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.”
4. Caterpillar Inc. (NYSE:CAT)
Number Of Hedge Fund Holders: 54
One of the world’s largest construction-equipment manufacturers, Caterpillar Inc. (NYSE:CAT) is an American Fortune 100 corporation that manufactures and sells construction and mining equipment, diesel and natural gas engines, as well as industrial gas turbines and diesel-electric locomotives.
Bernstein analyst Chad Dillard downgraded Caterpillar Inc. (NYSE:CAT) to Market Perform from Outperform with a $195 price target on August 3. According to the analyst, the stock brings the risk of negative earnings revisions to his 2023 and 2024 estimates of 16% and 39%, respectively. He adds that “several signs point to order growth markedly slowing” in the second half of 2022 and that the company is “too reliant in the current environment on pricing to drive growth.”
According to the Insider Monkey database, 54 hedge funds had a combined value of over $4 billion in Caterpillar Inc. (NYSE:CAT) in Q1 2022. Bill and Melinda Gates Foundation Trust held the most prominent stake, with 7.35 million shares of the company worth $1.638 billion.
Here is what Diamond Hill Large Cap Concentrated Fund has to say about Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter:
“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”
3. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP)
Number Of Hedge Fund Holders: 56
Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is a biopharmaceutical company engaged in the research, development, and marketing of of medicines for rheumatic and other rare diseases.
On August 4, UBS analyst Ashwani Verma downgraded Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) to Neutral from Buy with a price target of $71, down from $137, following its Q2 earnings miss and a cut in guidance. The analyst believes that the outlook provided by company on its Tepezza product appears to be difficult to achieve as the company’s commentary implies that the bulk of its early Tepezza launch success was due to a ‘low-hanging fruit’ in a new market. In the future, its growth is likely to be moderate.
According to Insider Monkey’s database, 56 hedge funds held stakes in Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) at the end of Q1 2022, compared to 58 funds in the preceding quarter. Kurt Von Emster’s VenBio Select Advisor is the biggest stakeholder of the company, with 6.5 million shares worth $683.8 million.
Here is what Carillon Tower Advisers had to say about Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) in their Q1 2021 investor letter:
“Horizon Therapeutics is a biopharmaceutical company whose primary focus is research, development, and marketing of late-stage pharmaceutical products. After experiencing some unfortunate manufacturing hiccups in the later stages of 2020 for its key product Tepezza, which is used in the treatment of thyroid eye disease, the company recently received positive news that should relieve their supply issues going forward. With manufacturing of Tepezza back online after being forced to halt due to Operation Warp Speed’s COVID-19 vaccine production orders, Horizon expects patient treatments to resume in mid-April.”
2. Intel Corporation (NASDAQ:INTC)
Number Of Hedge Fund Holders: 76
On August 2, DZ Bank analyst Ingo Wermann downgraded Intel Corporation (NASDAQ:INTC) to Sell from Hold with a $30 price target. In addition, Moody’s rating outlook for Intel Corporation (NASDAQ:INTC) and Altera was changed to negative from stable at the beginning of August, reflecting the company’s “ongoing challenges to consistently execute on its manufacturing and product development in the face of a weakening macro environment, strong competitive challenges, and supply chain disruptions.”
Based on the data tracked by Insider Monkey, 76 hedge funds were bullish on Intel Corporation (NASDAQ:INTC) in the first quarter of 2022. Baupost Group was the leading stakeholder in Intel Corporation (NASDAQ:INTC) as of Q1 of 2022, with an investment worth $822 million.
Baron Funds, an investment management firm, mentioned Intel Corporation (NASDAQ:INTC) in its first-quarter 2022 investor letter. Here is what they said:
“Intel Corporation (NASDAQ:INTC) capital spending process is guided by a process they appropriately named “copy exactly.” This means that they attempt to “copy exactly” what they have already built and attempt to improve tried and true processes iteratively.”
1. Snowflake Inc. (NYSE:SNOW)
Number Of Hedge Fund Holders: 81
BTIG analyst Gray Powell downgraded Snowflake Inc. (NYSE:SNOW) to Neutral from Buy without a price target on August 2. According to the analyst, his latest field surveys on Snowflake Inc. (NYSE:SNOW) “downticked,” indicating the potential for product revenue growth to slow in the coming quarters. Although the analyst sees a balanced risk/reward for Snowflake shares, he adds that feedback was “not nearly as good as 6 – 12 months ago as customers are becoming increasingly concerned about a weakening economic environment.”
At the close of Q1 2022, 81 hedge funds were eager on Snowflake Inc. (NYSE:SNOW) and held stakes worth $9.73 billion in the company. This is compared to 84 positions in the previous quarter with stakes worth $14.56 billion. Brad Gerstner’s Altimeter Capital Management is the biggest stakeholder of the company, with 17 million shares worth $5.75 billion.
Here is what ClearBridge Aggressive Growth Strategy has to say about Snowflake Inc. (NYSE:SNOW) in its Q2 2022 investor letter:
“Snowflake operates a cloud-based data platform for small and medium-sized businesses and enterprise customers. The company is a key beneficiary of software spending moving to the cloud, as well as the increasing strategic importance of data. With the potential to address the large and growing market for data cloud, a roughly $250 billion plus opportunity by 2026, we see a long runway for growth ahead. Although the company is already profitable, we believe Snowflake still has significant room for free cash flow margin expansion.”
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