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Daily research roundup
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August 13, 1999: 3:33 p.m. ET
Downgrades bury two funeral stocks, while Family Golf suffers bad day
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NEW YORK (CNNfn) - Wall Street shied away from funeral stocks Friday after sagging industry conditions prompted several analysts to lower their ratings on two of the sector's leaders.
Louisiana-based funeral-home operator Stewart Enterprises (STEI) started the grim parade by warning late Thursday that profits would disappoint investors throughout the rest of 1999. The company, the third-largest U.S. death-care firm, blamed the anticipated shortfall on competitive pricing pressures.
Merrill Lynch led the downgrades that followed, cutting the stock to "long-term accumulate/near-term neutral" from "long-term buy/near-term accumulate." In a research note, the Wall Street brokerage cited the increasing incidence of cremation and other non-traditional funerary strategies as a cause of sharpened competition in the funeral-home industry.
Banc of America Securities and J.P. Morgan both cut the stock to "market perform" from "buy," while Jefferies & Co. and Josephthal both downgrades shares to "hold" from "buy." J.C. Bradford lowered its rating to "neutral" from "buy."
Shares plunged 3-9/16, or 35 percent, to 6-1/2.
Meanwhile, Merrill Lynch took Stewart's difficulties as a sign of wider weakness in the funerary industry. As a result, the brokerage cut its rating on rival funeral-services provider Carriage Services (CSV) to "neutral" from "accumulate."
Carriage shares tumbled 3-1/2, or 23 percent, to 11-1/2.
Among other companies suffering the downgrade blues, Family Golf Centers (FGCI) got the worst of a rare "sell" recommendation from Prudential, which had previously rated the company a "hold."
The golf-course operator announced Thursday evening that it had received a temporary waiver on the $98.2 million outstanding on its line of credit. However, the company stressed that its attempts to restructure its debt may fail, in which case it would likely file for bankruptcy protection.
Shares plummeted 2-11/16, losing nearly 70 percent of their value, to 1-5/32. 
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