In this article, we will take a look at the 5 stocks that were recently downgraded by analysts. If you want to see some other stocks receiving downgrades, go directly to Analysts Are Downgrading These 10 Stocks.
5. Farfetch Limited (NYSE:FTCH)
Number Of Hedge Fund Holders: 45
Founded in 2007, Farfetch Limited (NYSE:FTCH) is a British-Portuguese online luxury fashion retail platform that provides clothes, shoes, accessories, and jewelry from over 700 global brands. The company also offers a mobile application that can be accessed in multiple languages.
On August 2, Cowen analyst Oliver Chen downgraded Farfetch Limited (NYSE:FTCH) to Market Perform from Outperform with a price target of $9, down from $11. Although the analyst sees the stock’s current valuation as fair, he also believes that there is a lack of upside to estimates as the company works on profitability and customer retention. He adds that Farfetch Limited (NYSE:FTCH) seems to be facing headwinds from both China and Russia, while navigating a promotional environment.
Among the hedge funds tracked by Insider Monkey, 45 funds were long Farfetch Limited (NYSE:FTCH) at the end of Q1 2022, compared to 47 funds in the previous quarter. Stephen Mandel’s Lone Pine Capital is the biggest stakeholder of the company, with 17.20 million shares worth $260 million.
Here is what Polen U.S. Small Company Growth Fund has to say about Farfetch Limited (NYSE:FTCH) in its Q1 2022 investor letter:
“We also initiated a position in global luxury fashion e-commerce marketplace Farfetch in the first quarter and took advantage of meaningful weakness in the company’s share price during the period. Farfetch previously had too large a market cap for the Portfolio, but it has since moved to a level where it’s appropriate to own it – both in this Portfolio and in our smid-cap strategy. The company’s fundamentals remain attractive as indicated by the compelling results Farfetch reported in February.
The company remains an early mover with “the world’s only truly global marketplace for luxury at scale”. Farfetch has broader reach around the world with a diversity of brands that is much larger than its competitors. Many of the items it sells are exclusive. Our research shows that its brand assortment, brand image, geographic breadth, an inventory-light business model, a more compelling offering for luxury partners, and artificial intelligence are all competitive edges for the company. We believe Farfetch is well-positioned for the continued market share shift from offline to online in this category. The personal luxury goods market has trailed other categories in online penetration, but consumer behaviors and preferences shifted as a result of the pandemic creating more comfort with purchasing goods like this online. Changed behavior and the general shift to a higher portion of Millennial and Gen Z luxury shoppers supports this continued shift as does the growth in emerging market demand.”
