In this article, we will discuss the 10 stocks recently downgraded by analysts.
Notable companies from the communication services sector, including Meta Platforms, Inc. (NASDAQ:META), Snap Inc. (NYSE:SNAP) and Match Group, Inc. (NASDAQ:MTCH), recently posted financial results for their respective quarters.
Meta Platforms, Inc. and Match Group, Inc. missed earnings expectations for their respective quarters. On the other hand, Snap Inc. beat profit estimates but issued a gloomy outlook for the current quarter.
Subsequently, analysts trimmed their ratings for Meta Platforms, Inc., Snap Inc. and Match Group, Inc., after their recent earnings.
HSBC downgraded Meta Platforms, Inc. from “Hold” to “Reduce,” citing macroeconomic and regulatory headwinds. In addition, the research firm also pointed towards lower sales numbers. Check out the complete article to see some other stocks recently downgraded by analysts.
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10. Atlas Technical Consultants, Inc. (NASDAQ:ATCX)
Number of Hedge Fund Holders: 6
Lake Street lowered its ratings for Atlas Technical Consultants, Inc. (NASDAQ:ATCX) from “Buy” to “Hold” on Wednesday, February 1. The downgrade came a day after private investment firm GI Partners decided to acquire Atlas Technical.
GI Partners has inked an agreement to buy Atlas Technical Consultants, Inc. for roughly $1.05 billion. The offer price represented a hefty premium of about 125 percent from Atlas stock’s closing price on January 30.
The two companies expect the deal to close in the second quarter. Atlas’ board has already authorized the deal. However, its shareholders have yet to vote in favor of the agreement. Atlas Technical Consultants, Inc. shares will stop trading on Nasdaq once the deal is closed.
9. Focus Financial Partners Inc. (NASDAQ:FOCS)
Number of Hedge Fund Holders: 20
Focus Financial Partners Inc. (NASDAQ:FOCS) received a downgrade from BMO Capital on Thursday, February 2. Analyst James Fotheringham reduced his ratings for the wealth management services provider from “Outperform” to “Market Perform,” citing a recent buyout proposal from Clayton, Dubilier & Rice (CD&R).
Fotheringham added that the potential agreement is exclusive in nature, and no counterbid is expected. The analyst also slashed his ratings for Focus Financial Partners Inc. from $55 per share to $53 per share.
CD&R plans to buy Focus Financial Partners Inc. in a cash transaction valued at $53 per share. The two companies are currently negotiating the terms of the agreement. Focus Financial shares jumped more than 8 percent on Thursday, February 2, following the development.
8. Digital Turbine, Inc. (NASDAQ:APPS)
Number of Hedge Fund Holders: 24
B. Riley downgraded Digital Turbine, Inc. (NASDAQ:APPS) from “Buy” to “Neutral” on Wednesday, February 1. Analyst Daniel Day thinks the company will face headwinds amid ongoing weakness in the app economy, particularly within its core segments, including mobile gaming and social media.
Day also cut his price target for Digital Turbine, Inc. from $20 per share to $16 per share, citing a downside risk to the consensus forecast through fiscal 2024.
The downgrade came just days before the company’s third-quarter results. Digital Turbine, Inc. is set to release its fiscal Q3 results after the market closes on February 8.
7. Sysco Corporation (NYSE:SYY)
Number of Hedge Fund Holders: 40
Sysco Corporation (NYSE:SYY) recently announced its fiscal second-quarter results. The food products distributor posted sales of $18.59 billion, representing a growth of 13.9 percent on a year-over-year basis and in line with expectations.
On the downside, Sysco Corporation reported adjusted earnings of 80 cents per share, up from 57 cents per share in the year-ago period but below analysts’ average estimate of 84 cents.
Subsequently, Argus analyst John Staszak cut his ratings for Sysco Corporation after the latest earnings miss. Staszak also reduced his fiscal 2023 earnings estimates to reflect the increasing product and labor costs in the coming quarters.
Like Sysco Corporation, analysts also trimmed their ratings for Meta Platforms, Inc., Snap Inc. and Match Group, Inc..
6. Electronic Arts Inc. (NASDAQ:EA)
Number of Hedge Fund Holders: 42
BofA downgraded Electronic Arts Inc. (NASDAQ:EA) from “Buy” to “Neutral” on Wednesday, February 1, citing the company’s Q3 earnings miss and disappointing growth outlook.
Electronic Arts Inc. recently posted earnings of 73 cents per share for its fiscal third quarter, missing the consensus of $3.05 with a big margin. In addition, net bookings for the quarter came in at $2.34 billion, while analysts were looking for $2.51 billion.
For the March quarter, Electronic Arts Inc. projected adjusted revenue in the range of $1.68 – $1.78 billion, below analysts’ average estimate of $2.23 billion. EA stock fell more than nine percent on February 1 following the results.
Speaking on the results, CFO Chris Suh said in a statement:
“As market uncertainty mounted during the quarter, we took measures to protect underlying profitability. We are prioritizing the player experience, directing investment to where it can have the most positive impact for our players and on growth.”
5. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 42
Snap Inc. shares plummeted over 10 percent on Wednesday, February 1, following its fourth-quarter results. The social media company managed to meet financial expectations for the quarter, reporting adjusted earnings of 14 cents per share on revenue of $1.3 billion. This compares to the consensus of 11 cents per share for earnings and $1.3 billion for revenue.
However, Snap Inc. came up with a gloomy sales outlook for the current quarter amid intense competition and an uncertain economic environment. The company expects its sales to drop in the range of 10 – 2 percent for the first quarter.
Subsequently, a couple of research firms downgraded Snap Inc. after its recent earnings. Benchmark lowered its ratings for SNAP stock from “Buy” to “Hold,” while UBS cut its ratings from “Buy” to “Neutral” on Wednesday, January 1.
4. Peloton Interactive, Inc. (NASDAQ:PTON)
Number of Hedge Fund Holders: 45
JMP Securities lowered its ratings for Peloton Interactive, Inc. (NASDAQ:PTON) from “Outperform” to “Market Perform” on Wednesday, February 1. The research firm believes PTON’s share price now reflects its full value.
The downgrade follows the company’s financial results for Q2. Peloton Interactive, Inc. reported a loss of 98 cents per share for the three months ended December 31, narrower than a loss of $1.39 per share in the year-ago period.
Revenue for the quarter dropped 30 percent on a year-over-year basis to $792.7 million. Analysts expected Peloton Interactive, Inc. to report a loss of 64 cents per share on revenue of $710 million.
3. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 45
Shares of First Solar, Inc. (NASDAQ:FSLR) fell over six percent on Thursday, February 2, after receiving a downgrade from BofA. Analyst Julien Dumoulin-Smith referred to FSLR stock’s outperformance since August 2022.
Dumoulin-Smith believes First Solar, Inc. has already benefitted from the Inflation Reduction Act, and there is less room for growth from now on. The analyst cut his ratings for FSLR from “Buy” to “Neutral” and reduced his price target for the stock from $196 per share to $195 per share on February 2.
2. Match Group, Inc. (NASDAQ:MTCH)
Number of Hedge Fund Holders: 54
Oppenheimer downgraded Match Group, Inc. from “Outperform” to “Perform” on Thursday, February 2, after the dating apps operator posted weak financial results for the fourth quarter.
Match Group, Inc. recently reported earnings of 30 cents per share for Q4, significantly lower than the consensus of 47 cents per share. The quarterly revenue of $786.15 million also missed the consensus of $787.09 million.
Looking forward, Match Group, Inc. expects revenue in the range of $790 – $800 million for the current quarter. The outlook compares with the consensus of $817.34 million.
1. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 89
Craig-Hallum cut its ratings for Advanced Micro Devices, Inc. (NASDAQ:AMD) from “Buy” to “Hold” on Wednesday, January 1. Analyst Christian Schwab referred to the near-term headwinds across PC and cloud spaces. Schwab thinks AMD will continue to gain market share, though more likely at a “marginalized pace.”
The downgrade came despite the better-than-expected Q4 performance of Advanced Micro Devices, Inc.. The computer processors maker recently earned 69 cents per share on an adjusted basis, beating the consensus of 67 cents per share. The quarterly sales of $5.6 billion also exceeded the consensus of $5.5 billion.
For the current quarter, Advanced Micro Devices, Inc. expects to generate revenue of around $5.3 billion, down 10 percent on a year-over-year basis and slightly below the consensus of $5.47 billion.
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