Potash Corp. and Take-Two Downgrades Sink Shares 5%

Rough start for Take-Two Interactive (NASDAQ:TTWO) and Potash Corp. (NYSE:POT), both companies got thrown a downgrade this morning and shares of TTWO and POT are down 5%.

POTASH GETS DOWNGRADED
Soleil Research analyst Mark Gulley downgraded both Potash and smaller rival Mosaic Co (NYSE:MOS) to "hold" from "buy" based on valuation, and cut the price targets on both companies based on their lower sales and earnings per share estimates.

In addition, RBC Capital Markets lowered its price target on the stock to $110 from $115, but said it believes long-term fundamentals driven by the constant need to improve food production will eventually outweigh current market challenges.

"Given Potash Corp's latest revision to its 2009 EPS guidance and updated outlook for 2010 potash demand, we expect its share price to face some downward pressure in the near term," RBC analyst Fai Lee wrote in a note to clients. Potash Corp lowered its outlook last week, saying it expects full-year earnings to be between $3.25 and $3.75 a share, down from its previous expectation of $4 to $5 a share, citing weak sales.

TAKE-TWO TAKES A HIT
Wedbush Morgan downgraded Take-Two Interactive Software (Nasdaq: TTWO) from Outperform to Neutral today. Wedbush analyst says, "We are lowering our rating for Take-Two to NEUTRAL due to valuation. Our $13 price target, which reflects a forward multiple of 15x estimated sustainable EPS of $0.80 (fully-taxed) plus $1/share in net cash reflects only 10% upside from current levels."

Webush -- "The target multiple is at the low end of Take-Two's historical range, and reflects the company recent earnings volatility and market contraction. We acknowledge that this downgrade may appear “early” in light of the company’s positive outlook for FY:10 due to the many game shifts from FY:09 and expected industry catalysts from hardware price cuts. Sony and Microsoft cut the price of the PS3 and 360 in late August, and we expect Nintendo to cut the price of the Wii to $199 by the end of the month. We expect a solid FY:10, and an announcement of the next installment of Grand Theft Auto by mid-June at the E3 Expo. In our view, the company’s share price fully reflects an increasingly positive outlook and the lack of other company specific catalysts."