In this article, we will take a look at the 10 stocks analysts have recently downgraded.
Many investors follow analyst ratings before making an investment decision. Analysts usually evaluate public financial reports, conference calls and market surveys before recommending investors to buy or sell a stock. Therefore, we can say that these ratings can be used as an effective tool before investing in a stock.
Video streaming giant Netflix, Inc. (NASDAQ:NFLX), cryptocurrency exchange Coinbase Global, Inc. (NASDAQ:COIN) and information technology company Hewlett Packard Enterprise Company (NYSE:HPE) were among the notable stocks that recently received a downgrade.
In addition, analysts also cut their ratings for dental products company Envista Holdings Corporation (NYSE:NVST) and electronic signature software provider DocuSign, Inc. (NASDAQ:DOCU).
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We will discuss the details of these downgrades in the remaining article.
Analysts Are Downgrading These 10 Stocks
10. HomeStreet, Inc. (NASDAQ:HMST)
Number of Hedge Fund Holders: 14
Shares of HomeStreet, Inc. (NASDAQ:HMST) hit a new 52-week low of $34.78 on Tuesday, June 14, 2022, after B. Riley Securities downgraded the Oregon-based community bank from “Buy” to “Hold.”
In a research note to clients, B. Riley analyst Steve Moss said rising interest rates would weigh on loan growth for banks, pressuring valuations. The analyst also trimmed the price target for HomeStreet, Inc. from $55 per share to $43 per share.
9. Omnicom Group Inc. (NYSE:OMC)
Number of Hedge Fund Holders: 22
Shares of Omnicom Group Inc. (NYSE:OMC) fell to a new low on Tuesday, June 14, 2022, after Edward Jones cut its ratings for the marketing communications company from “Buy” to “Hold.”
Edward Jones analyst David Heger expressed concerns over possible cuts in ad spending. Heger believes businesses may be reluctant to spend more on ads due to the ongoing inflationary environment and rising costs. As Omnicom Group Inc. primarily relies on its ad services to make money. Therefore, any cut in ad spending from its clients will impact its profitability.
8. Best Buy Co., Inc. (NYSE:BBY)
Number of Hedge Fund Holders: 25
Best Buy Co., Inc. (NYSE:BBY) recently received a downgrade from BofA Securities. The research firm trimmed its rating for the Minnesota-based consumer electronics retailer from “Buy” to “Neutral.”
BofA analyst Elizabeth Suzuki said U.S. customers are avoiding non-essential items and the trend poses a significant risk to Best Buy’s profit outlook for its fiscal year 2024. The research firm also lowered its price target for Best Buy Co., Inc. from $110 per share to $90 per share.
In its latest quarterly report, Best Buy Co., Inc. posted adjusted earnings of $1.57 per share, missing expectations of $1.61 per share. The company also slashed its fiscal 2023 adjusted earnings outlook to a range of $8.40 – $9 per share, from its previous projection between $8.85 – $9.15 per share.
Like Best Buy Co., Inc., analysts also recently downgraded Netflix, Inc., Global, Inc. and Enterprise Company.
7. FMC Corporation (NYSE:FMC)
Number of Hedge Fund Holders: 26
FMC Corporation (NYSE:FMC), founded in 1883, is a chemical company serving the agricultural market. It is engaged in the production and sale of insecticides, herbicides and fungicides. Its products help farmers to enhance crop yield and quality, besides offering protection against a variety of harmful insects and diseases.
Shares of FMC Corporation fell over four percent on Monday, June 13, 2022, after Redburn Partners downgraded the company from “Buy” to “Neutral.” Redburn analyst Tony Jones thinks that the company’s 2023 margin growth is expected to take a hit from the rising cost of inputs. FMC stock is now down about 2 percent on a year-to-date basis following the latest drop in its share price.
6. Huntsman Corporation (NYSE:HUN)
Number of Hedge Fund Holders: 36
BofA Securities downgraded Huntsman Corporation (NYSE:HUN) from “Buy” to “Underperform” and cut its price target for the stock from $45 per share to $34 per share. Huntsman stock fell to a nearly eight-month low on Tuesday, June 14, 2022, following the downgrade.
BofA analyst Steve Byrne expressed concerns over the profit stability of the company’s performance products segment, which produces thousands of specialty chemicals used in various industries. In addition, the analyst also predicted a margin drop for Huntsman’s MDI business.
Byrne added that polyurethane producers, including Huntsman Corporation, could also face hurdles due to the changing consumer environment, given their end markets like furniture and apparel.
5. Envista Holdings Corporation (NYSE:NVST)
Number of Hedge Fund Holders: 37
Shares of Envista Holdings Corporation hit a new 52-week low of $36.21 on Tuesday, June 14, 2022, after Baird downgraded the California-based global dental products company from “Outperform” to “Neutral.” The research firm also trimmed its price target for Envista stock from $54 per share to $46 per share.
The downgrade follows Baird’s recent dental survey, which shows declining spending projections for dental equipment. In a research note to clients, Baird analyst Jeff Johnson expressed concerns over discretionary spending on dental due to the elevated inflationary environment.
4. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 43
Hewlett Packard Enterprise Company recently received a downgrade from Deutsche Bank. The research firm lowered its ratings for the Palo Alto-based information technology company from “Buy” to “Hold,” besides cutting its price target for the stock from $18 per share to $16 per share.
Deutsche Bank analyst Sidney Ho expressed concerns over demand in the IT hardware space. Ho believes that supply disruptions are weighing on near-term sales and margins of Hewlett Packard Enterprise Company. The analyst also expects weak spending from software and semiconductor firms.
3. DocuSign, Inc. (NASDAQ:DOCU)
Number of Hedge Fund Holders: 45
Shares of DocuSign, Inc. continued their downward trend and fell more than three percent on Tuesday, June 14, 2022, hitting a new low of $57.14. DocuSign stock is now down about 60 percent on a year-to-date basis.
The latest drop follows a downgrade from Wolfe Research, which cut its ratings for the stock from “Peer Perform” to “Underperform.” The downgrade came just a few days after the mixed quarterly performance of DocuSign, Inc..
Last week, DocuSign, Inc. reported adjusted earnings of 38 cents per share for its fiscal first quarter, missing analysts’ average estimate of 46 cents per share. Moreover, Wolfe Research analyst Alex Zukin also expressed dissatisfaction over the company’s 2023 billings guidance.
2. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 46
JPMorgan recently slashed its ratings for Coinbase Global, Inc. from “Overweight” to “Neutral,” and trimmed its price target for the stock from $171 per share to $68 per share. The downgrade follows a sharp drop in the price of digital currencies.
JPMorgan analyst Kenneth Worthington thinks the declining prices of cryptocurrencies would impact the profitability of Coinbase Global, Inc. in the near future. Worthington also expects the downturn in the crypto market to negatively impact Coinbase Global’s revenue.
Meanwhile, Coinbase Global, Inc. plans to trim 18 percent of its full-time workforce. The percentage translates to about 1,100 job cuts. The news follows the dropping share price of Coinbase. The stock has lost about 80 percent of its value so far in 2022.
1. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 109
Shares of Netflix, Inc. slipped over one percent on Tuesday, June 14, 2022, after research firm Benchmark turned bearish on the California-based video streaming giant. Benchmark analyst Matthew Harrigan thinks Netflix could face difficulties in case of weak subscriber and profit margin growth.
Harrigan downgraded Netflix, Inc. from “Hold” to “Sell” and set a price target of $157 per share for the stock. Netflix published its last quarterly report in April. Back then, the company announced a significant drop in subscriber numbers and slower sales growth. Netflix stock has lost nearly 50 percent of its value since reporting its fiscal first-quarter results on April 19, 2022.
You can also take a peek at 10 Best CBD Stocks To Buy Now and 10 Favorite Stocks of Dan Loeb’s Third Point.
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