In this article, we will discuss the 10 stocks recently downgraded by analysts.
Caterpillar Inc. (NYSE:CAT), Emerson Electric Co. (NYSE:EMR), Marriott International, Inc. (NASDAQ:MAR) and CF Industries Holdings, Inc. (NYSE:CF) were among the notable stocks that were recently downgraded by analysts.
Emerson Electric Co. was downgraded amid near-term headwinds and the latest earnings miss, while ratings for CF Industries Holdings, Inc. were cut amid dropping urea prices. Check out the complete article to see the details of these downgrades.
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10. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 20
Citi downgraded Upstart Holdings, Inc. (NASDAQ:UPST) from “Neutral” to “Sell” on Wednesday, February 15. The research firm pointed towards the tightening financial environment and how it could make it difficult for Upstart to secure funding for its lending platform.
The rating cut came a day after the company’s Q4 results. Upstart Holdings, Inc. on Tuesday reported better-than-expected quarterly results but its sales outlook for the current quarter missed expectations.
For the fourth quarter, Upstart Holdings, Inc. reported a loss of 25 cents per share, narrower than the consensus forecast calling for a loss of 47 cents. In addition, revenue for the quarter plummeted 52 percent versus last year to $147 million but came in above the expectations of $133.59 million.
For the first quarter, Upstart Holdings, Inc. projected revenue of approx. $100 million, significantly below analysts’ average estimate of $157.99 million. Nevertheless, Upstart shares climbed nearly 28 percent on February 15 despite offering weak guidance.
9. Globus Medical, Inc. (NYSE:GMED)
Number of Hedge Fund Holders: 20
BofA recently turned bearish on Globus Medical, Inc. (NYSE:GMED), citing its decision to acquire NuVasive. Analyst Craig Bijou lowered his ratings for the medical device company from “Buy” to “Underperform” on Monday, February 13
Bijou sees risk to revenue estimates amid possible dis-synergies. The analyst also cut his price target for Globus Medical, Inc. from $83 per share for $63 per share.
Globus Medical, Inc. last week decided to buy NuVasive in an all-stock transaction valued at roughly $3 billion. The company plans to strengthen its foothold in the spinal devices market with the acquisition.
8. Akamai Technologies, Inc. (NASDAQ:AKAM)
Number of Hedge Fund Holders: 32
RBC Capital lowered its ratings for Akamai Technologies, Inc. (NASDAQ:AKAM) from “Outperform” to “Sector Perform” on Wednesday, February 15. Analyst Rishi Jaluria was mainly moved by the company’s strategic shift towards cloud computing.
Jaluria thinks the evident change in strategy alters the risk-reward profile of Akamai Technologies, Inc.. The analyst also lowered his price target for AKAM stock from $100 per share to $85 per share.
Akamai Technologies, Inc. recently posted its Q4 results, surpassing expectations for both profit and sales. However, investors seemed disappointed with the company’s changing business priorities.
The company’s senior management intends to expand its cloud business. However, Akamai Technologies, Inc. would need to spend a lot of capital to strengthen its cloud arm.
7. Lyft, Inc. (NASDAQ:LYFT)
Number of Hedge Fund Holders: 37
Argus downgraded Lyft, Inc. (NASDAQ:LYFT) from “Buy” to “Hold” on Tuesday, February 14. Analyst Bill Selesky was primarily moved by the company’s Q4 operating loss and soft sales outlook.
Lyft, Inc. shares lost nearly 40 percent of their value on Friday, February 10, following its mixed earnings and outlook. The ride-hailing service reported a negative adjusted Ebitda of $248.3 million for the fourth quarter. On the bright side, the quarterly revenue of $1.2 billion was above the consensus of $1.16 billion.
However, its sales outlook for the current quarter was below the consensus. Lyft, Inc. projected revenue of around $975 million for the current quarter, below analysts’ average estimate of $1.09 billion.
Like Lyft, Inc., analysts also recently trimmed their ratings for Caterpillar Inc., Emerson Electric Co. and CF Industries Holdings, Inc..
6. XPO, Inc. (NYSE:XPO)
Number of Hedge Fund Holders: 37
Several research firms cut their ratings for XPO, Inc. (NYSE:XPO) after its recent earnings. Evercore ISI downgraded the transportation company from “Outperform” to “In-Line” on Tuesday, February 14, citing macro hurdles and elevated corporate costs.
Separately, Morgan Stanley slashed its ratings for XPO, Inc. from “Overweight” to “Equal-Weight” on Monday, February 13, stating that the market is looking for more clarity around the company’s long-term goals. The research firm also cut its price target for XPO stock from $55 per share to $43 per share.
The downgrades follow the company’s Q4 results. XPO, Inc. recently reported adjusted earnings of 98 cents per share on sales of $1.8 billion for the fourth quarter. Analysts were looking for earnings of 83 cents per share on revenue of $1.8 billion.
5. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 43
Baird lowered its ratings for Caterpillar Inc. from “Buy” to “Hold” on Tuesday, February 14. Analyst Mircea Dobre thinks the company’s shares are approaching a cyclical pivot point after their recent outperformance.
Dobre added that the factors driving CAT shares are becoming headwinds for the stock. The analyst also cut his price target for Caterpillar Inc. from $290 per share to $230 per share, citing valuation risk.
4. Emerson Electric Co. (NYSE:EMR)
Number of Hedge Fund Holders: 48
Argus downgraded Emerson Electric Co. from “Buy” to “Hold” on Tuesday, February 14. The research firm referred to the near-term headwinds besides pointing towards the latest earnings miss.
Emerson Electric Co. last week announced disappointing financial performance for its fiscal first quarter. The industrial conglomerate earned 78 cents per share on an adjusted basis, missing the consensus of 87 cents. In addition, the quarterly sales of $3.37 billion also fell below the expectations of $3.43 billion.
The company primarily took a hit from supply-chain hurdles and semiconductor shortage. These factors didn’t let Emerson Electric Co. fully capitalize on the solid demand for automation.
Nevertheless, Emerson Electric Co. raised its 2023 sales growth outlook to a range of 8 – 10 percent, compared to its previous growth projection between 7 – 9 percent.
3. Marriott International, Inc. (NASDAQ:MAR)
Number of Hedge Fund Holders: 51
Evercore ISI trimmed its ratings for Marriott International, Inc. from “Outperform” to “In-Line” on Wednesday, February 15. Analyst Duane Pfennigwerth acknowledged the company’s latest earnings beat.
However, Duane said he is moving to the sidelines considering the stock’s recent outperformance, as Marriott shares have jumped about 22 percent on a year-to-date basis and rose nearly 32 percent since his coverage in July 2022.
Earlier this week, Marriott International, Inc. reported adjusted earnings of $1.96 per share for the fourth quarter, beating estimates of $1.83 per share. The quarterly revenue of $5.92 billion also exceeded the consensus of $5.37 billion.
2. Fidelity National Information Services, Inc. (NYSE:FIS)
Number of Hedge Fund Holders: 60
Citi downgraded Fidelity National Information Services, Inc. (NYSE:FIS) from “Buy” to “Neutral” on Tuesday, February 14. The research firm was primarily moved by the company’s decision to spin off its merchant business Worldpay.
Analyst Ashwin Shirvaikar called the decision a “potential lost opportunity.” Shirvaikar also cut his price target for Fidelity National Information Services, Inc. from $85 per share to $70 per share.
Separately, investment management firm Diamond Hill Capital also briefly discussed Fidelity National Information Services, Inc. in its Q4 2022 investor letter, stating:
“In addition to SVB Financial and V.F. Corporation, we eliminated our positions in financial services technology company Fidelity National Information Services, Inc. (NYSE:FIS) and media and technology company Comcast Corporation. Several reasons factored into our decision to sell Fidelity National Information Services, including board and leadership changes, a strategic review, and a cooperation agreement with activist shareholder D.E. Shaw (and discussions with JANA Partners).”
1. CF Industries Holdings, Inc. (NYSE:CF)
Number of Hedge Fund Holders: 65
Scotiabank slashed its ratings for CF Industries Holdings, Inc. from “Outperform” to “Sector Perform” on Tuesday, February 14. Analyst Ben Isaacson pointed towards a sharp drop in urea prices in recent months. Isaacson also cut his price target for CF stock from $118 per share to $100 per share.
Meanwhile, CF Industries Holdings, Inc. posted mixed financial results for the fourth quarter following the downgrade. The fertilizers maker reported earnings of $4.35 per share, topping estimates of $4.30 per share. On the downside, the quarterly revenue of $2.61 billion missed the consensus of $2.84 billion.
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