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.
The upcoming announcement from the Federal Reserve on July 5 is expected to shed light on the perplexing discussions that occurred during their June meeting, leaving the financial industry in a state of confusion. Despite the fact that inflation did not decrease as rapidly as predicted, the Federal Open Market Committee made the surprising decision to pause its string of interest rate hikes, which had been implemented consistently over a period of 15 months. Adding to the intrigue, policymakers revealed their forecast of two additional rate increases for the remainder of the year, surpassing the initial expectations. This unforeseen turn of events has left investors scrambling for answers, eagerly awaiting the Federal Reserve’s explanation and insight into their decision-making process. According to Bloomberg, The clarification from the Federal Reserve will be crucial in understanding the reasoning behind their divergence from the expected course of action and the potential implications for the financial markets. As market participants eagerly analyze the forthcoming details, they hope to gain a deeper understanding of the factors considered by the Federal Reserve and the potential impact on future economic conditions.
Despite the growing risks, prominent bond managers, including Brandywine Global Investment Management, Columbia Threadneedle Investments, and Vanguard Group Inc., continue to hold a positive outlook on the US government debt market. They maintain their bullish stance, expecting a robust rally in fixed-income assets. However, this optimistic view faces challenges as the economy demonstrates resilience, potentially diminishing the appeal of bonds, and with the Federal Reserve contemplating raising interest rates. These factors introduce uncertainty and test the conviction of these bond managers in their bullish position, reported Bloomberg.
According to Reuters, labeling this year’s equity market rally as solely driven by a few AI-powered stocks may misrepresent the situation and could actually be a source of strength. Despite the impressive 16% surge in the S&P500 and the tech-heavy Nasdaq’s best first half in 40 years, concerns over a potential recession led investors to dismiss the rebound as narrow and unsustainable. Critics argue that an equal-weight version of the S&P500 has only seen a modest 6% gain, while the remaining 490 stocks gained just 4%. The FANG+TM index, consisting of mega-cap tech stocks, soared by 75%. These stocks are among the largest globally, and their prominence in diversified portfolios makes them hard to overlook. Moreover, the estimated $7.1 trillion worth of indexed assets closely tracking the world’s most prominent benchmark index may not be overly concerned about the specifics of how the 16% gain was achieved.
The UK government and central bank find themselves heading towards a collision course as they grapple with the blame game surrounding the country’s economic challenges. The headline Consumer Price Index (CPI) for May remained at a concerning 8.7%, unchanged from the previous month. Meanwhile, core inflation, which excludes volatile energy, food, alcohol, and tobacco prices, reached its highest level in 31 years at 7.1%. The UK is facing a combination of economic woes, with stagnant economic growth and public debt surpassing 100% of GDP for the first time since March 1961. Shaan Raithatha, a senior economist at Vanguard, emphasized the severity of the situation, stating that the country is experiencing the “worst of both worlds” during an interview with CNBC’s “Squawk Box Europe.” The clash between the government and central bank highlights the need for a unified approach to addressing rising inflation, sluggish growth, and mounting debt. Criticism is directed towards the government’s policies, while pressure mounts on the central bank to implement measures to tackle inflationary pressures.
On the stocks market front, analysts are bearish on biotech firm BioMarin Pharmaceutical Inc. (NASDAQ: BMRN), financial services firm BlackRock, Inc. (NYSE:BLK), and the global sportswear company NIKE, Inc. (NYSE:NKE). Check out the complete article to see details of these and other stocks.
Photo by Jamie Street on Unsplash
10. Mercury Systems, Inc. (NASDAQ:MRCY)
Number of Hedge Fund Holders: 20
On July 3, Mercury Systems, Inc. (NASDAQ:MRCY), a company specializing in advanced technology solutions for the aerospace and defense industry, received a price target cut from $45 to $40 by Royal Bank of Canada (RBC). Despite this adjustment, RBC maintained its sector performance rating for the company. The decision was based on concerns surrounding the uncertainty regarding the health of Mercury Systems, Inc. (NASDAQ:MRCY) underlying business. Mercury Systems, Inc. (NASDAQ:MRCY) operates in a dynamic industry, providing cutting-edge solutions for critical applications. RBC’s decision to lower the price target reflects its cautious stance due to the perceived uncertainty surrounding the company’s core business operations. The sector performance rating suggests that RBC expects Mercury Systems, Inc. (NASDAQ:MRCY) performance to align with the overall sector performance without significant outperformance or underperformance.
Baron Discovery Fund made the following comment about Mercury Systems, Inc. (NASDAQ:MRCY) in its Q1 2023 investor letter:
“We reduced our investment in Mercury Systems, Inc. (NASDAQ:MRCY) as it ran up on news that it was working with its Board of Directors to look at a potential sale of the company or other strategic alternatives.”
09. Dominion Energy, Inc. (NYSE:D)
Number of Hedge Fund Holders: 28
Dominion Energy, Inc. (NYSE:D) is an American energy company that produces and distributes energy. It has four operating segments – Dominion Energy Virginia, Gas Distribution, Dominion Energy South Carolina, and Contracted Assets. Dominion Energy Virginia generates, transmits, and distributes electricity to about 2.7 million residential, commercial, industrial, and governmental customers in Virginia and North Carolina.
On July 3, BMO Capital analyst James lowered the price target for Dominion Energy, Inc. (NYSE:D) to $59 from $63. The decision reflects a revision in the projected valuation for the company’s shares. This adjustment suggests that BMO Capital has revised its expectations for Dominion Energy, Inc. (NYSE:D) future performance.
Carillon Eagle Growth & Income Fund made the following comment about Dominion Energy, Inc. (NYSE:D) in its Q4 2022 investor letter:
“Dominion Energy, Inc. (NYSE:D) traded lower following the surprise announcement of the company’s strategic review. The company is likely to sell several business units, which will impact future earnings. As a result of earnings uncertainty, we decided to sell the stock.”
08. Alexandria Real Estate Equities, Inc. (NYSE:ARE)
Number of Hedge Fund Holders: 33
Alexandria Real Estate Equities, Inc. (NYSE:ARE) owns and manages advanced life science, agtech, and technology campuses in highly sought-after innovation hubs such as Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. On July 3, Steve Sakwa, an analyst from Evercore ISI Group, reiterated his positive outlook on Alexandria Real Estate Equities, Inc. (NYSE:ARE) by maintaining an Outperform rating on the stock. However, he made a revision to the price target, lowering it from $141 to $137. This adjustment suggests a revised expectation for the stock’s future performance.
Baron Real Estate Fund made the following comment about Alexandria Real Estate Equities, Inc. (NYSE:ARE) in its first quarter 2023 investor letter:
“Alexandria Real Estate Equities, Inc. (NYSE:ARE) is the leading landlord and developer for the life science industry. Alexandria is a best-in-class company with several competitive advantages including an irreplaceable life science office portfolio concentrated in the premier life science markets in the U.S. and deep customer relationships.
Alexandria is valued at a 6.4% implied capitalization rate versus recent life science real estate transactions that have been valued in the 4% to 5% range. Alexandria’s real estate is attractively valued at approximately $500 per square foot versus private market transactions for life science real estate in the $1,000 to $1,500 per square foot range.
The shares of Alexandria Real Estate Equities, Inc., the only pure-play publicly traded landlord and developer to the life science industry, declined in the first quarter of 2023, alongside most traditional office REITs…” (Click here to read the full text)
07. SBA Communications Corporation (NASDAQ:SBAC)
Number of Hedge Fund Holders: 42
SBA Communications Corporation (NASDAQ:SBAC) is a prominent company that owns and operates wireless communications infrastructure such as towers, buildings, rooftops and distributed antenna systems. They have an extensive portfolio of over 39,000 communication sites across 16 markets in the Americas, Africa, and the Philippines. It is recognized as one of the largest Real Estate Investment Trusts (REITs) based on market capitalization. On July 3, RBC lowered the price target for SBA Communications Corporation (NASDAQ:SBAC) to $276 from $290. Despite the adjustment, RBC maintains its Outperform rating for the company. The revised price target suggests a revised expectation for the stock’s future valuation.
Baron Real Estate Fund made the following comment about SBA Communications Corporation (NASDAQ:SBAC) in its first quarter 2023 investor letter:
“In the most recent quarter, we exited our investment in SBA Communications Corporation (NASDAQ:SBAC), a global wireless cell tower REIT that owns a portfolio of wireless tower sites heavily concentrated in the U.S. We had been long-term shareholders of SBA due to our respect for CEO Jeff Stoops, who we have known for several years. We believe Jeff has been an astute allocator of capital and has created tremendous shareholder value over the long term. Jeff will be retiring from SBA at the end of 2023.
We believe a series of issues are likely to temper SBA’s growth in the next few years, including higher debt refinancing costs, wireless carrier decommissioning, headwinds from the company’s Latin American operations, and perhaps foreign exchange headwinds. Our sense is that the company’s annual cash flow growth will decelerate from 14% in 2022 to just 3% in 2023 and remain at modest annual growth rates over the next few years. The company’s high leverage, approximately 6.9 times net debt to cash flow, will limit the company’s ability for share repurchases and external growth opportunities.”
06. Halliburton Company (NYSE:HAL)
Number of Hedge Fund Holders: 43
Halliburton Company (NYSE:HAL) is one of the largest oil and gas equipment companies in the world. Like several others, it is also headquartered in Houston, Texas. The firm’s offshore and subsea segment provides umbilicals, subsea chemical injection, and fluid injection, among other products and services. Josh Silverstein, an analyst at UBS, has decided to maintain a Buy rating on Halliburton (NYSE: HAL) as of July 3. However, there has been a decrease in the price target, which has been adjusted from $49 to $46.
Carillon Eagle Mid Cap Growth Fund made the following comment about Halliburton Company (NYSE:HAL) in its Q1 2023 investor letter:
“Halliburton Company (NYSE:HAL) provides equipment and services to the global energy industry. Investor concerns surrounding the impact that recent softness in crude oil and natural gas prices would have on the overall level of production activity weighed on the company’s stock in the quarter. However, the recent commitment by the Organization of the Petroleum Exporting Countries (OPEC) to reduce production to balance global supply and demand should support healthy levels of activity specifically within North American shale, where Halliburton is a market leader. Over the longer term, we believe the company also should lay a pivotal role in helping exploration and production companies navigate ongoing productivity declines.”
Click to continue reading and see Analysts Are Cutting Price Targets of These 5 Stocks.
Suggested articles:
- 12 Best Long-Term Dividend Stocks To Buy Now
- 10 Martin Shkreli Stock Picks and Their Performance
- 10 Special Situation Penny Stocks With Near Term Catalysts
Disclosure. None. Analysts Are Cutting Price Targets of These 10 Stocks is originally published on Insider Monkey.
Hedge Fund Resource Center