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What's Behind 7 Stock Ratings Changes

A major beer merger, cautious investors in China, and promising data on a new diabetes drug are among the factors driving ratings changes at quarter-end, says Morningstar's Matt Coffina.

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Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. I'm joined today by Matt Coffina, who's the editor of Morningstar StockInvestor newsletter. We're going to take a look at some recent ratings changes across our equity-research universe. Matt, thanks for joining me.

Matt Coffina: Thanks for having me, Jeremy.

Glaser: So, certainly one of the big headlines over the past couple of months has been a slowing China. What impact has this had on our equity research, and have we made any changes to our fair value estimates because of this slowdown? 

Coffina: It's a very important area. It's certainly something that investors are paying a lot of attention to, and a lot of companies are exposed in varying ways. There are some companies that sell directly into China--multinational kinds of companies. But in those cases, I'd say their exposure is pretty limited. It's hard to see a material impact on fair value estimates. Maybe it lowers the growth rate for a company like Unilever (UN) or another multinational consumer-products company. It can lower the growth rate by a point or two here or there, but there are other factors going on in the fair value estimate that usually renders that immaterial.

Matthew Coffina does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.