In this article, we discuss the 10 stocks that analysts are downgrading.
The post-pandemic economic recovery has hit roadblocks in the past few days as new unemployment data pours in, major Wall Street indexes register small dips, and Chinese authorities extend a regulatory crackdown against dual-listed firms to the gambling industry based in Macau. According to the latest report by the United State Department of Labor, the seasonally adjusted weekly unemployment rate at the end of September 11 increased 20,000 from the previous week to register a high of 332,000.
The number aggravated concerns about the economic recovery losing steam towards the end of the year. The energy and technology sectors were the biggest losers in the new developments. According to news agency Reuters, the energy market tumbled 1.4% earlier this week while the S&P 500, dominated by mega technology stocks, was down 0.62%. Reputable investment banks like JPMorgan issued ratings downgraded for Macau-based businesses as Beijing pushed for tighter control over the gambling industry.
Some of the stocks that have been affected as a result of this activity include Las Vegas Sands Corp. (NYSE:LVS), Unilever PLC (NYSE:UL), and Wynn Resorts, Limited (NASDAQ:WYNN), among others discussed in detail below. Apart from energy and technology, other sectors of the market have been affected as well, with finance stocks down 0.2%. The Dow and NASDAQ also dipped by 0.56 and 0.55%. It remains to be seen how tech stocks, which have registered record highs over the past year, recover from this pullback.
Luis Louro / shutterstock.com
Our Methodology
With this context in mind, here is our list of the 10 stocks that analysts are downgrading. All the firms listed below have had their ratings downgraded by an investment advisory on September 16.
The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey. The list is ranked according to the number of hedge funds having stakes in each firm.
Why should we pay attention to hedge fund sentiment? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Analysts Are Downgrading These Stocks
10. Genmab A/S (NASDAQ:GMAB)
Number of Hedge Fund Holders: 9
Genmab A/S (NASDAQ:GMAB) is placed tenth on our list of 10 stocks that analysts are downgrading. The firm makes and sells antibody therapeutics for the treatment of cancer and other diseases. It is headquartered in Denmark.
On September 16, investment advisory Jefferies downgraded Genmab A/S stock to Hold from Buy but raised the price target to $48 from $45.50, noting that there was a lack of major near-term growth catalysts for the company.
At the end of the second quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $116 million in Genmab A/S, down from 13 the preceding quarter worth $113 million.
Just like Las Vegas Sands Corp., Unilever PLC, and Wynn Resorts, Limited, Genmab A/S is one of the stocks feeling the heat from a pullback in stock prices.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Genmab A/S (NASDAQ:GMAB) was one of them. Here is what the fund said:
“Genmab is a creator and developer of human antibody products for the treatment of life-threatening and debilitating diseases. Shares have been volatile this year amid a binding arbitration with Johnson & Johnson to decide key aspects of royalty payments related to nextgeneration multiple myeloma drug, Darzalex FASPROTM. Last quarter, we indicated share weakness in February and early March seemed to overstate the potential negative outcome, especially relative to the additional growth opportunities within Genmab’s promising R&D pipeline. That potential was on display in Q2 when the company reported positive data for its bispecific antibody Epcoritamab, a new drug being developed with AbbVie to treat lymphoma. Bispecific antibodies are recombinant antibodies aimed at two biological targets simultaneously and are an important emerging technology area. The company expects to report further clinical trial updates later this year for another bispecific antibody it has developed with partner BioNTech. This new drug is expected to treat patients with metastatic or unresectable malignant solid tumors who are not candidates for standard therapy. We believe Genmab is establishing itself as one of the clear leaders in bispecifics, which increases our optimism about the long-term value of the company’s R&D platform.”
9. Equinor ASA (NYSE:EQNR)
Number of Hedge Fund Holders: 11
Equinor ASA (NYSE:EQNR) is ranked ninth on our list of 10 stocks that analysts are downgrading. The firm operates as an integrated oil and gas company. It is headquartered in Norway.
On September 16, investment advisory Deutsche Bank downgraded Equinor ASA stock to Hold from Buy but raised the price target to NOK210 from NOK202, underlining rising medium-term undersupply risks as one of the reasons behind the downgrade.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Point72 Asset Management is a leading shareholder in Equinor ASA with 1.6 million shares worth more than $35 million.
In addition to Las Vegas Sands Corp., Unilever PLC, and Wynn Resorts, Limited, Equinor ASA is one of the stocks that is expected not to do very well in the near-term.
In its Q2 2021 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Equinor ASA (NYSE:EQNR) was one of them. Here is what the fund said:
“We currently have two oil-related positions in our portfolio and believe the oil opportunity set is ripe. As one might expect, both positions, (including Equinor: EQNR) performed well during the second quarter, given the steady march higher that oil has made in recent months. We maintain a positive outlook for both companies, although, importantly, our posture is not predicated on an expectation for continued oil price appreciation. This is not because of our inability to imagine scenarios where that does occur, but more out of an abundance of caution for what is a highly volatile commodity that at current price levels should be more than sufficient to generate ample free cash flow for any investable oil firm.
In the future, we expect both firms in the portfolio to generate significant free cash flow and expect EQNR to reinvest that free cash flow into a combination of offshore oil and wind opportunities with high rates of return. The path forward for AOI is more complicated and does warrant a few comments.”
8. Lordstown Motors Corp. (NASDAQ:RIDE)
Number of Hedge Fund Holders: 12
Lordstown Motors Corp. (NASDAQ:RIDE) is an Ohio-based automotive company that makes and sells electric-powered vehicles. It is placed eighth on our list of 10 stocks that analysts are downgrading.
On September 16, investment advisory Bank of America downgraded Lordstown Motors Corp. stock to Underperform from Neutral and reduced the price target to $5 from $11, highlighting that the firm was one of the “less legitimate” EV manufacturers on the block.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm OZ Management is a leading shareholder in Lordstown Motors Corp. with 902,900 shares worth more than $9.9 million.
7. Fisker Inc. (NYSE:FSR)
Number of Hedge Fund Holders: 16
Fisker Inc. (NYSE:FSR) is a California-based firm that designs, develops, and sells electric vehicles. It is ranked seventh on our list of 10 stocks that analysts are downgrading.
On September 16, investment advisory Bank of America downgraded Fisker Inc. stock to Neutral from Buy and decreased the price target to $18 from $27, noting that the competitive landscape in the EV industry was becoming “incredibly fierce”.
At the end of the second quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $256 million in Fisker Inc., down from 22 in the previous quarter worth $337 million.
Las Vegas Sands Corp., Unilever PLC, and Wynn Resorts, Limited are some of the stocks affected by the recent economic downturn, just like Fisker Inc..
6. Beyond Meat, Inc. (NASDAQ:BYND)
Number of Hedge Fund Holders: 17
Beyond Meat, Inc. (NASDAQ:BYND) is placed sixth on our list of 10 stocks that analysts are downgrading. The company operates as a food firm focusing on the development and sale of plant-based meat products. It is headquartered in California.
On September 16, investment advisory Piper Sandler downgraded Beyond Meat, Inc. stock to Underweight from Neutral and reduced the price target to $95 from $120, noting that the all-channel retail momentum for the firm was lagging expectations.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Beyond Meat, Inc. with 1.8 million shares worth more than $288 million.
Las Vegas Sands Corp., Unilever PLC, and Wynn Resorts, Limited are some of the stocks affected by the recent economic downturn, in addition to Beyond Meat, Inc..
In its Q2 2021 investor letter, Baillie Gifford, an asset management firm, highlighted a few stocks and Beyond Meat, Inc. (NASDAQ:BYND) was one of them. Here is what the fund said:
“One of the most important cognitive elements is our recognition that consumer patterns and attitudes are evolving increasingly rapidly and with ever greater amplitude. While the human needs for self-actualisation, esteem and belonging are innate and immutable, they are being expressed in new ways. Tastes are being shaped by social groups who are culturally similar but geographically distant. The lines between the physical and digital-self continue to blur.
To those in the throes of middle age, this can be discombobulating. I profess to unease when my daughter recently earned five pounds stacking logs – only to ‘blow’ this pocket money on a pair of virtual Gucci sneakers for her online Roblox character. But we need to be imaginative about the possible size of the market for virtual luxury in the long term and it’s encouraging to observe that Kering is already on the front foot. It is also amply clear that the experienced Long Term Global Growth investors who predate Generations Y & Z, need the help of colleagues in understanding the mood and aspirations of a new cohort of conscious consumers. In this sense, the multigenerational and multicultural dynamic within the LTGG team (and indeed across the broader Baillie Gifford investment floor), has never seemed more important.
It was the younger members of the team who pushed us to be more imaginative on the true size of the opportunity for Beyond Meat. This holding’s investment case is predicated firmly on the removal of the cow as a rather inefficient middle-man between the sun and the stomach. Some within the team see no reason why the opportunity for Beyond Meat shouldn’t ultimately be larger than the $500bn market for traditional protein forms.”
5. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 19
Unilever PLC is ranked fifth on our list of 10 stocks that analysts are downgrading. The firm operates as a fast-moving consumer goods company with operations around the world. It is headquartered in the United Kingdom.
On September 16, investment advisory Deutsche Bank downgraded Unilever PLC stock to Hold from Buy and reduced the price target to GBP4,600 from GBP4,800, noting that the firm was going to have to “show it can outperform earnings expectations” for an upgrade.
At the end of the second quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $844 million in Unilever PLC, down from 20 in the previous quarter worth $826 million.
In its Q2 2021 investor letter, Fiduciary Management, an asset management firm, highlighted a few stocks and Unilever PLC (NYSE:UL) was one of them. Here is what the fund said:
“New opportunities… when, where, and why? As disciplined investors, we find ourselves leaning into the wind time and again, and 2021 has been no different. Given the weakness in emerging markets, companies with significant revenue in emerging markets provided a handful of interesting opportunities. For example, we added to our position in Unilever PLC, a blue‐chip consumer staple. The company’s large emerging market exposure (over 50% of revenue), which, historically, had been viewed positively by the market due to better long‐term growth prospects, has weighed on the stock more recently. Growth is expected to rebound as these geographies recover, and the stock trades at a meaningful discount to its peers.”
4. Melco Resorts & Entertainment Limited (NASDAQ:MLCO)
Number of Hedge Fund Holders: 29
Melco Resorts & Entertainment Limited is a Hong Kong-based firm that owns and operates casino gaming and resort facilities. It is placed fourth on our list of 10 stocks that analysts are downgrading.
On September 16, investment advisory JPMorgan downgraded Melco Resorts & Entertainment Limited stock to Neutral from Overweight and decreased the price target to $10 from $21, highlighting the tightening regulatory oversight on Macau firms.
At the end of the second quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $755 million in Melco Resorts & Entertainment Limited, the same as in the preceding quarter worth $728 million.
3. Lear Corporation (NYSE:LEA)
Number of Hedge Fund Holders: 34
Lear Corporation (NYSE:LEA) is a Michigan-based firm that develops and sells automotive seating and electrical systems used by car firms. It is ranked third on our list of 10 stocks that analysts are downgrading.
On September 16, investment advisory Bank of America downgraded Lear Corporation stock to Underperform from Neutral and decreased the price target to $160 from $200, noting that the valuation of the firm was “less compelling than other suppliers”.
At the end of the second quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $1.24 billion in Lear Corporation, up from 28 in the previous quarter worth $1.21 billion.
2. Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 37
Wynn Resorts, Limited is placed second on our list of 10 stocks that analysts are downgrading. The firm designs, develops, and operates resort facilities. It is headquartered in Nevada.
On September 16, investment advisory JPMorgan downgraded Wynn Resorts, Limited stock to Neutral from Overweight and reduced the price target to $89 from $122.
At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $712 million in Wynn Resorts, Limited, down from 49 in the preceding quarter worth $1 billion.
1. Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Holders: 48
Las Vegas Sands Corp. is ranked first on our list of 10 stocks that analysts are downgrading. The company owns and operates resorts around the world and is headquartered in Nevada.
On September 16, investment advisory JPMorgan downgraded Las Vegas Sands Corp. stock to Neutral from Overweight and decreased the price target to $38 from $59. JPMorgan analyst Joseph Greff downgraded the stock amid the Macau government’s move to expand its casino regulatory oversight. Greff cited “uncertainty and opacity” related to Macau and China policy for the downgrade.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm DE Shaw is a leading shareholder in Las Vegas Sands Corp. with 5.8 million shares worth more than $308 million.
In its Q2 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Las Vegas Sands Corp. (NYSE:LVS) was one of them. Here is what the fund said:
“The shares of Las Vegas Sands Corporation, a leading developer of luxury casino resorts in Macau and Singapore, declined in the most recent quarter in large part due to COVID-19 travel-related restrictions. We believe the shares are attractively valued and will recover sharply when travel restrictions are lifted.”
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This article is originally published at Insider Monkey.
