Analysts Are Downgrading These 10 Stocks

In this article, we will discuss the 10 stocks recently downgraded by analysts.

Microsoft Corporation (NASDAQ:MSFT) is in the news after the company posted fiscal Q2 results. The company’s revenue outlook for the March quarter was below the consensus. Subsequently, BMO Capital cut its ratings for Microsoft from “Outperform” to “Market Perform” following its latest earnings.

Besides Microsoft Corporation, analysts also recently lowered their ratings for CrowdStrike Holdings, Inc. (NASDAQ:CRWD) and Advanced Micro Devices, Inc. (NASDAQ:AMD). Check out the complete article to find the details of these downgrades.

10. The Cheesecake Factory Incorporated (NASDAQ:CAKE)

Number of Hedge Fund Holders: 14

Shares of The Cheesecake Factory Incorporated (NASDAQ:CAKE) fell over eight percent on Tuesday, January 24, after Raymond James downgraded the restaurant company  from “Outperform” to “Market Perform.”

Analyst Brian Vaccaro believes the stock is now fairly valued, considering its year-to-date surge. Vaccaro also expressed concerns over the company’s near-term profitability. He added that The Cheesecake Factory Incorporated is still experiencing lower margin visibility.

9. Apollo Endosurgery, Inc. (NASDAQ:APEN)

Number of Hedge Fund Holders: 14

Cowen lowered its ratings for Apollo Endosurgery, Inc. (NASDAQ:APEN) from “Outperform” to “Market Perform” on Monday, January 23.

Analyst Joshua Jennings was primarily moved by the medical technology company’s decision to be acquired by Boston Scientific Corporation (NYSE:BSX) last year. Jennings trimmed his price target for Apollo Endosurgery, Inc. from $13 per share to $10 per share.

Boston Scientific Corporation decided to buy Apollo Endosurgery, Inc. in a cash deal valued at $10 per share in November 2022. The acquisition will help the company expand its foothold in the endoluminal surgery (ELS) space using Apollo’s products for ELS procedures and gastrointestinal management.

8. Levi Strauss & Co. (NYSE:LEVI)

Number of Hedge Fund Holders: 20

JPMorgan downgraded Levi Strauss & Co. from “Overweight” to “Neutral” on Monday, January 23. Analyst Matthew Boss cited mixed denim trends and a more balanced risk/reward at the current stock price.

Boss cut his price target for Levi Strauss & Co. from $19 per share to $17 per share. Earlier this month, Citigroup also predicted weaker denim demand in the coming quarters. The research firm said consumers are shifting away from costly jeans to opt for formal clothing.

Levi Strauss & Co. plans to release its fourth-quarter results after the closing bell on Wednesday, January 25. Analysts expect the company to earn 29 cents per share on revenue of $1.57 billion.

7. Dollar Tree, Inc. (NASDAQ:DLTR)

Number of Hedge Fund Holders: 37

Shares of Dollar Tree, Inc. (NASDAQ:DLTR) slid nearly three percent on Tuesday, January 24, after receiving a downgrade from Gordon Haskett. The research firm lowered its ratings for the discount variety stores operator from “Buy” to “Accumulate.”

The downgrade came a day after Dollar Tree, Inc. announced the departure of its CEO. Gordon Haskett analyst Chuck Grom believes the leadership transition could make things a bit choppy for the company in the near term.

Dollar Tree, Inc. recently announced that chief executive officer Mike Witynski is leaving the company. Subsequently, executive chairman Richard Dreiling will become the new CEO, effective January 29.

Like Dollar Tree, Inc., analysts also cut their ratings for Microsoft Corporation, CrowdStrike Holdings, Inc. and Advanced Micro Devices, Inc..

6. Peloton Interactive, Inc. (NASDAQ:PTON)

Number of Hedge Fund Holders: 45

Shares of Peloton Interactive, Inc. (NASDAQ:PTON) fell more than five percent on Tuesday, January 24, after Baird downgraded the exercise equipment company, citing signs of more people returning to gyms. The research firm lowered its ratings for Peloton stock from “Outperform” to “Neutral.”

Peloton Interactive, Inc. enjoyed massive growth after a large number of people started working at home following Covid-19 outbreak in 2020. However, the demand for its equipment has dropped sharply over the last year with the reopening of gyms. PTON stock has lost about 60 percent of its value during the past 12 months amid fading demand.

Separately, investment advisor Merion Road Capital also discussed the demand issued in its third-quarter 2022 investor letter. Here’s what the firm said:

“Peloton Interactive, Inc. (NASDAQ:PTON) is quite a different story. You may recall from my Q1 letter that I initiated a position in the stock given the potential for a new CEO to leverage the company’s passionate and engaged userbase. The investment had meaningful upside potential (multiples of the then trading price), but also presented real downside risk; as such, I kept our exposure to just a few percentage points of the portfolio. Fast forward six months and underlying trends like churn, engagement, and new users weakened dramatically. I sold our shares as the likelihood for the company to achieve financial success has become increasingly remote.”

5. Lululemon Athletica Inc. (NASDAQ:LULU)

Number of Hedge Fund Holders: 57

Lululemon Athletica Inc. (NASDAQ:LULU) shares slipped nearly two percent on Tuesday, January 24, after Bernstein turned bearish on the Canadian athletic apparel retailer. Analyst Aneesha Sherman downgraded Lululemon from “Market Perform” to “Underperform.”

Sherman referred to a cautious consumer outlook, normalized demand trends and negative margin mix shifts. She believes these factors are going to impact the company’s probability. The analyst also cut her price target for Lululemon Athletica Inc. from $340 per share to $290 per share.

4. Union Pacific Corporation (NYSE:UNP)

Number of Hedge Fund Holders: 74

BofA slashed its ratings for Union Pacific Corporation (NYSE:UNP) from “Buy” to “Neutral” on Tuesday, January 24. Analyst Ken Hoexter pointed towards continued cost pressure and elevated inflation. Hoexter also cut his price target for the railroad holding company from $238 per share to $218 per share.

The downgrade follows the company’s disappointing financial results for Q4. On Tuesday, Union Pacific Corporation reported earnings of $2.67 per share, missing the consensus of $2.78 per share.

Revenue for the quarter rose 8 percent on a year-over-year basis to $6.18 billion, while analysts expected Union Pacific Corporation to generate revenue of $6.31 billion. The weakness was mainly attributed to shipment challenges amid labor shortages and disruptions in freight operations due to a winter storm.

3. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)

Number of Hedge Fund Holders: 85

CrowdStrike Holdings, Inc. recently came into the limelight after receiving a downgrade from Deutsche Bank. The research firm lowered its ratings for the cybersecurity company from “Buy” to “Hold” on Monday, January 23.

Analyst Brad Zelnick believes the cybersecurity sector is more vulnerable than many previously predicted. Zelnick expect software stocks to experience volatility this year. The analyst cut his price target for CrowdStrike Holdings, Inc. from $150 per share to $115 per share.

Separately, investment management firm Carillon Tower Advisers also briefly discussed CrowdStrike Holdings, Inc. in its fourth-quarter 2022 investor letter, stating:

“CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a provider of cyber security software solutions, delivered quarterly results that exceeded expectations, but provided guidance that disappointed, as the macro economy is causing longer sales cycles and some larger orders are being sold in smaller pieces. However, these deals are not being lost to competitors; they are just being delayed, and management expects enterprise security spending to remain relatively resilient in 2023.”

2. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Hedge Fund Holders: 89

Bernstein slashed its ratings for Advanced Micro Devices, Inc. from “Outperform” to “Market Perform” on Tuesday, January 24. Analyst Stacy Rasgon was primarily moved by a deteriorating PC environment.

Rasgon thinks fading PC demand could hurt AMD’s profitability. The analyst also cut his price target for Advanced Micro Devices, Inc. from $95 per share to $80 per share. AMD stock slid over two percent on January 24 following the downgrade. However, the stock is still up about 15 percent on a year-to-date basis.

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Microsoft Corporation has been making headlines since releasing its fiscal second-quarter results on Tuesday. The software giant posted mixed results for the quarter along with a disappointing financial outlook for the current quarter.

Meanwhile, BMO Capital lowered its ratings for Microsoft Corporation from “Outperform” to “Market Perform” following the latest results.

Microsoft Corporation posted adjusted earnings of $2.32 per share for its fiscal Q2, above analysts’ average estimate of $2.29 per share. The quarterly revenue of $52.75 billion was marginally below the consensus of $52.94 billion.

For its fiscal third quarter, Microsoft Corporation projected revenue in the range of $50.5 – $51.5 billion. The outlook missed analysts’ average estimate of $52.43 billion. Microsoft stock slid over four percent after the opening bell on Wednesday following its recent earnings.

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This article is originally published at Insider Monkey.