In this article, we will take a look at the 10 stocks that were recently downgraded by analysts.
Leading U.S. indices fell slightly in pre-market trading Thursday, apparently on recession fears and soaring Treasury yields. Mega cap stocks, including Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA) and Meta Platforms, Inc. (NASDAQ:META), were also in the red.
Apple Inc. shares fell after receiving a downgrade from BofA, while Tesla, Inc. shares slipped after Piper Sandler trimmed its price target for the electric vehicle giant.
In addition, analysts also lowered their ratings for CSX Corporation (NASDAQ:CSX) and Lockheed Martin Corporation (NYSE:LMT). Check out the complete article to see why analysts are decreasing their ratings for these stocks.
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10. Lakeland Bancorp, Inc. (NASDAQ:LBAI)
Number of Hedge Fund Holders: 13
DA Davidson lowered its ratings for Lakeland Bancorp, Inc. (NASDAQ:LBAI) from “Buy” to “Neutral” on Wednesday, September 28, following its recent deal with Provident Financial Services (PFS). The research firm also reduced its price target for the New Jersey-based bank holding company from $22 per share to $18 per share.
The downgrade came a day after Provident Financial Services decided to acquire Lakeland Bancorp, Inc. in an all-stock transaction valued at approx. $1.3 billion. The deal is expected to close by the second half of 2023.
Speaking on the deal, CEO of Lakeland Bancorp, Inc., Thomas J. Shara, said in a statement:
“The combination of our companies will allow us to achieve substantially more for our clients, associates, communities, and shareholders than we could alone.”
9. Sunlight Financial Holdings Inc. (NYSE:SUNL)
Number of Hedge Fund Holders: 14
Shares of Sunlight Financial Holdings Inc. (NYSE:SUNL) plummeted more than 20 percent in pre-market trading Thursday, September 29, after Roth Capital downgraded the financial services company from “Buy” to “Neutral.”
The research firm also trimmed its price target for Sunlight Financial Holdings Inc. from $10 per share to $2.50 per share. The downgrade came after Sunlight Financial renounced its outlook for the full year, citing volatility in interest rates.
Sunlight Financial Holdings Inc. added that one of its biggest solar installers is winding down its operations amid cash flow challenges. The company said it expects to incur certain non-recurring costs due to the development.
8. BTRS Holdings Inc. (NASDAQ:BTRS)
Number of Hedge Fund Holders: 15
Needham decreased its ratings for BTRS Holdings Inc. (NASDAQ:BTRS) from “Buy” to “Hold” on Wednesday, September 28, 2022. The research firm was moved by the company’s decision to be acquired by EQT X fund.
EQT X is buying BTRS Holdings Inc. in a cash deal valued at about $1.7 billion. According to the terms of the agreement, BTRS shareholders will receive cash of $9.50 for every share they own. The offer price represents a hefty premium of 64 percent from the stock’s closing price of $5.77 on Tuesday, September 27.
Meanwhile, several reports suggest that EQT borrowed most money from private lender Sixth Street to fund the acquisition of BTRS Holdings Inc.. The deal is expected to close in the first quarter of 2023.
7. Cognyte Software Ltd. (NASDAQ:CGNT)
Number of Hedge Fund Holders: 16
Shares of Cognyte Software Ltd. (NASDAQ:CGNT) slid nearly five percent in pre-market trading Thursday, September 29, after Stifel downgraded the security software solutions provider from “Buy” to “Hold.”
Stifel analyst Brad Reback pointed towards the company’s lackluster performance in its fiscal second quarter. He also trimmed his price target for Cognyte Software Ltd. from $8 per share to $6 per share.
Cognyte Software Ltd. recently posted mixed financial results for its fiscal Q2. The company reported an adjusted loss of 4 cents per share, narrower than analysts’ average estimate for a loss of 17 cents.
On the downside, Cognyte Software Ltd. posted revenue of $81.3 million, down 30.1 percent on a year-over-year basis and below the expectations of $92.5 million. The company also released its segment-wise sales results. Its software revenue plummeted 43.7 percent versus last year to $27.02 million, while software services revenue decreased 15.7 percent to $45.44 million in the quarter.
Like Cognyte Software Ltd., analysts also revised their price targets for Apple Inc., Tesla, Inc. and CSX Corporation.
6. Avient Corporation (NYSE:AVNT)
Number of Hedge Fund Holders: 17
Oppenheimer lowered its ratings for Avient Corporation (NYSE:AVNT) from “Outperform” to “Perform” on Wednesday, September 28, 2022, citing slowing demand and higher debt load. Moreover, the research firm doesn’t see many transformative catalysts for the polymer services company in the near term.
The downgrade came a day after Avient Corporation reduced its full-year adjusted earnings to $2.70 per share, down from its earlier guidance of $3.50 per share. The revised forecast was significantly lower than the consensus of $3.49 per share.
Avient Corporation blamed decelerating demand and elevated interest rates for the weak outlook. Moving forward, the company expects global demand to drop further due to the ongoing macro environment.
5. Olaplex Holdings, Inc. (NASDAQ:OLPX)
Number of Hedge Fund Holders: 18
Shares of Olaplex Holdings, Inc. (NASDAQ:OLPX) turned red in pre-market trading Thursday, September 29, after Piper Sandler lowered its ratings for the beauty company from “Overweight” to “Neutral.”
Analyst Korinne Wolfmeyer thinks Olaplex Holdings, Inc. could face a tough time due to intensifying competition from other hair brands such as K18. Wolfmeyer added the company needs to boost its marketing and educational efforts to overcome the hurdles. She cut her price target for Olaplex stock from $19 per share to $12 per share.
Earlier this year, Olaplex Holdings, Inc. also appeared in ClearBridge Investments’ first-quarter 2022 investor letter, stating:
“During this sharp downward move for growth equities, the ClearBridge Mid Cap Growth Strategy trailed its Russell Midcap Growth benchmark. Strategy holdings were buffeted by a variety of macro and industry-specific factors. We exited hair care products maker Olaplex (NASDAQ:OLPX) in the consumer staples sector on concerns over what negative publicity for the company could mean for branding.”
4. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Holders: 29
Shares of Keurig Dr Pepper Inc. (NASDAQ:KDP) slipped over three percent on Tuesday, September 27, 2022, after Goldman Sachs downgraded the soft drink company from “Buy” to “Neutral.”
Analyst Bonnie Herzog believes the growth of Keurig Dr Pepper’s packaged beverage segment would start decelerating in the current environment. Herzog also referred to commodity inflation, which is expected to weigh on the company’s margins. She also cut her price target for Keurig Dr Pepper Inc. from $39 per share to $37 per share.
Keurig Dr Pepper Inc. shares haven’t gained any value so far in 2022. The stock is nearly flat on a year-to-date basis.
3. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 55
Wells Fargo decreased its ratings for Lockheed Martin Corporation from “Equal Weight” to “Underweight” on Wednesday, September 28. Analyst Matthew Akers thinks the company could face challenges in 2023 if geopolitical tensions eased.
Akers believes defense stocks, including Lockheed Martin Corporation, are unlikely to gain significant value from the current levels unless there is a geopolitical escalation involving U.S. military. However, the prospects of any escalation are very low, the analyst added.
Separately, investment management firm Old West Investment Management also talked about Lockheed Martin Corporation in its second-quarter 2022 investor letter, stating:
“As I sat in the theater watching Top Gun: Maverick, it gave me tremendous pride knowing we are shareholders of Lockheed Martin (NYSE:LMT). When the Top Gun: Maverick team was looking to push the envelope and stand true to Maverick’s need for speed, LMT’s Skunk Works was their first call. With Skunk Works expertise in developing the fastest known aircraft along with a passion for defining the future of aerospace, LMT is at the epicenter of our nation’s defense.
Based in Bethesda, Maryland, LMT is an American aerospace arms, defense, information security and technology company. LMT employs 115,000 people worldwide, including 60,000 engineers and scientists. LMT is the world’s largest defense contractor. They manufacture the F-16, F-22 and F-35 fighter jets, Sikorsky Black Hawk helicopters, Skunk Works technology, Javelin, Himars, and Tomahawk missile systems and…” (Click here to see the full text)
2. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Holders: 63
Susquehanna analyst Bascome Majors slashed his ratings for CSX Corporation from “Positive” to “Neutral” on Wednesday, September 28, 2022, citing macro deterioration.
The analyst was moved by a number of factors, such as persistent pressure to improve rail service, a potential surge in labor costs and the looming risk of a strike. Majors also trimmed his price target for CSX Corporation from $35 per share to $29 per share.
Meanwhile, CSX Corporation recently announced that it would post financial results for the third quarter after the closing bell on October 20, 2022.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Shares of Apple Inc. slipped over two percent in pre-market trading Thursday, September 29, after BofA downgraded the world’s most valuable company from “Buy” to “Neutral.
BofA thinks Apple Inc. has been outperforming the broad market due to its resilience to weather tough macro environment. However, it may not be able to outperform over the next year due to slowing consumer demand, the research firm added. BofA also trimmed its price target for Apple Inc. from $185 per share to $160 per share.
The downgrade came after several reports claimed that Apple Inc. has scrapped its plans to boost the production of its newly launched iPhone 14 due to lower-than-expected demand.
You can also take a peek at 10 Long-Term Stocks To Buy During Recessions and 10 Best Cyclical Stocks for Inflation.
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This article is originally published at Insider Monkey.
