In this article, we discuss the 10 stocks that analysts are cutting price targets of. If you want to skip our detailed analysis of these stocks, go directly to Analysts are Cutting Price Targets of These 5 Stocks.
Two top economic experts have warned that there are signs that the United States economy is headed towards a recession as research shows drops in performance similar to the ones seen before the 2009 financial crisis. David Blanchflower, a former Bank of England member, has authored a study with Alex Bryson that contends that supportive fiscal policies are masking weaknesses in the economy. The claim is surprising since new numbers indicate that the unemployment rate is below 5% and the GDP soared to a record 6.7% in the second quarter.
Larry Summers, a former Treasury secretary, has also voiced his fears regarding the crisis, noting that out of control prices in the US would have an impact on inflation and interest rates across the world. Earlier this week, the International Monetary Fund also slashed the growth outlook for the US economy to 6% from 7% citing supply chain problems and weakening consumer spending in the third quarter. An escalating property crisis in China because of the collapse of property giant Evergrande is also compounding problems for the global economy.
Investors who want to prepare their portfolios for the coming weeks and months should monitor stocks that are the immediate losers in this environment. Some of the prominent stocks that analysts just cut the price targets of include Caterpillar Inc. (NYSE:CAT), BlackRock, Inc. (NYSE:BLK), and Ball Corporation (NYSE:BLL), among others discussed in detail below. IMF expects inflation levels to scale back to pre-pandemic levels by 2022, but has forecast that prices might still remain high and push interest rates higher.
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Our Methodology
With this context in mind, here is our list of the 10 stocks that analysts are cutting price targets of. All the firms listed below have had their price targets lowered by an investment advisory this week.
The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey. The list is compiled according to the number of hedge funds having stakes in each firm.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Analysts are Cutting Price Targets of These Stocks
10. Airgain, Inc. (NASDAQ:AIRG)
Number of Hedge Fund Holders: 8
Airgain, Inc. (NASDAQ:AIRG) markets electronic components used by original equipment manufacturers. Like other firms, it has been affected by the rising production costs due to supply chain disruptions across the world. It is placed tenth on our list of 10 stocks that analysts are cutting price targets of. The company narrowly beat market expectations on earnings per share in the second quarter but missed revenue estimates by over $1 million.
Cowen analyst Karl Ackerman downgraded Airgain, Inc. (NASDAQ:AIRG) stock to Market Perform from Outperform on October 14 and lowered the price target to $14 from $18, highlighting that tech supply chains were becoming more cautious.
At the end of the second quarter of 2021, 8 hedge funds in the database of Insider Monkey held stakes worth $23.8 million in Airgain, Inc. (NASDAQ:AIRG), down from 9 in the previous quarter worth $23.2 million.
Just like Caterpillar Inc. (NYSE:CAT), BlackRock, Inc. (NYSE:BLK), and Ball Corporation (NYSE:BLL), Airgain, Inc. (NASDAQ:AIRG) is one of the stocks that is feeling the heat of an economic downturn.
9. BeiGene, Ltd. (NASDAQ:BGNE)
Number of Hedge Fund Holders: 21
Brukinsa, a drug developed by BeiGene, Ltd. (NASDAQ:BGNE) for the treatment of patients with mantle cell lymphoma, was approved by Australian drug authorities last week. In September, a European medicine body had also adopted a positive view on the product, resulting in a 13% boost to the share price. However, the fundamentals of the firm do not make for pleasant reading. It missed market estimates on earnings per share and revenue in the second quarter. The firm is ranked ninth on our list of 10 stocks that analysts are cutting price targets of.
The price target on BeiGene, Ltd. (NASDAQ:BGNE) stock was lowered to $414 from $417 by SVB Leerink on October 14 with an Outperform rating maintained. Bernstein had initiated the stock at Outperform with a $431 price target two days earlier.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in BeiGene, Ltd. (NASDAQ:BGNE), up from 19 in the preceding quarter worth $6.2 billion.
In addition Caterpillar Inc. (NYSE:CAT), BlackRock, Inc. (NYSE:BLK), and Ball Corporation (NYSE:BLL), BeiGene, Ltd. (NASDAQ:BGNE) is one of the stocks that investors should keep an eye on in the coming weeks and months.
8. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)
Number of Hedge Fund Holders: 21
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is placed eighth on our list of 10 stocks that analysts are cutting price targets of. The share price of the firm has been in decline since it missed market expectations on revenue by over $9 million in the second quarter and lowered guidance for the fiscal year. The company is also in a management crisis. In September, Elena Ridloff, the CFO of the firm, stepped down from her position to join another pharma firm.
Morgan Stanley analyst Jeffrey Hung downgraded ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) stock to Equal Weight from Overweight on October 14. The price target was reduced to $20 from $27.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), down from 33 in the previous quarter worth $1.4 billion.
Along with Caterpillar Inc. (NYSE:CAT), BlackRock, Inc. (NYSE:BLK), and Ball Corporation (NYSE:BLL), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is one of the stocks affected by the slowdown in post-pandemic economic recovery.
In its Q1 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) was one of them. Here is what the fund said:
“Acadia Pharmaceuticals Inc. was among the top detractors from performance. Acadia Pharmaceuticals develops and commercializes small molecule drugs that address unmet medical needs associated with central nervous system disorders. Acadia’s Nuplazid (Pimavansenn) is marketed for treating hallucinations and delusions that accompany Parkinson’ s disease psychosis. Additionally, Nuplazid is being developed to treat hallucinations and delusions related to dementia. The price of Acadia shares fell significantly in response to an FDA notification on March 3 that the agency had identified deficiencies in the drug’ s supplemental new drug application that currently preclude discussion of labeling and post-marketing requirements.”
7. Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Number of Hedge Fund Holders: 21
Bed Bath & Beyond Inc. (NASDAQ:BBBY) stock has slumped by more than 41% over the past twelve months despite a Reddit-fueled rally. It is ranked seventh on our list of 10 stocks that analysts are cutting price targets of. Bank of America had initiated coverage of the stock with an Underperform rating and a price target of $14 in early October. The firm missed market estimates on earnings per share and revenue in the second quarter.
On October 14, investment advisory Morgan Stanley downgraded Bed Bath & Beyond Inc. (NASDAQ:BBBY) stock to Underweight from Equal Weight and lowered the price target to $12 from $18, predicting that the home furnishing industry would decline in 2022.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $363 million in Bed Bath & Beyond Inc. (NASDAQ:BBBY), down from 23 in the previous quarter worth $314 million.
Caterpillar Inc. (NYSE:CAT), BlackRock, Inc. (NYSE:BLK), and Ball Corporation (NYSE:BLL) are some of the stocks that analysts do not view favorably in the short term, alongside Bed Bath & Beyond Inc. (NASDAQ:BBBY).
In its Q2 2021 investor letter, Heartland Advisors, an asset management firm, highlighted a few stocks and Bed Bath & Beyond Inc. (NASDAQ:BBBY) was one of them. Here is what the fund said:
“The gyrations of story stocks touted on message boards have resulted in distortions in the market but on rare occasions have also swept up a few compelling opportunities. Bed Bath & Beyond (BBBY), a national retailer of home goods, babywear and health and beauty products, is one example.
Even before Bed Bath & Beyond made headlines earlier this year when day traders drove the price of shares up in an effort to squeeze short sellers, the company had caught our attention for the results its new management team was delivering since taking over in late 2019.
CEO Mark Tritton, who came to BBBY after a successful tenure at Target, quickly got to work installing new corporate leadership, closing underperforming stores, selling non-core businesses to firm up the balance sheet, and implementing retail best practices across the company. He also worked to improve store efficiency and revamped the company’s online presence.
The moves by Tritton made an impact. In its 2020 fiscal year, BBBY closed 144 under-performing stores, grew new digital customers by 95%, reduced debt by $1 billion, and returned $375 million of capital to shareholders. Despite the meaningful improvements, and the strong performance year-to-date, shares of the retailer are trading at just .35X sales and less than 5X estimated 2022 earnings before interest, taxes, depreciation, and amortization—roughly half of the multiple commanded by peer Williams- Sonoma Inc.
At current valuations, we view BBBY as offering attractive upside as recent improvements gain traction. It appears we’re not alone as executives have also been buying shares in recent months.”
6. Berry Global Group, Inc. (NYSE:BERY)
Number of Hedge Fund Holders: 37
Berry Global Group, Inc. (NYSE:BERY) has recently announced that it will be investing $110 million to expand foodservice packaging operations in North America. The announcement came after Hurricane Ida disrupted mill operations in Louisiana and led to supply chain problems for the firm. The company beat market expectations on earnings per share and revenue in the second quarter. It is placed sixth on our list of 10 stocks that analysts are cutting price targets of.
Investment bank Wells Fargo maintained an Overweight rating on Berry Global Group, Inc. (NYSE:BERY) stock but lowered the price target to $78 from $80 on October 14. Mizuho had initiated coverage of the shares with a Neutral rating and a $70 target a day earlier.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Eminence Capital is a leading shareholder in Berry Global Group, Inc. (NYSE:BERY) with 4.5 million shares worth more than $293 million.
Caterpillar Inc. (NYSE:CAT), BlackRock, Inc. (NYSE:BLK), and Ball Corporation (NYSE:BLL) are some of the stocks that analysts are not particularly bullish on, just like Berry Global Group, Inc. (NYSE:BERY).
In its Q4 2020 investor letter, Rhizome Partners, an asset management firm, highlighted a few stocks and Berry Global Group, Inc. (NYSE:BERY) was one of them. Here is what the fund said:
“Berry Global is the “Rodney Dangerfield” of value investments. The company recently issued $750mm worth of 2026 debt at 1.57% and used the proceeds to pay down higher coupon debt. The spread between the debt and equity yield is about 10%. Something is mispriced. In 2020, Berry had generated “bond-like” cashflows and had paid down almost $1 billion of debt. The market simply yawned. We keep hearing that institutional investors will not touch Berry until it reduces leverage below 4x EBITDA. Perhaps Berry will work like Griffin in that once they reduce leverage below 4x and starts to show 4-6 quarters of 2% organic growth, the shares may move “violently” to the upside.”
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Disclosure. None. Analysts are Cutting Price Targets of These 10 Stocks is originally published on Insider Monkey.
