AstraZeneca plc (ADR) (AZN), BlackBerry Ltd (BBRY): Tuesday’s Top Upgrades (and Downgrades)

To justify these kinds of earnings multiples, Intuitive simply has to find a way to grow faster than analysts think it can — and until Intuitive proves the analysts wrong, First Analysis is probably right to be cautious.

AstraZeneca plc (ADR) (NYSE:AZN) is no star Speaking of companies with less-than-attractive growth prospects, analyst estimates for Britain’s AstraZeneca plc (ADR) (NYSE:AZN) look positively bleak. On average, analysts expect to see this company’s earnings erode at the rate of nearly 10% per year, every year, for the next five years. Little wonder then that, looking at the stock and its 12.5 P/E ratio, analysts at Copenhagen’s Danske Bank still aren’t convinced the stock is cheap.

On Tuesday, Danske cut its rating on AstraZeneca plc (ADR) (NYSE:AZN) from “hold” to “sell.” This comes even though the company is churning out $7.3 billion annually in free cash flow and using that cash to pay its shareholders a beefy 5.7% (according to S&P Capital IQ) dividend yield.

That’s a very attractive number, of course, even without earnings growth. The question, of course, is how long AstraZeneca plc (ADR) (NYSE:AZN) can afford to pay such a rich dividend — or how long it will consider it wise to spend that money on dividends, rather than, say, additional product research or acquisitions of promising target companies. Because with profits on the downturn, there’s really little other than the dividend to recommend this stock to investors.

All it should take is one announcement of a dividend cut to send investors fleeing, and AstraZeneca plc (ADR) (NYSE:AZN) stock falling.

The article Tuesday’s Top Upgrades (and Downgrades) originally appeared on Fool.com and is written by Rich Smith.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Intuitive Surgical. The Motley Fool owns shares of Intuitive Surgical and Microsoft.

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