In this article, we will discuss the 10 stocks that recently received ratings cut from analysts.
The key U.S. indices inched lower in pre-market trading Tuesday after a couple of Federal Reserve members pointed towards further hikes in interest rates. Atlanta Fed CEO Raphael Bostic said rates should increase over 5 percent. On the other hand, San Francisco Fed CEO Mary Daly stated that the central bank should keep raising the rates, though at a slower pace.
Meanwhile, notable stocks like PayPal Holdings, Inc. (NASDAQ:PYPL), Bank of America Corporation (NYSE:BAC) and Constellation Brands, Inc. (NYSE:STZ), were recently downgraded by analysts.
PayPal Holdings, Inc. received a downgrade amid intensifying competition, while the stock rating for Bank of America Corporation was cut due to potential downside risk in case of a recession. On the other hand, Constellation Brands, Inc. received a downgrade amid a downtrading in its premium beer and wine category. Check out the complete article if you want to explore some other notable downgrades.
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10. Heska Corporation (NASDAQ:HSKA)
Number of Hedge Fund Holders: 14
Morgan Stanley lowered its ratings for Heska Corporation (NASDAQ:HSKA) from “Equal-Weight” to “Underweight” on Friday, January 6. Analyst Erin Wright thinks the company’s underperformance in 2022 will pose a risk to the current year’s growth.
Wright previously used the word “ambitious” for the company’s medium to long-term outlook. Besides the rating cut, she decreased her price target for Heska Corporation from $135 per share to $58 per share.
Meanwhile, some of the problems faced by Heska Corporation were also discussed by investment management firm Alger Capital in its third-quarter 2022 investor letter. Here’s what the firm said:
“Shares of Heska underperformed this quarter largely due to an industry-wide slowdown in the animal health market. The company reported lower than expected earnings results due to the recent weakness in vet visitation trends. Consequently, management lowered forward guidance given the difficult macroeconomic outlook. While near-term weakness is expected at this time, we believe the company remains well positioned to benefit from new product launches going into next year.”
9. Doximity, Inc. (NYSE:DOCS)
Number of Hedge Fund Holders: 19
Doximity, Inc. (NYSE:DOCS), an online networking service for healthcare professionals, went public in June 2021. The stock initially skyrocketed to a high of around $107 but has been losing value since then. It has lost more than 30 percent of its value in the last year alone, while its current trading price stands around $31.
The San Francisco based-company recently received a downgrade from Morgan Stanley. The research firm cut its ratings for Doximity, Inc. from “Equal-Weight” to “Underweight” on Friday, January 6.
Citing her latest industry checks, analyst Ricky Goldwasser pointed towards a further slowdown in the healthcare digital ad space growth in the coming quarters. She also slashed her price target for Doximity, Inc. from $32 per share to $29 per share.
8. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 20
BofA lowered its ratings for XPeng Inc. (NYSE:XPEV) from “Buy” to “Neutral” on Friday, January 6. The downgrade came after rival Tesla, Inc. (NASDAQ:TSLA) decreased the prices of its electric vehicles (EVs) in China.
The research firm believes the latest move from Tesla, Inc. could impact the sales and market share of Chinese rivals, including XPeng Inc..
The decision from Tesla also indicates a potential demand problem, which is another reason behind the latest sell-off in Chinese EV stocks. XPeng Inc. stock plummeted over 15 percent on Friday, January 6, following the development.
7. Duck Creek Technologies, Inc. (NASDAQ:DCT)
Number of Hedge Fund Holders: 21
Needham downgraded Duck Creek Technologies, Inc. (NASDAQ:DCT) after the insurance technology firm decided to be acquired by Vista Equity Partners. Needham cut its ratings for the Massachusetts-based company from “Buy” to “Hold” on January 9 following the news.
Vista plans to buy Duck Creek Technologies, Inc. in a cash transaction valued at $2.6 billion. The offer represented a hefty premium of 46 percent from the stock’s closing price on Friday, January 6.
Duck Creek Technologies, Inc. shares skyrocketed over 45 percent on Monday following the development. The deal, subject to shareholders’ consent, is expected to close in the second quarter.
Like Duck Creek Technologies, Inc., analysts also lowered their ratings for PayPal Holdings, Inc., Bank of America Corporation and Constellation Brands, Inc..
6. Silvergate Capital Corporation (NYSE:SI)
Number of Hedge Fund Holders: 27
Silvergate Capital Corporation (NYSE:SI) shares have lost nearly 50 percent of their value over the last few days following a series of negative news and downgrades.
The crypto-focused bank recently announced disappointing preliminary results for the fourth quarter. Silvergate Capital Corporation said the total deposits from digital asset clients stood at $3.8 billion at the end of Q4, a steep decline from $11.9 billion at the end of the prior quarter.
Meanwhile, Cathie Wood’s Ark Invest unloaded nearly all of its stakes in Silvergate Capital Corporation following the latest sell off. The investment management firm sold about 0.43 million shares in the bank.
On top of that, Silvergate Capital Corporation received a downgrade from a couple of research firms. Wedbush lowered its ratings for Silvergate from “Outperform” to “Neutral” on January 9, while Craig-Hallum cut its ratings from “Buy” to “Hold” on January 6.
5. Fate Therapeutics, Inc. (NASDAQ:FATE)
Number of Hedge Fund Holders: 27
Truist analyst Robyn Karnauskas lowered her ratings for Fate Therapeutics, Inc. (NASDAQ:FATE) from “Buy” to “Hold” on Friday, January 6. Karnauskas was primarily moved by the company’s decision to end collaboration with Janssen. She reduced her price target for the biopharmaceutical company from $46 per share to $7 per share.
Meanwhile, Fate Therapeutics, Inc. also announced job cuts as a part of its efforts to limit operating costs. Moving forward, the company plans to prioritize its clinical programs besides discontinuing some of them.
4. Baxter International Inc. (NYSE:BAX)
Number of Hedge Fund Holders: 42
Morgan Stanley downgraded Baxter International Inc. (NYSE:BAX) from “Overweight” to “Equal-Weight” on Friday, January 6. Analyst Drew Ranieri expects the healthcare company to benefit from the Hillrom deal in the longer run. However, he acknowledged that he failed to estimate the impact that macroeconomic factors would have on Baxter’s legacy business.
Ranieri also expressed concerns over little clarity around the company’s business while going forward. In addition, he cut his price target for Baxter International Inc. from $70 per share to $55 per share.
Meanwhile, Baxter International Inc. recently disclosed plans to spin off its renal care segment into a separately listed company. It is also exploring strategic alternatives for its biopharma solutions unit.
3. Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 43
Cowen analyst Vivien Azer lowered her ratings for Constellation Brands, Inc. from “Outperform” to “Market Perform” on Friday, January 6. The analyst expressed concerns over the downtrading in the company’s premium beer and wine category.
Azer also thinks the company’s beer margins will stay under pressure. She cut her price target for Constellation Brands, Inc. from $275 per share to $200 per share.
The downgrade came a day after Constellation Brands, Inc. revised its profit outlook for the full year. The beer and wine producer now expects earnings in the range of $11 – $11.20 per share for fiscal 2023, down from its previous forecast between $11.20 to $11.60 per share.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 97
Bank of America Corporation received a downgrade just ahead of its fourth-quarter earnings. Deutsche Bank slashed its ratings for the Charlotte-based banking giant from “Buy” to “Hold” on Friday, January 6.
The research firm predicted new lows for U.S. bank stocks. Deutsche Bank analyst Matt O’Connor expects downside risk in case of a recession. O’Connor lowered his price target for Bank of America Corporation from $45 per share to $36 per share.
Major U.S. banks, including Bank of America Corporation, are set to report their earnings this week. Analysts expect lower fourth-quarter profit primarily amid an economic downturn.
1. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 126
PayPal Holdings, Inc. is one of the best stocks in the digital payments space due to its solid business fundamentals and strong balance sheet. However, KeyBanc analyst Josh Beck believes the company is facing intense competition from rivals, like Apple Pay and Shop Pay, which could hamper its growth.
Beck downgraded PayPal Holdings, Inc. from “Overweight” to “Sector Weight” and reduced his price target from $100 per share to $80 per share on Monday, January 9. The analyst was primarily moved by intensifying competition and changing industry dynamics.
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This article is originally published at Insider Monkey.
