In this article, we discuss 5 stocks getting crushed by the global supply chain crisis. If you want to see more stocks that are impacted by tightening supply conditions, click 10 Stocks Getting Crushed by Global Supply Chain Crisis.
5. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 46
Year-to-Date Share Price Decline as of June 1: 37.76%
Ford Motor Company (NYSE:F) is an American manufacturer of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles, operating via three segments – Automotive, Mobility, and Ford Credit. Ford Motor Company (NYSE:F) stock has declined close to 38% YTD as of June 1. On June 2, Ford Motor Company (NYSE:F) reported May Truck sales of 74,595, down 1.4%. The May SUV sales were 76,625, dropping 4.4%, given the continued global industry semiconductor chip shortage.
On June 1, Goldman Sachs slashed the price target on Ford Motor Company (NYSE:F) to $14 from $18 and maintained a Neutral rating on the shares. He cited supply chain constraints in the near-term and weaker demand in the intermediate term. Analyst Mark Delaney issued the rating.
According to Insider Monkey’s first quarter data, 46 hedge funds were bullish on Ford Motor Company (NYSE:F), down from 53 funds in the previous quarter. D E Shaw is the largest shareholder of the company, with 31.2 million shares worth $528.3 million.
In its Q1 2020 investor letter, Greenlight Capital Fund highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford Motor Company (NYSE:F), lost about half its value.”
4. Lumentum Holdings Inc. (NASDAQ:LITE)
Number of Hedge Fund Holders: 31
Year-to-Date Share Price Decline as of June 1: 18.98%
Lumentum Holdings Inc. (NASDAQ:LITE) is a California-based firm that designs and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company operates in two segments – Optical Communications and Commercial Lasers. The stock is down about 19% year-to-date as of June 1.
On May 5, B. Riley analyst Dave Kang lowered the price target on Lumentum Holdings Inc. (NASDAQ:LITE) to $119 from $120 and reiterated a Buy rating on the shares after the fiscal Q3 results. The analyst noted that demand remains robust, but supply chain constraints impacted revenue by $65 million in Q3 and is forecasted to hit the sales by about $100 million in Q4.
According to Insider Monkey’s database, 31 hedge funds were bullish on Lumentum Holdings Inc. (NASDAQ:LITE) at the end of March 2022, compared to 29 funds in the earlier quarter. Anand Parekh’s Alyeska Investment Group is a leading shareholder of the company, with 930,738 shares worth about $91 million.
3. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 50
Year-to-Date Share Price Decline as of June 1: 32.52%
Target Corporation (NYSE:TGT) is a general merchandise retailer in the United States. On May 18, the company reported its Q1 financial results. The earnings per share of $2.19 missed analysts’ consensus estimates by $0.87. Target Corporation (NYSE:TGT) shares have declined about 32.5% YTD as of June 1.
On May 19, JPMorgan analyst Christopher Horvers slashed the price target on Target Corporation (NYSE:TGT) to $188 from $302 and maintained an Overweight rating on the shares. The analyst is “not throwing in the towel” after the earnings miss. The issues that resulted in Target Corporation (NYSE:TGT)’s “substantial miss and nearly unimaginable guide down” primarily relate to poor inventory and supply chain execution, the analyst told investors. Until inventory “cleans up”, Target Corporation (NYSE:TGT) will suffer from valuation headwinds as is generally the case with retailers and sell-downs on big estimate cuts, added the analyst.
According to Insider Monkey’s database, 50 hedge funds were bullish on Target Corporation (NYSE:TGT) at the end of Q1 2022, compared to 49 funds in the preceding quarter. Arrowstreet Capital held the largest stake in the company, comprising 2.50 million shares worth $530.5 million.
Here is what Nelson Capital Management has to say about Target Corporation (NYSE:TGT) in its Q2 2021 investor letter:
“We added Target (tkr: TGT) to our consumer staples sector. Target Corporation (NYSE:TGT) offers a broad array of products in owned and known brand items at affordable prices. Its omni-channel fulfillment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
2. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 60
Year-to-Date Share Price Decline as of June 1: 13.27%
Walmart Inc. (NYSE:WMT) operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, and mobile commerce applications. The stock has declined 13.27% year-to-date as of June 1. The company reported Q1 earnings per share of $1.30, missing market consensus estimates by $0.18.
Guggenheim analyst Robert Drbul on May 18 lowered the price target on Walmart Inc. (NYSE:WMT) to $175 from $185 and maintained a Buy rating on the shares. He still forecasts strong top-line results for the rest of 2022, but after a “disappointing quarter”, he now expects some persistence of higher costs owing to inflation and logistics challenges and is slashing his FY22 and FY23 EPS estimates, the analyst told investors. However, he still sees Walmart Inc. (NYSE:WMT)’s scale, price leadership, and a diversified profit base lending it an optimistic outlook over the long-term.
Among the hedge funds tracked by Insider Monkey, 60 funds were bullish on Walmart Inc. (NYSE:WMT) at the end of Q1 2022, down from 63 funds in the last quarter. Rajiv Jain’s GQG Partners is the biggest shareholder of the company, with 15.4 million shares worth about $2.3 billion.
1. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 43
Year-to-Date Share Price Decline as of June 1: 20.18%
NXP Semiconductors N.V. (NASDAQ:NXPI) is a Dutch company that manufactures semiconductor products including microcontrollers, application processors, communication processors, wireless connectivity solutions, analog and interface devices, radio frequency power amplifiers, security controllers, and semiconductor-based environmental and inertial sensors. The stock has fallen over 20% YTD as of June 1.
On May 3, Piper Sandler analyst Harsh Kumar lowered the price target on NXP Semiconductors N.V. (NASDAQ:NXPI) to $175 from $210 and maintained a Neutral rating on the shares. The company posted “solid” Q1 results, exceeding March and June quarter forecasts while projecting steady and consistent growth through the second half of 2022, the analyst told investors. However, NXP Semiconductors N.V. (NASDAQ:NXPI) cited supply bottlenecks in both its core markets of automotive and internet of things, added the analyst. While he is impressed with the company’s execution, he prefers other names in the automotive and industrial sectors.
According to Insider Monkey’s Q1 data, 43 hedge funds were bullish on NXP Semiconductors N.V. (NASDAQ:NXPI), with combined stakes of $843 million, compared to 44 funds in the earlier quarter, holding stakes in the company valued at $907 million. Ken Fisher’s Fisher Asset Management is the largest shareholder of the company, with 923,855 shares worth about $171 million.
Here is what Sound Shore Fund has to say about NXP Semiconductors N.V. (NASDAQ:NXPI) in its Q1 2022 investor letter:
“Similarly, analog chip supplier NXP Semiconductors declined even though the company reported above consensus revenue growth. A leading chip maker for infrastructure and automotive applications, we view NXP as a “new industrial,” uniquely positioned to benefit from increased chip content per application/vehicle. This includes electric and autonomous vehicles and more broadly, connectivity and the internet of things. We added the stock to the portfolio during the volatile fourth quarter of 2018 at just 10 times earnings. Today, NXP is still valued at a very reasonable 14 times earnings.”
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