Steer Clear: Analysts Just Sounded the Alarm on These 10 Overhyped Stocks

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4. HubSpot (NYSE:HUBS)

Average Upside Potential: 15%

Number of Hedge Fund Holders: 51

Cantor Fitzgerald analyst Matthew Vanvliet downgraded HubSpot to Underweight from Neutral on November 5 and cut his price target to $170 from $265. The quarter just reported had still beaten Wall Street’s numbers.

Analysts expected HubSpot to earn $3.28 a share. It earned $3.81 on an adjusted basis, the Associated Press reported, while revenue of $947.6 million beat the $924.5 million forecast. Net profit came to $83 million, or $1.67 a share.

The beat fits a long record of growth. HubSpot’s revenue has grown 28.81% a year over the past five years, and the software it sells keeps most of each sales dollar after the cost of delivering it.

The price looks modest next to that record. HubSpot trades at 15.41 times forward earnings, compared with 18.86 for its sector, and sits 83.99% below its own five-year average, on adjusted figures. For the fourth quarter, the company guided adjusted earnings of $3.85 to $3.87 a share. Bulls see a software company with a long growth record that now trades below its sector’s multiple. We recently looked at how HubSpot’s rising AI adoption could turn into revenue growth.

3. Adobe (NASDAQ:ADBE)

Average Upside Potential: 9%

Number of Hedge Fund Holders: 81

Citigroup downgraded Adobe to Sell from Neutral on November 4, with a price target of $207. The call sits against a quarter in which the company’s AI products grew fast.

CEO Shantanu Narayen called passing one billion monthly active users a defining moment for Adobe. That audience is the base for its AI products, and AI-first annual recurring revenue grew more than 150% from a year earlier.

The core business is growing too. Third-quarter revenue hit a record $6.76 billion, up 13%, and Adobe raised its full-year revenue and earnings targets, with non-GAAP earnings per share now expected between $24.45 and $24.50. Narayen said the quarter reflected the strength of the company’s AI innovation.

Total annual recurring revenue exited the quarter at $27.50 billion, so the AI products are growing from a large base. Remaining performance obligations, the revenue Adobe has signed up but not yet recognized, are mostly due within a year, about two-thirds of the total. Adobe also bought back about 9.5 million of its own shares in the quarter. The market’s worry about AI is the focus of our look at whether the fear around Adobe is overdone.

2. Apple (NASDAQ:AAPL)

Average Upside Potential: -1%

Number of Hedge Fund Holders: 169

DZ Bank downgraded Apple to Sell from Hold on November 4, with a price target of $300. The call came days after a record quarter, and the numbers behind the company stayed strong.

Apple’s installed base now tops 2.5 billion active devices, Yahoo Finance reported, and that base is why the company can post records at its size. In the September quarter, revenue rose 12% to $114.5 billion, a record for that quarter, and iPhone sales set a September-quarter record as well.

Apple returned $28 billion to shareholders in the quarter. Services revenue hit an all-time high, giving the company a growing stream of income from devices already sold. Active devices reached a record in every major product category and every geographic segment, and CFO Kevan Parekh said Apple set September-quarter records for net income and earnings per share. He guided December-quarter revenue growth of 7% to 10%.

John Ternus, who recently took over as CEO from Tim Cook, pointed to the iPhone Duo and a new line of home hardware as what comes next. Whether longer ownership can still raise profit per customer is the question in our piece on Apple’s iPhone economics.

1. Nike (NYSE:NKE)

Average Upside Potential: -8%

Number of Hedge Fund Holders: 56

Truist Securities analyst Joseph Civello downgraded Nike to Sell from Hold on November 5 and kept his price target at $29. The company’s latest report gave its supporters something to point to.

Nike’s turnaround shows up first in its margins. Gross margin widened 60 basis points to 42.8% in the fiscal first quarter, helped by lower warehousing and logistics costs. That kind of gain does not depend on a sales rebound, and it suggests the cleanup under CEO Elliott Hill is paying off.

Sales are steadier where Nike has focused. Wholesale, its largest channel, brought in $6.8 billion, down just 1%, with North America growing even as Greater China declined. Hill said the push around sport-specific products is driving measurable progress in its performance business, and the company says momentum continued across the sports it has chosen to prioritize, which Hill calls the Sport Offense.

Nike also returned about $610 million through dividends, up 3% from a year earlier. A dividend that keeps growing during a rebuild tells investors management believes the cash flow can support it. We also asked whether Nike’s turnaround is worth betting on.

READ NEXT: Jim Cramer Is Staying Away From NIKE (NKE) Stock After Losing Money and Billionaire Ken Fisher and Jim Cramer Still Like Apple (AAPL). Should You?

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