Analysts Just Turned Bearish on These 10 Stocks

Published July 8, 2022 at 9:19 am EDT Updated September 7, 2026 at 2:18 pm EDT

In this article, we will take a look at the 10 stocks that were recently downgraded by analysts.

Notable companies from the industrials and technology sectors, including United Airlines Holdings, Inc. (NASDAQ:UAL), Union Pacific Corporation (NYSE:UNP) and VMware, Inc. (NYSE:VMW), recently received downgrades from analysts.

In addition, analysts also lowered their ratings for spices and flavored products maker McCormick & Company, Incorporated (NYSE:MKC) and Arkansas-based bank holding company Bank OZK (NASDAQ:OZK). We will discuss the reasons behind these downgrades in the remaining article.

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Analysts Just Turned Bearish on These 10 Stocks

10. Azul S.A. (NYSE:AZUL)

Number of Hedge Fund Holders: 10

Shares of Azul S.A. (NYSE:AZUL) fell over six percent on Wednesday, July 6, 2022, after Barclays downgraded the Brazil airline from “Equal-Weight” to “Underweight,” citing elevated fuel prices.

Moreover, Barclays analyst Pablo Monsivais thinks Azul S.A. would likely face more difficulties as it seeks external financing while the interest rates are climbing. Monsivais also cut his price target for Azul S.A. from $17 per share to $7 per share.

Azul S.A. also received a price-target cut from Raymond James on Thursday, July 7, 2022. The research firm slashed its price target for Azul S.A. from $22 per share to $12 per share, citing a higher fuel price outlook.

9. Southern Copper Corporation (NYSE:SCCO)

Number of Hedge Fund Holders: 16

Wolfe Research lowered its ratings for Southern Copper Corporation (NYSE:SCCO) from “Peer Perform” to “Underperform” on Thursday, July 7, 2022, citing dropping commodity prices.

Wolfe Research analyst Timna Tanners trimmed the commodity price outlook amid lower demand from China. Tanners also anticipate limited near-term growth for Southern Copper Corporation. She cut her price target for Southern Copper Corporation from $62 per share to $47 per share.

8. SAP SE (NYSE:SAP)

Number of Hedge Fund Holders: 19

Barclays downgraded SAP SE (NYSE:SAP) from “Overweight” to “Equal Weight” on Wednesday, July 6, 2022. Barclays analyst Raimo Lenschow argued that the consensus estimate doesn’t reflect the company’s suspension of services in Russia. Lenschow also expressed concerns over the full-year outlook of SAP SE and the upcoming departure of its CFO.

Earlier this year, SAP SE announced that its CFO Luka Mucic would leave the company in March 2023. The company is currently searching for a successor but hasn’t found one so far.

Separately, investment management firm Polen Capital also talked about SAP SE in its first-quarter 2022 investor letter, stating:

“In our opinion, SAP is demonstrating that their cloud transition and RISE with SAP strategy are working. We added to our position upon evidence that CEO Christian Klein’s strategy is bearing fruit, and the stock trading down to an attractive valuation during the quarter. The strategy and sell-off are connected, and we believe it provided an opportunity for long- term shareholders. The company recently reported weak 2022 margin and FCF guidance. This was expected if cloud growth accelerated – which it has. Current cloud backlog has accelerated to a mid-20% growth rate, and the S/4 HANA Cloud Backlog and Cloud Sales have accelerated as well. Cloud, which tends to be a very sticky business with high recurring revenue, is now a >$10bn business and represents roughly 40% of sales.

Our research shows this should only increase over the next five years. If management continues to successfully execute its strategy, the transition should create a mechanical lift to margins and greater levels of FCF. We believe SAP is a durable business led by capable management that is poised to deliver high-quality mid-teens earnings growth over the next five years.”

7. Kellogg Company (NYSE:K)

Number of Hedge Fund Holders: 22

UBS cut its ratings for Kellogg Company (NYSE:K) from “Buy” to “Neutral” on Thursday, July 7, 2022. UBS analyst Cody Ross thinks that Kellogg Company will face a sharp rise in inflation in the coming months.

Ross added that it would be hard for Kellogg Company to pass on all of that inflation to customers in the form of price hikes. He also cut his price target for the Michigan-based food manufacturer from $81 per share to $74 per share.

Like Kellogg Company, analysts also turned bearish on United Airlines Holdings, Inc., Union Pacific Corporation and VMware, Inc..

6. Aspen Technology, Inc. (NASDAQ:AZPN)

Number of Hedge Fund Holders: 22

Aspen Technology, Inc. (NASDAQ:AZPN) received a downgrade from Baird on Thursday, July 7, 2022. The research firm slashed its ratings for the software company from “Outperform” to “Neutral.”

Baird analyst Rob Oliver thinks that the potential near-term challenges would restrict the upward movement of Aspen shares. Oliver also expressed worries over the company’s fiscal 2022 and fiscal 2023 financial guidance. He cut his price target for Aspen Technology, Inc. from $170 per share to $162 per share.

Earlier this year, Aspen Technology, Inc. appeared in the first-quarter 2022 investor letter of investment management firm Polen Capital. Here’s what the firm said:

“Asset optimization software company Aspen Technology is one of our long-time holdings. We anticipate growth in the business to accelerate as both customer demand and business conditions in many of the company’s key end markets continue to improve. The company had been previously challenged, in part, by weaker energy prices and the impact of the pandemic. Still, we believe the strategic imperative for its customers to operate assets more efficiently and sustainably remains intact.”

5. Bank OZK (NASDAQ:OZK)

Number of Hedge Fund Holders: 22

Wells Fargo downgraded Bank OZK from “Overweight” to “Equal Weight” on Thursday, July 7, 2022. Wells Fargo analyst Timur Braziler thinks that the recessionary fears will keep OZK stock range-bound.

Braziler expressed optimism over the bank’s loan growth but cautioned that Bank OZK would achieve that growth at a higher cost. He also cut his price target for Bank OZK from $58 per share to $42 per share.

4. United Airlines Holdings, Inc. (NASDAQ:UAL)

Number of Hedge Fund Holders: 31

United Airlines Holdings, Inc. received a downgrade from Argus on Thursday, July 7, 2022. The research firm downgraded United Airlines Holdings, Inc. from “Buy” to “Hold,” citing elevated fuel costs, lack of pilots and flight cancellations.

Argus analyst John Staszak also lowered his earnings expectations due to these challenges. While Staszak thinks United Airlines Holdings, Inc. is ready to capitalize on the recovery in the airline industry, he anticipates leisure travel demand to level off in the U.S. amid dwindling consumer sentiment.

Meanwhile, United Airlines Holdings, Inc. recently blamed the Federal Aviation Administration (FAA) for increasing flight cancellations. In a letter to employees, the company’s COO Jon Roitman said 75 percent of United Airlines’ cancellations over the last four months occurred due to the traffic handling initiatives of FAA.

3. McCormick & Company, Incorporated (NYSE:MKC)

Number of Hedge Fund Holders: 34

Argus lowered his ratings for McCormick & Company, Incorporated from “Buy” to “Hold” on Wednesday, July 6, 2022. The downgrade was based on the elevated input costs and comparatively high valuation of the stock.

Separately, McCormick & Company, Incorporated appeared in the third-quarter 2021 investor letter of investment management firm ClearBridge Investments. Here’s what the firm said about McCormick & Company, Incorporated:

“Within consumer staples, we sold out of Unilever, a great company and sustainability leader that we believe faces margin headwinds as it invests to promote growth, and replaced it with McCormick, a leader in food seasonings and flavors. McCormick is a high-quality business that has lagged recently due to the negative COVID-19 impacts on the business, which provided us with an attractive entry point. The company is also levered to the healthy eating trend, as seasonings are a healthier substitute for sugar and fat.”

2. VMware, Inc. (NYSE:VMW)

Number of Hedge Fund Holders: 52

Raymond James downgraded VMware, Inc. from “Outperform” to “Market Perform” on Wednesday, July 6, 2022, citing Broadcom’s $61 billion acquisition offer for the company. Raymond James analyst Simon Leopold said that VMware, Inc. didn’t receive any competing offer during the go-shop period, which expired recently.

Broadcom first disclosed its offer to buy VMware, Inc. on May 26. The offer included a 40-day period in which potential buyers could place a competing bid on VMware, Inc.. However, the 40-day go-shop period recently came to an end without any alternate buyout proposal.

1. Union Pacific Corporation (NYSE:UNP)

Number of Hedge Fund Holders: 89

Union Pacific Corporation is America’s leading railroad company connecting 23 states. It plays a critical role in the global supply chain by transporting essential materials for industries such as agriculture, automotive and chemical.

Susquehanna downgraded Union Pacific Corporation from “Positive” to “Neutral” on Wednesday, July 6, 2022. The research firm thinks macro headwinds and capacity challenges could impact volume recovery in the rail industry.

Union Pacific Corporation also appeared in the first-quarter 2022 investor letter of investment management firm Carillon Tower Advisers published last month. Here’s what the firm said:

“Union Pacific benefited from rising oil prices, which typically bring more demand for rail shipping as opposed to moving freight by truck. Rail transportation can be much more fuel-efficient than over-the-road trucking.”

You can also take a peek at Top 10 Stock Picks of Randall Smith’s Alden Global and David Abrams’ 2022 Portfolio: Top 10 Stock Picks.

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