Wall Street Analysts are Downgrading These 10 Stocks

Published August 17, 2022 at 8:42 am EDT Updated September 7, 2026 at 11:35 am EDT

In this article, we will take a look at the 10 stocks receiving downgrades from analysts.

Analysts continue to update their ratings for stocks in the current volatile market, citing various factors such as financial performance and changing macroeconomic conditions. Snowflake Inc. (NYSE:SNOW), Comcast Corporation (NASDAQ:CMCSA) and Dollar General Corporation (NYSE:DG) were among the notable stocks that recently received downgrades from market research firms.

In addition, Wall Street analysts also lowered their ratings for Southwest Airlines Co. (NYSE:LUV) and Avalara, Inc. (NYSE:AVLR). Check out the complete article below to see the reasons behind these downgrades.

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10. Rackspace Technology, Inc. (NASDAQ:RXT)

Number of Hedge Fund Holders: 16

Shares of Rackspace Technology, Inc. (NASDAQ:RXT) fell nearly three percent on Tuesday, August 16, 2022, after JPMorgan downgraded the Texas-based cloud computing company from “Neutral” to “Underweight.”

JPMorgan analyst Tien-tsin Huang expressed concerns over the company’s earnings growth potential in the near term. Huang also cut his price target for Rackspace Technology, Inc. from $7 per share to $5 per share.

The downgrade came just a few days after Rackspace Technology, Inc. announced disappointing results for the second quarter. Last week, Rackspace reported adjusted earnings of 17 cents per share for Q2, down from 24 cents per share in the year-ago period. Revenue for the quarter increased 4 percent on a year-over-year basis to $772 million, missing the consensus of $793 million.

9. Clean Energy Fuels Corp. (NASDAQ:CLNE)

Number of Hedge Fund Holders: 18

Raymond James lowered its ratings for Clean Energy Fuels Corp. (NASDAQ:CLNE) from “Outperform” to “Market Perform,” sending its shares down nearly four percent on Tuesday, August 16, 2022.

Clean Energy Fuels Corp. shares have gained decent value on a year-to-date basis and Raymond James analyst Pavel Molchanov thinks that stock’s current valuation is close to fair value. Molchanov also referred to the recently approved Inflation Reduction Act and how clean tech companies like Clean Energy Fuels Corp. could benefit from it.

The Inflation Reduction Act includes $369 billion in funds for climate change and clean energy measures. The legislation offers a range of incentives and tax credits for firms working in areas like clean energy.

8. TaskUs, Inc. (NASDAQ:TASK)

Number of Hedge Fund Holders: 21

TaskUs, Inc. (NASDAQ:TASK) received a downgrade from Morgan Stanley on Monday, August 15, 2022. The research firm lowered its ratings for the digital outsourcing services provider from “Overweight” to “Equal Weight.”

Morgan Stanley analyst James Faucette was moved by the near-term growth challenges that would likely make the stock range bound in the coming quarters. Faucette also cut his price target for TaskUs, Inc. from $28 per share to $19 per share.

Shares of TaskUs, Inc. have traded mostly lower since announcing a disappointing sales outlook for fiscal 2022 last week. The company expects full-year revenue between $930 – $950 million, below analysts’ average estimate of $992.41 million.

7. Park Hotels & Resorts Inc. (NYSE:PK)

Number of Hedge Fund Holders: 22

Park Hotels & Resorts Inc. is a real estate investment trust (REIT) that owns several famous hotels and resorts in the U.S. BMO Capital downgraded the Virginia-based lodging REIT from “Outperform” to “Market Perform” on Tuesday, August 16, 2022.

BMO Capital analyst Ari Klein thinks the company’s big-box properties in urban gateway markets could face uncertainty. Klein trimmed his price target for Park Hotels & Resorts Inc. from $21 per share to $18 per share.

Like Park Hotels & Resorts Inc., analysts also lowered their ratings for Snowflake Inc., Comcast Corporation and Dollar General Corporation.

6. Elanco Animal Health Incorporated (NYSE:ELAN)

Number of Hedge Fund Holders: 31

Shares of Elanco Animal Health Incorporated (NYSE:ELAN) slightly moved down on Tuesday, August 16, 2022, following a downgrade from JPMorgan. The research firm decreased its ratings for the animal health company from “Overweight” to “Neutral.”

JPMorgan analyst Chris Schott expressed concerns over the company’s outlook for the current and next year amid supply chain issues and product delays. Schott also cut his price target for Elanco Animal Health Incorporated from $28 per share to $24 per share.

The downgrade came a week after Elanco Animal Health Incorporated trimmed its financial outlook for fiscal 2022. The company now anticipates adjusted earnings in the range of $1.06 – $1.13 per share and revenue between $4.46 – $4.55 billion for the full year. The revised guidance missed the consensus of $1.14 per share for earnings and $4.69 billion for revenue.

5. Avalara, Inc. (NYSE:AVLR)

Number of Hedge Fund Holders: 38

Morgan Stanley downgraded Avalara, Inc. from “Overweight” to “Equal Weight” on Tuesday, August 16, 2022, citing an acquisition offer from Vista Equity Partner. Morgan Stanley analyst Keith Weiss believes the valuation of Avalara seems fair and a competing bid for the Seattle-based software firm is unlikely.

Weiss also cut his price target for Avalara, Inc. from $111 per share to $93.50 per share. The downgrade came nearly a week after Vista disclosed its plans to buy Avalara, Inc. for $8.4 billion.

Earlier this year, Avalara, Inc. also appeared in the fourth-quarter 2021 investor letter of investment management firm ClearBridge Investments. Here’s what the firm said:

“Avalara, which offers online tax compliance software for small and medium size businesses and increasingly enterprise customers, also saw its stock lose altitude with many high growth technology companions as some investors reduced financial leverage, although we are unaware of any fundamental disappointments. We continue to believe companies like Avalara will be key players in the democratization of e-commerce.”

4. Southwest Airlines Co. (NYSE:LUV)

Number of Hedge Fund Holders: 45

Argus lowered its ratings for Southwest Airlines Co. from “Buy” to “Hold” on Monday, August 15, 2022. Argus analyst John Staszak thinks capacity challenges and inflationary pressures could impact the growth of the Texas-based airline.

Staszak doesn’t see an upside for the stock until there is more clarity around cost stabilization. He reduced his earnings estimate by 5c to $2.45 per share for fiscal 2022. However, Staszak remains optimistic about the long-term growth prospects of Southwest Airlines Co..

Senior management of Southwest Airlines Co. also talked about inflationary pressures during the second-quarter earnings call last month. CEO Bob Jordan said in a statement:

“Travel demand surged in second quarter, and thus far, strong demand trends continue in third quarter 2022. As anticipated, we experienced inflationary pressures and headwinds from operating at suboptimal productivity levels in second quarter, which we expect will continue in second half 2022.”

3. Dollar General Corporation (NYSE:DG)

Number of Hedge Fund Holders: 53

Dollar General Corporation received a downgrade from BMO Capital on Monday, August 15, 2022. The research firm cut its ratings for the discount retail stores operator from “Outperform” to “Market Perform.”

BMO Capital analyst Kelly Bania believes the company’s valuation is near its peak levels. She added that more discounts from rivals could also hurt the growth of Dollar General Corporation to some extent.

Meanwhile, Dollar General Corporation recently faced a setback. The U.S. safety regulators imposed a fine of $1.3 million on the company over worker safety violations. The penalty was imposed after the federal inspectors visited Dollar General’s locations in Georgia earlier this year.

2. Comcast Corporation (NASDAQ:CMCSA)

Number of Hedge Fund Holders: 78

Atlantic Equities downgraded Comcast Corporation from “Overweight” to “Neutral” on Monday, August 15, 2022. Atlantic Equities analyst Hamilton Faber was moved by the company’s disappointing broadband results for the second quarter. He also trimmed his price target for Comcast Corporation from $60 per share to $44 per share.

Comcast Corporation announced its Q2 results last month. While the telecommunications company beat financial expectations for the quarter, it failed to add broadband customers in the period. On the other hand, analysts were looking for net additions of 84,000.

1. Snowflake Inc. (NYSE:SNOW)

Number of Hedge Fund Holders: 81

Shares of Snowflake Inc. slipped nearly two percent on Tuesday, August 16, 2022, after UBS downgraded the Montana-based tech company from “Buy” to “Neutral,” citing its high valuation.

UBS analyst Karl Keirstead referred to his recent conversation with customers, saying nearly half of them anticipate a drop in their budget for data analytics software. Nevertheless, most Wall Street analysts are still bullish on Snowflake Inc., maintaining a “Buy” rating for the stock.

Last month, Snowflake Inc. also appeared in the second-quarter 2022 investor letter of investment management firm ClearBridge Investments. Here’s what the firm said:

“Snowflake operates a cloud-based data platform for small and medium-sized businesses and enterprise customers. The company is a key beneficiary of software spending moving to the cloud, as well as the increasing strategic importance of data. With the potential to address the large and growing market for data cloud, a roughly $250 billion plus opportunity by 2026, we see a long runway for growth ahead. Although the company is already profitable, we believe Snowflake still has significant room for free cash flow margin expansion.”

You can also take a peek at 10 Best Stocks to Buy According to DE Shaw and Jim Cramer Recommends These 10 Stocks For Recession.

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