In this article, we discuss the 10 stocks that just received a Sell rating from analysts.
The spread of the Delta variant of the coronavirus and the social media amplification of conspiracy theories surrounding COVID-19 vaccines have increased Wall Street fears around a lull in the post-pandemic economic recovery that was just beginning to gather some steam. Data from the Bureau of Labor Statistics, released last month, indicated that the United States economy remained more than 5 million jobs short of the position it was in just before the virus crisis in February 2020. This recovery will not be fully complete until 2023.
The poverty rate in the country is also rising. Nearly 3.3 million Americans slipped below the poverty line in 2020, according to the Census Bureau. The median household income also fell close to 3% in 2020, one of the sharpest decreases in almost a decade. A study by the University of Michigan has revealed that consumer sentiment, which stood at 100 before the pandemic, has now dropped to as low as 71. The sentiment is a measure of the confidence that consumers have in their finances and the overall economy. Investors have been positioning their portfolios in light of the new developments and selling stocks that are not likely to perform in the near-term.
Some of the most high-profile stocks that recently received a Sell rating from an investment bank include Twitter, Inc. (NYSE:TWTR), Airbnb, Inc. (NASDAQ:ABNB), and 3M Company (NYSE:MMM), among others discussed in detail below. The uncertainty surrounding the economy and the supply chain problems that have affected several large businesses continue to shape much of the debate around stocks on Wall Street. The tech-enable disruption that dominated 2020 is also in the crosshairs amid inflation fears.
Our Methodology
With this context in mind, here is our list of the 10 stocks that just received a Sell rating from analysts. All the firms listed below have been rated as Sell by an investment advisory in the past few weeks.
The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey. The list is compiled according to the number of hedge funds having stakes in each firm.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Stocks That Just Received Sell Rating from Analysts
10. Top Glove Corporation Bhd. (OTC:TGLVY)
Number of Hedge Fund Holders: N/A
Top Glove Corporation Bhd. (OTC:TGLVY) is placed tenth on our list of 10 stocks that just received a Sell rating from analysts. The firm operates as an investment holding company and is headquartered in Malaysia.
On September 20, investment advisory Citi downgraded Top Glove Corporation Bhd. (OTC:TGLVY) stock to Sell from Neutral and lowered the price target to MYR2.65 from MYR7, calling the fourth quarter print for the firm “disappointing”.
9. NFI Group Inc. (OTC:NFYEF)
Number of Hedge Fund Holders: N/A
NFI Group Inc. (OTC:NFYEF) is ranked ninth on our list of 10 stocks that just received a Sell rating from analysts. The firm manufactures and markets buses across the world and is headquartered in Canada.
On September 20, investment advisory Stifel downgraded NFI Group Inc. (OTC:NFYEF) stock to Sell from Hold and lowered the price target to C$22 from C$27.50, highlighting the supply chain issues for the firm and their ramifications as one the reasons behind the downgrade.
In addition to Twitter, Inc. (NYSE:TWTR), Airbnb, Inc. (NASDAQ:ABNB), and 3M Company (NYSE:MMM), NFI Group Inc. (OTC:NFYEF) is one of the stocks with negative analyst sentiment.
8. Himax Technologies, Inc. (NASDAQ:HIMX)
Number of Hedge Fund Holders: 16
Himax Technologies, Inc. (NASDAQ:HIMX) is a Taiwan-based company that provides display image processing technologies to firms around the world. It is placed eighth on our list of 10 stocks that just received a Sell rating from analysts.
On September 17, investment advisory Vertical Group downgraded Himax Technologies, Inc. (NASDAQ:HIMX) stock to Sell from Neutral with a price target of $7.5. Jon Lopez, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, California-based investment firm Yiheng Capital is a leading shareholder in Himax Technologies, Inc. (NASDAQ:HIMX) with 8.9 million shares worth more than $149 million.
Along with Twitter, Inc. (NYSE:TWTR), Airbnb, Inc. (NASDAQ:ABNB), and 3M Company (NYSE:MMM), Himax Technologies, Inc. (NASDAQ:HIMX) is one of the stocks that does not have consensus positive analyst ratings.
7. AMC Entertainment Holdings, Inc. (NYSE:AMC)
Number of Hedge Fund Holders: 21
AMC Entertainment Holdings, Inc. (NYSE:AMC) is a Kansas-based company in the theatrical exhibitions business. It is ranked seventh on our list of 10 stocks that just received a Sell rating from analysts.
On August 24, investment advisory MKM Partners maintained a Sell rating on AMC Entertainment Holdings, Inc. (NYSE:AMC) stock with a price target of $1, underlining that a slowed box office recovery would likely make breakeven cash flow for the firm unlikely this year.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $404 million in AMC Entertainment Holdings, Inc. (NYSE:AMC), up from 19 in the preceding quarter worth $34 million.
Twitter, Inc. (NYSE:TWTR), Airbnb, Inc. (NASDAQ:ABNB), and 3M Company (NYSE:MMM) are some of the stocks that some analysts recommend selling, along with AMC Entertainment Holdings, Inc. (NYSE:AMC).
In its Q4 2020 investor letter, Mittleman Investment Management LLC, an asset management firm, highlighted a few stocks and AMC Entertainment Holdings, Inc. (NYSE:AMC) was one of them. Here is what the fund said:
“AMC Entertainment (AMC) was our only material loser in Q4, dropping from $4.71 to $2.12 (-55%). I planned on discussing here why it was worth at least the $10 per share that my recently reduced estimate of fair value claimed, but since then AMC raised more cash against their UK holdings and then the stock took off due to speculative players from reddit.com getting involved, so we sold it all around $14 during the last week of Jan. 2021. This was a modest profit for most clients, but a loss for some others, depending on when the account began, so check your statements to see where you came out. And yes, I recognize it as being a dose of good luck, which I heartily accept from the universe as it seemed somewhat lacking in the portfolio of late. After the sale of AMC in late January 2021, our exposure to the movie theater business is now exclusively in Canada via Cineplex, which has a 75% market share and much less leverage on its balance sheet.”
6. Novartis AG (NYSE:NVS)
Number of Hedge Fund Holders: 22
Novartis AG (NYSE:NVS) is placed sixth on our list of 10 stocks that just received a Sell rating from analysts. The company makes and sells healthcare products globally and is headquartered in Switzerland.
On September 20, investment advisory Deutsche Bank downgraded Novartis AG (NYSE:NVS) stock to Sell from Hold and lowered the price target to CHF70 from CHF80, noting that the pipeline slate for the company was “thinning”.
At the end of the second quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $1.78 billion in Novartis AG (NYSE:NVS), up from 19 the preceding quarter worth $1.70 billion.
Twitter, Inc. (NYSE:TWTR), Airbnb, Inc. (NASDAQ:ABNB), and 3M Company (NYSE:MMM) are some of the stocks with negative analyst ratings, just like Novartis AG (NYSE:NVS).
In its Q4 2020 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Novartis AG (NYSE:NVS) was one of them. Here is what the fund said:
“Novartis is one of Europe’s largest pharmaceutical companies and possesses a highly diversified portfolio of innovative products. Its share price underperformed both the broader market and its pharma peers during 2020, largely due to a few disappointing late-stage trials and the company’s lack of Covid-19-related therapeutics or vaccines. These short-term issues provided us with an attractive entry point to invest in a leading pharmaceutical franchise with compelling economics. We estimate that the market is currently ascribing almost no value to Novartis’ pipeline despite the company’s excellent track record in new drug development. We expect that Novartis will deliver mid-single-digit, top-line growth and expand margins over the next five years as a result of its cost-savings plan. The company possesses one of the most diversified product portfolios in the pharma industry with 15 $1b+ compounds, which reduces its reliance on any single compound.”
5. Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Number of Hedge Fund Holders: 29
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is ranked fifth on our list of 10 stocks that just received a Sell rating from analysts. The company develops and sells security solutions for the information technology industry. It operates from Israel.
On September 13, investment advisory Goldman Sachs downgraded Check Point Software Technologies Ltd. (NASDAQ:CHKP) stock to Sell from Neutral and lowered the price target to $121 from $133, citing risk to growth driven by a lack of inflection in sales efficiency for the firm.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Check Point Software Technologies Ltd. (NASDAQ:CHKP) with 1.1 million shares worth more than $134 million.
In its Q1 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and Check Point Software Technologies Ltd. (NASDAQ:CHKP) was one of them. Here is what the fund said:
“Another software holding, Israeli security firm Check Point, saw its shares fall after announcing that investments to fund its future growth will reduce margins this year.”
4. ChampionX Corporation (NASDAQ:CHX)
Number of Hedge Fund Holders: 30
ChampionX Corporation (NASDAQ:CHX) is a Texas-based firm that provides technology and equipment solutions to the oil and gas industry. It is placed fourth on our list of 10 stocks that just received a Sell rating from analysts.
On September 17, investment advisory Goldman Sachs initiated coverage of ChampionX Corporation (NASDAQ:CHX) stock with a Sell rating and a price target of $22, noting that the firm generated revenue from North American markets where volume growth is likely “muted”.
At the end of the second quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $525 million in ChampionX Corporation (NASDAQ:CHX), up from 28 in the previous quarter worth $589 million.
3. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 42
3M Company (NYSE:MMM) is a Minnesota-based diversified industrial manufacturer. It is ranked third on our list of 10 stocks that just received a Sell rating from analysts.
On September 17, investment advisory UBS maintained a Sell rating on 3M Company (NYSE:MMM) stock and lowered the price target to $172 from $183, citing intensifying sales and margin pressure from supply chain constraints for the firm in the near term.
Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in 3M Company (NYSE:MMM) with 5.3 million shares worth more than $1 billion.
2. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 58
Airbnb, Inc. (NASDAQ:ABNB) is placed second on our list of 10 stocks that just received a Sell rating from analysts. The firm owns and operates a travel-related platform and is headquartered in California.
On September 13, investment advisory Goldman Sachs initiated coverage of Airbnb, Inc. (NASDAQ:ABNB) stock with a Sell rating and a price target of $132, underlining that the stock had a “negative risk/reward skew” in context of a volatile travel environment ahead.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Airbnb, Inc. (NASDAQ: ABNB) with 3.4 million shares worth more than $526 million.
In its Q2 2021 investor letter, Worm Capital LLC, an asset management firm, highlighted a few stocks and Airbnb, Inc. (NASDAQ:ABNB) was one of them. Here is what the fund said:
“Throughout the quarter, you may have noticed that we averaged into a significant position in Airbnb (ABNB). Though the stock has been a relative underperformer since its February highs, we are highly confident about the company’s prospects and its ability to generate meaningful compounded returns over time.
Some history: We have been following Airbnb’s journey for several years, long before the company went public earlier this year. (In fact, nine years ago, in November 2012, Eric profiled the company for Inc.: “Airbnb Is Changing Travel.”)
Whenever we underwrite a new investment, we look for a few key attributes that help us determine the potential long-term value of a business, as well as its risks. In particular, we focus on management (Are they founders? Do they have skin the game? Are they playing the long game?), addressable market size (How big is the opportunity?), its relative growth and creativity to expand (Are they constantly innovating to make the product better for their customers?), margin expansion (Where can we find operating leverage in the model?), its status in the industry (Are they the dominant player? Can they
take market share from incumbents?), business risks (What are we missing? Are customers dissatisfied? What do employees say?) and probably a dozen more elements that are critical to our process. It’s only then do we take out the pencils do the valuation work.
In short, ABNB fulfills pretty much every element of a business model we’re attracted to: First, it’s highly scalable marketplace-based business model that unites buyer and seller with observable flywheel effects. (This is an important observation, in that the platform creates significant economic value for millions of hosts who rely on Airbnb, which in turn attracts new hosts who identify the opportunity, which creates more inventory, which turn attracts more travelers, which attracts more hosts, and soon.) Second, it has a global focus with significant opportunities to expand its operating leverage; Third, its management—which is still founder-led—stands out to us as long-term thinkers capable of handling crisis, which the team demonstrated throughout the pandemic by dropping operating costs and turning the business into a more efficient, lean organization. (Like Churchill said: “Never let a good crisis go to waste.”)..”
1. Twitter, Inc. (NYSE:TWTR)
Number of Hedge Fund Holders: 89
Twitter, Inc. (NYSE:TWTR) is ranked first on our list of 10 stocks that just received a Sell rating from analysts. The firm owns and runs a social networking platform and is headquartered in California.
On September 13, investment advisory Goldman Sachs initiated coverage of Twitter, Inc. (NYSE:TWTR) stock with Sell rating and a price target of $60, noting that the advertising recovery for the firm was already priced into the shares.
At the end of the second quarter of 2021, 89 hedge funds in the database of Insider Monkey held stakes worth $6 billion in Twitter, Inc. (NYSE:TWTR), down from 107 in the preceding quarter worth $4.5 billion.
RGA Investment Advisors, in its Q1 2021 investor letter, mentioned Twitter, Inc. (NYSE:TWTR). Here is what the fund has to say in its letter:
“‘The bird has wings’—Twitter’s quarter started off somewhat ominously, with Twitter the worst performing stock in the S&P 500 following the January 6th insurrection and questions about the stickiness of the userbase after permanently suspending the account of President Trump.8 By the end of the quarter, Twitter was one of the best performers in the index after exceptionally strong fourth quarter earnings and guidance for the year and an upbeat analyst day that highlighted a rapidly evolving product roadmap placing the timeline at the center of ephemeral (fleets), long form (Revue) and voice (Spaces). The improvements to the experience makes the platform more accessible and provides more opportunity to continue growing the userbase. Importantly, Twitter also embraced what we have been calling “creative empowerment” in previewing SuperFollows and a host of features designed to help content creators and contributors monetize their own audience on Twitter itself. These developments, alongside considerable progress on the advertising platform give us growing conviction that Twitter will deliver on its largely untapped opportunity—in other words, the value creation opportunity on top of the low multiple we were able to build our position at. Elliot spoke at length about these developments on Yet Another Value Podcast with Andrew Walker and The Business Brew with Bill Brewster, which we invite you to check out.”
You can also take a peek at 10 Stocks Jim Cramer and Ken Fisher Have in Common and 10 Best Nickel Stocks to Buy Now.
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Disclosure. None. 10 Stocks That Just Received Sell Rating from Analysts is originally published on Insider Monkey.
