Agco Corp.'s stock slumped 5.9% in active midday trade Thursday, putting it on course to close at an eight-month low, after UBS downgraded the agricultural equipment maker because of a bleak 2016 outlook. Analyst Steven Fisher cut his rating to sell, after being at neutral for more than 2 1/2 years. He slashed his stock price target to $39, which is 11% below current levels, from $52. Fisher said expectations weaker corn, soybean and cattle prices in the U.S., continued weakening in South America markets and risks of lower machinery and dairy prices in 2016, have not yet been fully reflected in consensus earnings estimates. While the company has done a "good job" of improving productivity and cutting costs, Fisher said he believes further progress will be harder to achieve. "WE believe volume declines in 2016 will have a more direct negative impact on profitability, particularly in the North American market," Fisher wrote in a note to clients. The stock has tumbled 21% over the past three months, while the S&P 500 has lost 8.5%.
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