In this article, we discuss the 5 stocks receiving downgrades from analysts. If you want to see more such stocks on the list, go directly to Analysts Are Downgrading These 10 Stocks.
05. Citizens Financial Group, Inc. (NYSE:CFG)
Number of Hedge Fund Holders: 45
Citizens Financial Group, Inc. (NYSE:CFG) reported lower-than-expected earnings in the first quarter due to a decline in deposits and higher provisions for bad loans. The bank also lowered its outlook for net interest income, a measure of earnings from lending, from 11% to 14% forecasted in January to a range of 5% to 7% for the year.
Citizens Financial Group, Inc. (NYSE:CFG) has been downgraded by BofA from Buy to Neutral on April 20, with a new price target of $33, down from $37, due to the company’s updated FY23 NII guidance, which failed to meet expectations. The firm does not expect the stock to sustain outperformance, despite any potential support from valuation, and believes better risk/reward opportunities are available elsewhere in the group, according to the analyst’s note to investors.
04. Bath & Body Works, Inc. (NYSE:BBWI)
Number of Hedge Fund Holders: 46
Bath & Body Works, Inc. (NYSE:BBWI) revealed its fiscal fourth-quarter 2022 financial results on February 23, 2023, which came in higher than the Wall Street consensus with earnings per share of $1.86 compared to the expected $1.63. Despite exceeding expectations in earnings, Bath & Body Works, Inc. (NYSE:BBWI) experienced a 5% decline in revenue during the fourth quarter, generating $2.889 billion compared to $3.027 billion in the previous year. To improve its operating efficiency, Bath & Body Works, Inc. (NYSE:BBWI) announced an enterprise-wide plan to decrease expenses and cut costs. The company aims to achieve $200 million in annual cost savings, with over 50% of those savings expected to impact the second half of 2023. This initiative is a promising step towards improving the company’s financial health and growth prospects.
In a research note to investors issued on April 20, Piper Sandler analyst Korinne Wolfmeyer downgraded Bath & Body Works, Inc. (NYSE:BBWI) from Overweight to Neutral, with a new price target of $37, down from $48. The company’s results are likely to align with management’s guidance from the fiscal Q4 earnings call due to ongoing margin pressures, according to the analyst. Despite the stock’s relatively low valuation, current estimates are deemed to be overly optimistic, leaving little potential for share price growth from current levels, says the firm.
03. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 48
Sea Limited (NYSE:SE) was downgraded to Neutral from Buy by UBS analyst Navin Killa on April 20, who lowered the price target from $105 to $92. Killa believes that competition in the e-commerce industry is growing, and there is no clear sign of a gaming recovery. Furthermore, despite facing competition headwinds and experiencing slower near-term growth, Sea Limited (NYSE:SE) is trading at a premium valuation to its peers, making it less attractive as an investment, according to the analyst’s research note.
02. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 74
On April 20, a financial analyst from Redburn downgraded The Charles Schwab Corporation (NYSE:SCHW) from Neutral to Sell. As of Thursday, Charles Schwab’s stock price closed at $54.01, having decreased by 1.26% in the last month and 24.18% in the last year. According to Investing Pro, The Charles Schwab Corporation (NYSE:SCHW) fair value is $79.85, which represents a potential upside of 44%. However, the fair value comes with a medium degree of uncertainty, as per InvestingPro.
01. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 91
On April 20, Tudor Pickering analyst Matt Portillo downgraded Tesla, Inc. (NASDAQ:TSLA) to Sell from Hold. Tudor Pickering analyst Matt Portillo believes that Tesla’s focus on boosting sales at the expense of profits could jeopardize its higher stock-market valuation. The downgrading of stock from hold to sell is the first such downgrade since mid-January.
On April 21, following the downgrade, Tesla, Inc. (NASDAQ:TSLA) shares saw a steep decline of 9.75%, reaching lows not seen since January, as the electric vehicle (EV) manufacturer’s gross margins dipped below 20% for the first time in nearly three years. Wall Street analysts responded to the earnings report that showcased a drop in profits from $3.3 billion to $2.5 billion, resulting in numerous estimate cuts amid mounting concerns over margin pressure. The pressure has been attributed to Tesla’s decision to slash prices six times this year, with two cuts being implemented this month, in a bid to stimulate demand for its EVs.
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