1Q17 net sales of ~$1.8 billion, a rise of 7.9% compared to net sales of ~$1.6 billion in fiscal 1Q16. Sales of Connected Car, Lifestyle Audio, and Connected Services rose 5.6%, 19.3%, and 4.4%, respectively, in fiscal 1Q17 compared to fiscal 1Q16. Sales of Professional Solutions fell 2.8% in fiscal 1Q17 compared to fiscal 1Q16.

The company’s gross profit margin and operating margin expanded 90 basis points and 50 basis points, respectively, in fiscal 1Q17 compared to fiscal 1Q16.

HAR’s net income and EPS (earnings per share) rose to $103.1 million and $1.45, respectively, in fiscal 1Q17, compared to $87.1 million and $1.20, respectively, in fiscal 1Q16. It reported adjusted EPS of $1.87 in fiscal 1Q17, a rise of 26.4% compared to fiscal 1Q16.

Harman’s cash and cash equivalents fell 15.0%, and its inventories rose 17.8% in fiscal 1Q17 compared to fiscal 4Q16. Its current ratio and debt-to-equity ratio fell to 1.57x and 1.46x, respectively, in fiscal 1Q17 compared to 1.59x and 1.47x, respectively, in fiscal 4Q16.

Next, we’ll discuss Kimberly-Clark (KMB).


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