In this article, we will discuss the 10 stocks whose price targets were recently trimmed by analysts. If you want to see more such stocks on the list, go directly to Analysts Are Cutting Price Targets of These 5 Stocks.
Since mid-March, equity markets have experienced a notable rally, accompanied by a rise in bond prices as the yield on the 10-year Treasury note dropped from around 4% to 3.5%. This resulted in a contraction of both investment-grade and high-yield fixed-income spreads (i.e., the difference in yield between these bonds and U.S. Treasuries). As a result, many investors can be pleased with the recent performance of their investment portfolios, as these trends have persisted for the past seven weeks or so. Last week, U.S. stocks bounced back from a low point of four weeks thanks to better-than-expected tech earnings. This helped to balance out some troubles experienced by regional banks. As indicated by U.S. PCE data, consumer spending in the first quarter was not as strong as expected. However, U.S. wage growth remains robust, which suggests that inflation will exceed the 2% policy target.
Bank-related news has been a hot topic in financial headlines since early March and continues to dominate this week. While it is possible that more regional banks may fail in the near to intermediate term, the main concern is the impact on credit conditions and the wider U.S. economy. Loans are becoming harder to obtain, especially for consumers and businesses with less-than-perfect credit histories. The availability of credit is essential for the growth of the U.S. economy, as spending drives growth, and loans and credit serve as lubricants for economic activity. Experts believe tightening credit conditions will accelerate the economic slowdown, leading to a recession that could happen sooner than expected.
On May 4, stocks finished lower due to concerns about the banking sector and the Federal Reserve’s monetary policy decision. Initial jobless claims for the week ended April 29 rose from the prior week’s print, while a preliminary reading of first-quarter nonfarm productivity fell and unit labor costs climbed. The U.S. Challenger job cuts announcement for April showed job cuts rose by 175.9% year-over-year, with retailers and the technology sector announcing the most cuts. According to wellsfargoadvisors, investors reacted positively to the latest corporate earnings and jobs data, with U.S. equity futures climbing on Friday, May 5. Apple Inc. reported better-than-expected top-and bottom-line results in the latest quarter, driven by strong iPhone sales, which suggests that the supply chain issues faced by the tech giant may be easing. However, sales of Mac and iPad fell short of expectations. After tumbling earlier in the week, regional banks recovered on May 5.
The latest employment data from the Bureau of Labor Statistics showed a larger-than-expected increase in nonfarm payrolls, with 253,000 jobs added in the U.S. last month. This could lead to the Federal Reserve keeping interest rates high for a longer period, and possibly even raising rates for an 11th consecutive time in June. Additionally, the unemployment rate dropped to 3.4%, which is a multi-decade low. These unexpected developments in hiring and wages suggest a strong U.S. economy, which could have implications for monetary policy going forward, reported Bloomberg.
Meanwhile, notable stocks, including BILL Holdings, Inc. (NYSE:BILL), AbbVie Inc. (NYSE:ABBV) and Amazon.com, Inc. (NASDAQ:AMZN), came into the spotlight after receiving price-target cuts from analysts.
BILL Holdings, Inc. (NYSE:BILL) received the price-target cut due to concerns about bank sector uncertainty. On the other hand, Wells Fargo and Guggenheim revised their price target for AbbVie Inc. (NYSE:ABBV), citing pipeline concerns that raise the need for M&A.
Check out the remaining article to see some other stocks whose price targets were recently cut by analysts.
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10. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Holders: 31
According to a research note by Barclays analyst Lauren Lieberman, the price target for Keurig Dr Pepper Inc. (NASDAQ:KDP) has been reduced from $42 to $37 on May 1. However, the company’s shares are still rated as Overweight. Despite Keurig Dr Pepper Inc. (NASDAQ:KDP) affirmation of its financial guidance for 2023, the stock experienced a sell-off due to poor Q1 coffee sales and a less optimistic outlook.
Keurig Dr Pepper Inc. (NASDAQ:KDP) released its Q1 2023 earnings on April 27, reporting a non-GAAP EPS of $0.34 and revenue of $3.35 billion. The company exceeded Wall Street’s expectations by $0.01 and $60 million, respectively.
Oakmark Funds made the following comment about Keurig Dr Pepper Inc. (NASDAQ:KDP) in its Q4 2022 investor letter:
“We sold the remainder of our Keurig Dr Pepper Inc. (NASDAQ:KDP) shares in the quarter. As a consumer staples company, Keurig’s shares have held up very well in a difficult market and, as a result, its relative valuation was no longer as compelling as other investment opportunities. We would be happy to own the company again at the right price.”
09. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 38
Snap Inc. (NYSE:SNAP) is a popular social networking platform that was founded in 2011 and is often referred to as a camera startup. It boasts 375 million daily active users and generates 70% of its revenue from North America, primarily from advertising. To date, the company has raised $4.9 billion from 39 different investors.
On April 28, Guggenheim analyst Michael Morris reduced the price target on Snap Inc. (NYSE:SNAP) stock from $12 to $9 and retained a Neutral rating on the shares due to lower estimates following the company’s Q1 report. The Q2 revenue and adjusted EBITDA performance is expected to be below consensus, based on the company’s internal forecasts, despite management’s belief that a more diverse group of advertisers is succeeding on the platform.
08. Nutrien Ltd. (NYSE:NTR)
Number of Hedge Fund Holders: 40
Mizuho, a financial services company, on April 28, decreased the price target on Nutrien Ltd. (NYSE:NTR) stock from $91 to $79 and maintained a Neutral rating on the shares. The analyst notes that investor doubt regarding the agriculture markets is mainly influenced by fertilizer price ambiguity rather than global crop fundamentals, despite Q1 volatility. As a result, the firm has reduced its estimates for the nutrients sector as a whole. Nutrien Ltd. (NYSE:NTR) is a major player in the fertilizer industry and has a strong presence in potash and phosphates. The company’s valuation metrics indicate that its EV/Revenue multiple is 0.11, and its P/E ratio is 7.74.
ClearBridge Investments, an investment management company, mentioned Nutrien Ltd. (NYSE:NTR) in its third-quarter 2022 investor letter. Here’s what the firm said:
“However, we believe this is exactly the kind of environment that separates the highest-quality companies from their peers and allows them to strengthen their competitive positioning. For example, Nutrien Ltd. (NYSE:NTR), a Canadian fertilizer company, was a top contributor during the quarter. While the war in Ukraine and economic sanctions on Russia have significantly reduced the output of two of the world’s largest agricultural producers, Nutrien has benefited from a strong global agricultural cycle and from farmers seeking to increase their output and capitalize on higher agricultural prices.”
07. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 40
On May 1, Credit Suisse analyst Sami Badri lowered the price target on Cloudflare, Inc. (NYSE:NET) stock from $95 to $75 and maintains an Outperform rating on the shares. While Cloudflare, Inc. (NYSE:NET) reported a 36.8% year-over-year growth in revenue, which is slightly below the consensus expectation of 37.1%, the firm notes significant sales cycle elongation, especially in expansion deals, and an underperforming section of the salesforce that hampered growth. As a result, the Q2 and full-year 2023 revenue guidance is below consensus. Despite these challenges, the company’s free cash flow is well above consensus. Also, during Q4 2022, Cloudflare, Inc. (NYSE:NET) experienced a significant 41.9% YoY growth in revenue. The company’s adjusted EPS for the same period was $0.06, which exceeded analysts’ estimates by $0.01. Cloudflare, Inc. (NYSE:NET) is witnessing high demand for its services from both small and large companies. It was recently reported that even ChatGPT is using Cloudflare, Inc. (NYSE:NET)’s services.
06. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 44
First Solar, Inc. (NASDAQ:FSLR) is a company that produces and sells solar panels, and also offers solar farms and related services. The company has provided a positive outlook for 2023, with expected net sales ranging between $3.4 billion to $3.6 billion and a projected diluted EPS between $7.00 to $8.00. Additionally, the company expects to end the year with a net cash balance between $1.2 billion to $1.5 billion.
However, according to a research note by Deutsche Bank analyst Corinne Blanchard, released on May 1, the firm lowered its price target on First Solar, Inc. (NASDAQ:FSLR) stock from $230 to $220 and maintained a Hold rating on the shares. The analyst notes that the company’s outlook is heavily skewed towards the latter half of the year.
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Disclosure: None. Analysts Are Cutting Price Targets of These 10 Stocks is originally published on Insider Monkey.
