In this article, we will take a look at the 10 stocks losing value following analysts’ downgrades.
Analysts recently lowered their ratings for cryptocurrency exchange platform Coinbase Global, Inc. (NASDAQ:COIN), e-commerce company eBay Inc. (NASDAQ:EBAY) and fashion retailer Farfetch Limited (NYSE:FTCH).
Shares of Coinbase, eBay and Farfetch dropped after receiving the downgrades. In addition, stocks, including Floor & Decor Holdings, Inc. and Mister Car Wash, Inc. (NYSE:MCW), also fell sharply after analysts trimmed their ratings for them.
10. Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Number of Hedge Fund Holders: 15
Shares of Bed Bath & Beyond Inc. declined for two consecutive trading sessions after receiving a downgrade from B. Riley on Monday, June 27, 2022. The research firm lowered its ratings for the New Jersey-based retail store operator from “Buy” to “Neutral,” citing declining store traffic.
B. Riley analyst Susan Anderson referred to supply-chain disruptions that are weighing on sales. Anderson also cut her price target for Bed Bath & Beyond Inc. from $17 per share to $7 per share.
Separately, investment management firm L1 Capital mentioned Bed Bath & Beyond Inc. in its fourth-quarter 2021 investor letter. The firm said:
“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Bed Bath & Beyond‘s shares surged after showing strong operating momentum in early 2021, along with a large buyback program and a short squeeze. Exited holding in January (around $45), near share price peak.”
9. Altair Engineering Inc. (NASDAQ:ALTR)
Number of Hedge Fund Holders: 18
Shares of Altair Engineering Inc. (NASDAQ:ALTR) fell over seven percent on Monday, June 27, 2022, after Goldman Sachs downgraded the Michigan-based tech company from “Neutral” to “Sell.” The research firm expects a potential downside to the company’s fiscal 2022 sales estimates amid macroeconomic uncertainty.
Goldman Sachs analyst Kash Rangan thinks that Altair’s customers are facing tough operating conditions and they might limit their spending, denting Altair’s sales outlook for the full year. Rangan also cut his price target for Altair Engineering Inc. from $62 per share to $41 per share.
Earlier this year, investment management firm Harding Loevner talked about Altair Engineering Inc. in its fourth-quarter 2021 investor letter. Here’s what the firm said:
“Altair’s core competitive advantage lies in its “solvers,” software modules that use differential equations to solve physics problems. The company has utilized data from decades’ worth of crash tests to improve its core structural optimization solver, Optistruct. Altair has also been quietly investing in the underlying software tools needed to harness the power of Al, enabling customers to optimize the performance of simulation analysis regardless of whether they are accessing the cloud through Microsoft, Amazon, Oracle, or any of the above in combination with the customer’s in-house hardware. This gives customers flexibility to take advantage of the increased power of the cloud while still amortizing their past investments. Recently, Altair acquired DataWatch, known for its live-streaming analytics capabilities, in anticipation of what management sees as the growing opportunity to continuously enhance its simulations with more real-time data from sensors embedded in its customers’ deployed products —an approach known as ‘digital twins.'”
8. Samsara Inc. (NYSE:IOT)
Number of Hedge Fund Holders: 20
Shares of Samsara Inc. (NYSE:IOT) dropped over five percent on Monday, June 27, 2022, after Goldman Sachs cut its ratings for the California-based IoT company from “Buy” to “Hold.”
Goldman Sachs analyst Kash Rangan believes that persistent logistic hurdles and capital needs would make it hard for Samsara Inc. to achieve profitability in the near future. Rangan also trimmed his price target for Samsara Inc. from $27 per share to $16 per share.
Like Samsara Inc., analysts also recently lowered their ratings for Coinbase Global, Inc., eBay Inc. and Farfetch Limited.
7. The Boston Beer Company, Inc. (NYSE:SAM)
Number of Hedge Fund Holders: 22
Shares of The Boston Beer Company, Inc. (NYSE:SAM) slipped over four percent on Tuesday, June 28, 2022, after Goldman Sachs downgraded the alcoholic beverages maker from “Neutral” to “Sell.”
Goldman Sachs analyst Bonnie Herzog referred to the company’s declining hard-seltzer business, arguing that distributors are further decreasing their hard-seltzer inventory. Herzog added that The Boston Beer Company, Inc. may have to cut its outlook for fiscal 2022. She also lowered her price target for The Boston Beer Company, Inc. from $380 per share to $318 per share.
6. Varonis Systems, Inc. (NASDAQ:VRNS)
Number of Hedge Fund Holders: 26
Varonis Systems, Inc. (NASDAQ:VRNS) is focused on data security and analytics. It helps businesses manage, analyze and secure enterprise data, such as sensitive files, financial records, and emails.
Shares of Varonis Systems, Inc. fell over seven percent on Monday, June 27, 2022, after Morgan Stanley downgraded the software company from “Overweight” to “Equal Weight,” citing signs of decelerating top-line growth.
Morgan Stanley analyst Hamza Fodderwala also hinted toward extended sales cycles and limited customer adoption. Fodderwala cut his price target for Varonis Systems, Inc. from $50 per share to $35 per share.
5. Mister Car Wash, Inc. (NYSE:MCW)
Number of Hedge Fund Holders: 26
Shares of Mister Car Wash, Inc. plummeted over seven percent on Monday, June 27, 2022, after Goldman Sachs downgraded the Arizona-based car wash operator from “Neutral” to “Sell.”
Goldman Sachs analyst Kate McShane pointed to the discretionary nature of the company’s business. McShane thinks that the ongoing inflationary pressure might force Mister Car customers to cancel their memberships.
McShane also cut her price target for Mister Car Wash, Inc. from $12 per share to $10 per share. Shares of Mister Car Wash, Inc. have lost about 40 percent of their value so far in 2022.
4. Floor & Decor Holdings, Inc. (NYSE:FND)
Number of Hedge Fund Holders: 30
Shares of Floor & Decor Holdings, Inc. turned red on Monday, June 27, 2022, after receiving a downgrade from Goldman Sachs. The research firm lowered its ratings for the hard surface flooring retailer from “Buy” to “Neutral.”
Goldman Sachs analyst Kate McShane thinks that rising interest rates would impact the demand for the company’s products. McShane also referred to the macro challenges Floor & Decor Holdings, Inc. is facing. She trimmed her price target for Floor & Décor stock from $109 per share to $64 per share.
Separately, investment management firm Argosy Investors also talked about Floor & Decor Holdings, Inc. in its first-quarter 2022 investor letter published last month. Here’s what the firm said:
“Floor & Decor Holdings, Inc., was “cyclical” risk sales in the sense that the stock has benefitted from some pandemic-related boosts in sales and/or they are more exposed to economic downturns. Floor & Décor is a terrific business that we would love to own more of at a better price. Given the significant amount of home renovations that have occurred during the pandemic, we thought better of our continued ownership in this stock until we were at a more favorable point in the economic cycle.”
3. eBay Inc. (NASDAQ:EBAY)
Number of Hedge Fund Holders: 44
Shares of eBay Inc. fell nearly four percent on Tuesday, June 28, 2022, after UBS lowered its ratings for the e-commerce company from “Buy” to “Neutral.” The research firm also cut its price target for eBay Inc. from $60 per share to $40 per share.
UBS analyst Kunal Madhukar thinks that the gross merchandise value (GMV) of eBay Inc. for fiscal 2022 will decrease nearly 17 percent on a year-over-year basis, wider than the Street estimate for a drop of 15 percent.
2. Farfetch Limited (NYSE:FTCH)
Number of Hedge Fund Holders: 45
Shares of Farfetch Limited plummeted over 11 percent on Tuesday, June 28, 2022, after UBS downgraded the online luxury fashion retail platform from “Buy” to “Neutral,” citing lower gross merchandise volume (GMV) growth.
In a research note to investors, UBS analyst Kunal Madhukar projected GMV growth of 1.7 percent for fiscal 2022, well below the Street estimates of 4 percent growth. Madhukar thinks that Farfetch Limited may not be able to achieve GMV growth targets in certain regions due to a deteriorating macro-outlook. He also trimmed his price target for Farfetch Limited from $13 per share to $10 per share.
Farfetch Limited also recently appeared in the first-quarter 2022 investor letter of investment management firm Polen Capital. The firm said:
“We also initiated a position in global luxury fashion e-commerce marketplace Farfetch in the first quarter and took advantage of meaningful weakness in the company’s share price during the period. Farfetch previously had too large a market cap for the Portfolio, but it has since moved to a level where it’s appropriate to own it – both in this Portfolio and in our smid-cap strategy. The company’s fundamentals remain attractive as indicated by the compelling results Farfetch reported in February.
The company remains an early mover with “the world’s only truly global marketplace for luxury at scale”. Farfetch has broader reach around the world with a diversity of brands that is much larger than its competitors. Many of the items it sells are exclusive. Our research shows that its brand assortment, brand image, geographic breadth, an inventory-light business model, a more compelling offering for luxury partners, and artificial intelligence are all competitive edges for the company. We believe Farfetch is well-positioned for the continued market share shift from offline to online in this category. The personal luxury goods market has trailed other categories in online penetration, but consumer behaviors and preferences shifted as a result of the pandemic creating more comfort with purchasing goods like this online. Changed behavior and the general shift to a higher portion of Millennial and Gen Z luxury shoppers supports this continued shift as does the growth in emerging market demand.”
1. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 46
Shares of Coinbase Global, Inc. fell for two straight days after Goldman Sachs downgraded the cryptocurrency exchange platform from “Neutral” to “Sell” on Monday, June 27, 2022.
Goldman Sachs analyst Will Nance thinks the current trading volumes indicate a further decline in revenue. Nance expects a year-over-year drop of 61 percent in Coinbase revenue for 2022. He also cut his price target for Coinbase Global, Inc. from $70 per share to $45 per share, citing continuously dropping crypto prices.
Separately, Memphis-based Longleaf Partners Fund talked about Coinbase Global, Inc. in its fourth-quarter 2021 investor letter, stating:
“We also have seen plenty of IPO/SPAC craziness showing both that private players need public markets more than they admit and that there is more volatility embedded in these newer companies than a private quarterly mark might admit. As for how efficient both the private and public markets are, we would encourage you to really delve into some of those multi-hundred-page S1s for many of the newest public companies to see the huge gap between the last valuation at which the company was funded and/or granted shares to its executives and the often much higher price at which the company went public – Coinbase is a prime example.”
You can also take a peek at Billionaire Richard Chilton Is Selling These 10 Tech Stocks and 6 Defensive Stocks to Buy in 2022 According to Seth Klarman.
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originally published on Insider Monkey.
