In this article, we will discuss the 10 stocks whose price targets were recently trimmed by analysts. If you want to see more such stocks on the list, go directly to Analysts Are Cutting Price Targets of These 5 Stocks.
The US economy demonstrated a noteworthy surge in growth during the second quarter, expanding at an annualized rate of 2.4%. This acceleration comes as a positive surprise, especially considering the preceding three months had seen a pace of 2%, indicating a marked improvement in economic performance. The initial estimate from the Commerce Department, released on July 27, highlighted the remarkable resilience exhibited by both consumers and companies in the face of challenging conditions, particularly the impact of high interest rates. According to Bloomberg, a key driver of this growth was the robust performance of household spending, which surpassed earlier estimates. Despite concerns and uncertainties in the market, consumers showed remarkable confidence and continued to open their wallets, contributing significantly to the overall economic expansion. In contrast to some forecasts, consumer spending increased at a more substantial pace of 1.6% during this period, building on the strong momentum observed at the beginning of the year. Another crucial factor that contributed to the encouraging economic performance was the resilience demonstrated by businesses, with their investments remaining solid. Even with the backdrop of high interest rates, companies managed to maintain their confidence and commitment to expansion, fueling economic activity and job creation.
The latest data depicting a robust economic growth trajectory is likely to instill optimism and confidence among policymakers, businesses, and the general public. Amid concerns over a potential recession, this unexpected acceleration offers hope that the US economy can successfully navigate through challenging economic conditions and avoid a downturn. However, it is important to note that economic growth is subject to various factors, both domestic and global, which can influence its trajectory in the future. While the current data paints a positive picture, ongoing monitoring and prudent economic policies will remain crucial to sustain this growth momentum and ensure a stable and thriving economy in the long run.
Oil prices surged to $80 per barrel, the highest since April, driven by strong US economic growth forecasts, boosting oil demand expectations. However, there are concerns about potential price corrections due to technical factors, as crude oil is trading in overbought territory. The rally was led by the US benchmark, West Texas Intermediate (WTI), crossing the $80 mark, supported by speculation that the Federal Reserve is nearing the end of its monetary tightening cycle. The recent increase in oil prices has also been aided by supply cuts by the OPEC+ alliance, reducing the global supply glut. Nevertheless, the oil market’s future trajectory remains uncertain, influenced by various factors, including geopolitical developments and global energy demand, prompting close monitoring by market participants.
On July 27, on the stock market front, the Dow Jones Industrial Average experienced a rise, and it is now on track to tie its best winning streak ever recorded since 1897. The 30-stock index added 119 points, equivalent to a 0.34% increase. The S&P 500 also climbed by 0.69%, while the Nasdaq Composite showed a more substantial gain of 1.26%. According to CNBC, if the trend continues, the Dow will achieve a 14-day consecutive advance, matching its longest positive streak on record dating back to June 1897. The Dow Jones Industrial Average was established a little over a year earlier, in May 1896. The recent historic streak in the Dow can be attributed to several factors, including promising indications that the economy will avoid a recession, declining inflation data, and resilient corporate earnings. On July 27, Wall Street received further supporting evidence on all these fronts. In the second quarter, the Gross Domestic Product showed a rise of 2.4%, surpassing the economists’ expectations of a 2% increase, as per the polls conducted by Dow Jones. The report also indicated that price pressures are easing, with the personal consumption expenditures price index rising 2.6% in the second quarter. This figure is lower than the economists’ expectation of a 3.2% increase and is also a decline from the 4.1% rise observed in the previous quarter. These economic indicators contribute to the positive market sentiment and drive the Dow’s remarkable winning streak. However, despite this rally in Dow stocks, analysts are bearish on technology firms such as Microsoft Corporation (NASDAQ:MSFT) and Danaher Corporation (NYSE:DHR) alongwith biotech firm Biogen Inc. (NASDAQ:BIIB). Check out the complete article to see details of these and other stocks.
10. Lulu’s Fashion Lounge Holdings, Inc. (NASDAQ:LVLU)
Number of Hedge Fund Holders: 3
Lulu’s Fashion Lounge Holdings, Inc. (NASDAQ:LVLU) was established in 1996 and is based in Chico, California. It is an e-commerce retailer specializing in women’s clothing, shoes, and accessories. Lulu’s Fashion Lounge Holdings, Inc. (NASDAQ:LVLU) product lineup includes a variety of items such as dresses, tops, bottoms, wedding dresses, intimates, sleepwear, swimwear, footwear, and accessories, all branded under the name Lulus. They primarily operate through their website, and mobile app, and engage customers through social media. Additionally, the company uses earned and paid media strategies, along with social media platforms, to reach its target audience. Lulu’s Fashion Lounge Holdings, Inc. (NASDAQ:LVLU) predominantly caters to Millennial and Gen Z women. On July 26, Lulu’s Fashion Lounge Holdings, Inc. (NASDAQ:LVLU) was downgraded to $4 from $5 by Baird analyst Mark Altschwager.
09. Alaska Air Group, Inc. (NYSE:ALK)
Number of Hedge Fund Holders: 32
Alaska Air Group, Inc. (NYSE:ALK) owns Alaska Airlines and Horizon Air. On July 26, while maintaining a positive outlook on the company, Stathoulopoulos has adjusted the price target for Alaska Air Group, Inc. (NYSE:ALK) to $58, down from the previous target of $65. In the second quarter of FY23, Alaska Air Group, Inc. (NYSE:ALK) reported a 7% year-over-year growth in operating revenue, reaching $2.84 billion, which surpassed the consensus of $2.77 billion. Passenger revenues also saw a 7% increase year-over-year, amounting to $2.6 billion. However, analyst Christopher Danely expressed concerns about Alaska Air’s guidance raise for FY23 capacity, which remained unchanged for CASM-ex (Cost per Available Seat Mile), given the softening U.S. domestic fares, expanding U.S. domestic capacity, and potential discrepancies in the company’s internal expense forecasting.
08. Nutrien Ltd. (NYSE:NTR)
Number of Hedge Fund Holders: 32
Nutrien Ltd. (NYSE:NTR) is an agricultural raw materials firm that sells urea, nitrates, and potash products. On July 26, HSBC analyst Santhosh Seshadri reiterated his position on Nutrien Ltd. (NYSE:NTR) as a Hold, but he revised the price target down from $81 to $72.
ClearBridge Investments made the following comment about Nutrien Ltd. (NYSE:NTR) in its Q3 2022 investor letter:
“However, we believe this is exactly the kind of environment that separates the highest-quality companies from their peers and allows them to strengthen their competitive positioning. For example, Nutrien Ltd. (NYSE:NTR), a Canadian fertilizer company, was a top contributor during the quarter. While the war in Ukraine and economic sanctions on Russia have significantly reduced the output of two of the world’s largest agricultural producers, Nutrien has benefited from a strong global agricultural cycle and from farmers seeking to increase their output and capitalize on higher agricultural prices.”
07. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 52
Texas Instruments Incorporated (NASDAQ:TXN) is a renowned semiconductor design and manufacturing company. Their historical significance in the electronics industry stems from their groundbreaking achievement of creating the first commercial silicon transistor in 1954. This technological milestone revolutionized electronics by providing a more efficient and reliable alternative to previous transistor technologies. As pioneers in the development of integrated circuits, commonly known as chips or microchips, Texas Instruments Incorporated (NASDAQ:TXN) played a vital role in the miniaturization of electronic components. This breakthrough paved the way for the growth of modern computing and communication devices, shaping the trajectory of technology in the 20th and 21st centuries.
According to the latest report from Mizuho Securities, issued on July 26, analyst Vijay Rakesh has made adjustments to the price target for Texas Instruments Incorporated (NASDAQ:TXN), bringing it down to $181 from $185. This revision suggests that the analyst has reassessed the company’s potential valuation and arrived at a more conservative target compared to previous estimates. The decision to lower the price target may have been influenced by various factors, such as changes in the industry landscape, the company’s recent financial performance, or macroeconomic trends affecting the semiconductor sector.
06. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders: 59
In their recent research note issued on July 26, Pivotal Research lowered the target price on Spotify Technology S.A. (NYSE:SPOT) from $145 to $140. Despite the downward adjustment in the price target, the research firm maintained its “Hold” rating on the stock. This action suggests that Pivotal Research has revised its outlook for Spotify Technology S.A. (NYSE:SPOT) valuation, projecting a slightly lower target price compared to its previous assessment. The decision to maintain the “Hold” rating indicates that, in the analysts’ view, the stock’s current performance is expected to be in line with market expectations, and they do not anticipate significant upside potential in the near term.
Baron Partners Fund made the following comment about Spotify Technology S.A. (NYSE:SPOT) in its Q4 2022 investor letter:
“Spotify Technology S.A. (NYSE:SPOT) is a leading global digital music service offering on-demand audio streaming through paid premium subscriptions and an ad-supported model. Shares of Spotify were down on weakness in the company’s fourth quarter gross margin guide. We still view Spotify as a long-term winner in music streaming with potential to reach more than one billion active monthly users. Subscriber additions remain strong, price increases seem likely, and cost discipline has become a bigger focus.”
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Disclosure: None. Analysts Are Cutting Price Targets of These 10 Stocks is originally published on Insider Monkey.