Analysts Are Downgrading These 10 Stocks

Published May 22, 2023 at 6:44 am EDT Updated September 7, 2026 at 11:56 am EDT

In this article, we will discuss the 10 stocks recently downgraded by analysts.

In recent years, inflation has consistently exceeded the Federal Reserve’s target of 2% amid increased prices in commodities such as oil, copper, soybeans, and corn, reported. According to Wells Fargo Advisors weekly market commentary, this rise in commodity prices directly impacts average Americans, as they regularly encounter higher costs at the gas pump and grocery stores. Consumer sentiment is often influenced by gasoline prices, especially when they are on the rise. In the past few decades, as inflation and interest rates decreased from their peak levels in the early 1980s, the Federal Reserve has primarily focused on “core” inflation, which excludes food and energy prices. The rationale behind this approach is that monetary policy has limited influence over food and energy prices. Grain prices are influenced by various factors, including weather conditions in different regions around the world, making them less responsive to interest rate adjustments or changes in the money supply. Similarly, the oil market has often been subject to the impact of natural events like hurricanes, which can disrupt production and affect prices. Hence, monetary policy decisions have limited influence on natural phenomena.

However, the demand for oil and gasoline is directly tied to economic expansions and contractions, which are influenced by the Federal Reserve’s monetary policy decisions and the market’s perception of their impact on demand. For instance, the recent decline in oil prices can be attributed, in part, to market expectations of a global economic slowdown and a potential recession in many developed countries. China’s slower-than-anticipated recovery has also contributed to the downward pressure on oil prices and other commodities.

According to Bloomberg, markets are experiencing anxiety due to concerns that leaders in Washington may not be able to prevent a historic default before the June 1 deadline. This uncertainty is unsettling investors and impacting market sentiment. As a result, yields across the US Treasury curve increased on May 16. Specifically, the yield on 30-year notes reached approximately 3.9%, marking its highest level since the regional bank turmoil in early March. The rising yields indicate that investors demand higher returns as they perceive an increased risk in holding long-term US government debt.

The Estée Lauder Companies Inc. (NYSE:EL), The Walt Disney Company (NYSE:DIS), and PayPal Holdings, Inc. (NASDAQ:PYPL) were among the notable stocks that analysts recently downgraded. The Estée Lauder Companies Inc. (NYSE:EL) was downgraded primarily due to concerns about the slow recovery in China and the travel retail segment in Asia, where inventories are increasing. At the same time, ratings for The Walt Disney Company (NYSE:DIS) were cut due to the deterioration of the company’s outlook for direct-to-consumer subscribers and linear TV. Check out the complete article to see the details of these downgrades.

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10. Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH)

Number of Hedge Fund Holders: 7

Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH) is a Georgia-based home care platform company offering private duty nursing, adult home health and hospice, and home-based pediatric therapy in the United States.

On May 12, Raymond James lowered its rating on Aveanna Healthcare Holdings Inc. from Strong Buy to Market Perform without providing a specific price target. According to the analyst’s research note, although Aveanna Healthcare Holdings Inc. Q1 results surpassed expectations, the company’s performance still falls short of the necessary levels to maintain its equity value. The firm highlights that Aveanna Healthcare Holdings Inc. metrics continue to pose high risks, particularly with a debt-to-EBITDA ratio of 11.1 times. Additionally, there is limited visibility regarding the substantial improvement in EBITDA required to establish an adequate margin of error, as stated by the analyst.

09. SJW Group (NYSE:SJW)

Number of Hedge Fund Holders: 12

SJW Group (NYSE:SJW) provides water utility services in the United States. It specializes in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater services.

Wells Fargo revised its rating on SJW Group from Equal Weight to Underweight on May 12 while maintaining an unchanged price target of $76. According to the analyst’s research note, SJW Group shares are trading at valuation multiples similar to larger water utility companies. However, the analyst believes a slight discount would be more appropriate given the stock’s ongoing “show me” narrative, accompanied by regulatory uncertainties that have not yet been fully resolved. The analyst also mentions that SJW Group management is rebuilding investor confidence following strategic missteps. As a result, Wells Fargo predicts that SJW Group shares will offer one of the lowest potential total returns among the five water utilities it covers over the next 12-18 months.

08. Stantec Inc. (NYSE:STN)

Number of Hedge Fund Holders: 13

According to Raymond James analyst Frederic Bastien’s research note, Stantec Inc. (NYSE:STN) rating has been downgraded from Strong Buy to Outperform. However, the price target remains at C$90. The analyst stated on May 12 that Stantec’s shares have already exhibited strong performance, which aligns with the firm’s belief that the market can no longer overlook the company’s improving and consistently positive performance, noteworthy ESG (Environmental, Social, and Governance) attributes, and promising future. This downgrade suggests that while the analyst still considers Stantec Inc. attractive, the previous “Strong Buy” recommendation has been adjusted to an “Outperform” rating.

07. Diageo plc (NYSE:DEO)

Number of Hedge Fund Holders: 23

Diageo plc (NYSE:DEO), an alcoholic beverage company based in London, is the owner of several distilleries. The company is responsible for manufacturing a majority of the total production of Scotch whisky and boasts a portfolio of over 24 brands, including Johnnie Walker, J&B, and Vat 69.

On May 12, in a research note, Jefferies downgraded Diageo plc (NYSE:DEO) from Buy to Hold and reduced the price target from $200 to $190. The analyst explains that the downgrade results from a less optimistic short-term outlook for Diageo plc (NYSE:DEO) primary market, the United States. The firm anticipates a normalization of industry growth following the extraordinary period during the pandemic and potential risks associated with inventory realignment in a slower macroeconomic environment. Recent data suggest a deceleration in growth within the U.S. market, prompting Jefferies to revise its recommendation.

Here is what ClearBridge Aggressive Growth Strategy has to say about Diageo plc (NYSE:DEO) in its Q2 2022 investor letter:

“Diageo is a leading global distiller and brewer which addresses the large ($500 billion-plus) and fragmented market for spirits. With its portfolio of premium products, we see Diageo as a steady compounder poised for sustained, above industry growth. The company’s margins remain below pre-COVID levels in a number of geographies and should continue to recover as channels reopen, though we also see opportunities for consistent margin expansion beyond this period of rebound. The spirits category is not immune to weaker consumer spending nor inflation; however the majority of Diageo’s profits are from the U.S. market, which has historically been more resilient. Additionally, the company has a number of margin levers to help combat rising input costs.”

06. Fox Corporation (NASDAQ:FOXA)

Number of Hedge Fund Holders: 34

Fox Corporation (NASDAQ:FOX) is a news, sports, and entertainment company. Fox Corporation Class A (NASDAQ:FOXA) shares carry additional voting rights compared to the regular common shares of Fox Corporation. Essentially, FOXA shares give shareholders more influence over the company’s decision-making processes.

Wells Fargo analyst Steven Cahall downgraded Fox Corporation from Overweight to Equal Weight on May 12, with a lowered price target of $35 (previously $44). The analyst explains that the firm had a positive outlook on Fox Corporation when its EBITDA was growing, the potential of sports betting appeared promising, and its balance sheet seemed appealing in the context of rising interest rates. However, looking ahead, the analyst finds fewer reasons for excitement and believes there are diminished prospects for the company.

05. The Estée Lauder Companies Inc. (NYSE:EL)

Number of Hedge Fund Holders: 44

The Estée Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. On May 12, Argus analyst John Staszak downgraded The Estée Lauder Companies Inc. from Buy to Hold. The downgrade is primarily due to concerns about the slow recovery in China and the travel retail segment in Asia, where inventories are increasing. The analyst also highlights The Estée Lauder Companies Inc. recent earnings miss and guidance reduction. As a result, Argus has revised its earnings per share (EPS) estimates for FY23 to $3.80 (down from $6.00) and for FY24 to $6.00 (down from $7.20). However, the firm mentions that if there is an earlier-than-expected recovery in China and the travel retail segment, it will reconsider adding the stock back to its Buy list.

ClearBridge All Cap Growth Strategy made the following comment about The Estée Lauder Companies Inc. in its Q4 2022 investor letter:

“The Estée Lauder Companies Inc., which manufactures and markets cosmetics, fragrances, skin and hair care products across a number of well-known global brands including Clinique, MAC and Bobbi Brown, adds to our group of secular growers. Estee Lauder is a global leader in the prestige beauty space, which has outgrown the broader home and personal care category since 2010 and has historically been recession resilient. The company has substantial brand and pricing power and is over indexed to the highly profitable prestige skin care category. We believe the company’s most recent earnings report and 2023 guidance update, which was cut significantly due to uncertainty over China’s zero-COVID policy (China and travel retail are key growth drivers), provided an attractive entry point. At this point, we believe the stock has been significantly derisked and could see potential upside from a China recovery.”

04. Twilio Inc. (NYSE:TWLO)

Number of Hedge Fund Holders: 48

In a research note issued on May 12, Mizuho downgraded Twilio Inc. (NYSE:TWLO) from Buy to Neutral and adjusted the price target from $90 to $55. The analyst explains that Twilio Inc. Q1 guidance, projecting a 4%-5% year-over-year revenue growth, fell significantly below the consensus estimate of 11%. This disparity is attributed to the challenging macroeconomic conditions and the ongoing impact of tough comparisons from the cryptocurrency sector, which are expected to continue exerting pressure on growth in the near term. Mizuho anticipates subdued growth for Twilio Inc. in the near term and does not foresee any immediate catalysts that would drive the stock’s performance.

Aristotle Atlantic Focus Growth Strategy made the following comment about Twilio Inc. in its Q4 2022 investor letter:

“We sold Twilio Inc. (NYSE:TWLO) and thereby reduced our subsector weight in software. The company reported a decent third quarter, but disappointed on fourth quarter 2022, full year 2023, and long-term guidance. The company is seeing macroeconomic headwinds and a slowdown spreading from technology, social media and cryptocurrency to retail and e-commerce. The other negative disclosure and a driver of this gross margin “miss” was that Twilio’s software sales are not accelerating at the rate that we expected. We are disappointed with this lower topline and low operating margin improvement guidance. The business transformation is taking longer than expected, and there is the heightened possibility that the new software growth could be stifled by more formidable competition as Twilio has made too many missteps.”

03. Brookfield Corporation (NYSE:BN)

Number of Hedge Fund Holders: 49

Keefe Bruyette analyst Michael Brown downgraded Brookfield Corporation (NYSE:BN) from Outperform to Market Perform on May 12 and adjusted the price target from $45 to $39. According to the analyst’s research note, although Brookfield Corporation reported a beat in its recent quarter due to realized carried interest, the overall performance was relatively in line with expectations. The analyst expresses concerns about the early stages of real estate stress and believes that these concerns will continue to negatively impact the company’s shares. Keefe Bruyette does not anticipate any catalysts in the near term that would narrow the valuation gap between the stock and its net asset value. As a result, the firm expects the shares to remain range-bound.

02. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 99

The Walt Disney Company on May 10 reported a FQ2 non-GAAP EPS of $0.93, missing Wall Street estimates by $0.01. Revenue over the period increased 13.4% year-over-year to $21.82 billion, in-line with market consensus. The average monthly revenue generated per paid subscriber of Disney+ in the domestic market rose from $5.95 to $7.14, attributed to a surge in average retail pricing.

On May 12, Wolfe Research analyst Peter Supino downgraded Disney from Outperform to Peer Perform without providing a specific price target. In a research note, the analyst explains that the company’s outlook for direct-to-consumer subscribers and linear TV has deteriorated. The firm expresses skepticism regarding Disney’s plan to achieve higher subscriber numbers, implement price increases, and reduce costs, considering it contradictory. Wolfe Research further highlights concerns about the risky nature of Disney’s subscriber forecasts for Disney+ and the worsening outlook for linear TV. Additionally, the $2.5 billion in cost reductions that Disney aims to achieve are now included in consensus estimates.

01. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Fund Holders: 115

PayPal Holdings, Inc. is a payment platform provider enabling cross-border transactions for businesses and consumers. It is headquartered in San Jose, California. PayPal Holdings, Inc. is another company facing the heat from inflation, as it revealed in February 2023 that consumer spending slowed down during last year’s fourth quarter. Exane BNP Paribas analyst Alexandre Faure downgraded PayPal from Outperform to Neutral on May 12.

Paypal Holdings, Inc. was mentioned in the fourth-quarter 2022 investor letter of Renaissance Investment Management. Here is what it is:

“Another underperformer in the quarter was PayPal Holdings, Inc.. Despite reporting solid third quarter operating results and announcing new payment agreements with both Apple and Amazon.com, the company guided for a slowdown in e-commerce activity, partly reflecting weakened consumers who are dealing with heightened inflation. However, we still expect growth in PayPal’s core payments platforms to improve in upcoming quarters, driven by easier year-over-year comparisons.”

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