In this article, we discuss the 5 stocks that were recently downgraded by analysts. If you want to see some other stocks receiving downgrades, go directly to Analysts Just Turned Bearish on These 10 Stocks.
5. Bank OZK (NASDAQ:OZK)
Number of Hedge Fund Holders: 22
Wells Fargo downgraded Bank OZK (NASDAQ:OZK) from “Overweight” to “Equal Weight” on Thursday, July 7, 2022. Wells Fargo analyst Timur Braziler thinks that the recessionary fears will keep OZK stock range-bound.
Braziler expressed optimism over the bank’s loan growth but cautioned that Bank OZK (NASDAQ:OZK) would achieve that growth at a higher cost. He also cut his price target for Bank OZK (NASDAQ:OZK) from $58 per share to $42 per share.
4. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 31
United Airlines Holdings, Inc. (NASDAQ:UAL) received a downgrade from Argus on Thursday, July 7, 2022. The research firm downgraded United Airlines Holdings, Inc. (NASDAQ:UAL) from “Buy” to “Hold,” citing elevated fuel costs, lack of pilots and flight cancellations.
Argus analyst John Staszak also lowered his earnings expectations due to these challenges. While Staszak thinks United Airlines Holdings, Inc. (NASDAQ:UAL) is ready to capitalize on the recovery in the airline industry, he anticipates leisure travel demand to level off in the U.S. amid dwindling consumer sentiment.
Meanwhile, United Airlines Holdings, Inc. (NASDAQ:UAL) recently blamed the Federal Aviation Administration (FAA) for increasing flight cancellations. In a letter to employees, the company’s COO Jon Roitman said 75 percent of United Airlines’ cancellations over the last four months occurred due to the traffic handling initiatives of FAA.
3. McCormick & Company, Incorporated (NYSE:MKC)
Number of Hedge Fund Holders: 34
Argus lowered his ratings for McCormick & Company, Incorporated (NYSE:MKC) from “Buy” to “Hold” on Wednesday, July 6, 2022. The downgrade was based on the elevated input costs and comparatively high valuation of the stock.
Separately, McCormick & Company, Incorporated (NYSE:MKC) appeared in the third-quarter 2021 investor letter of investment management firm ClearBridge Investments. Here’s what the firm said about McCormick & Company, Incorporated (NYSE:MKC):
“Within consumer staples, we sold out of Unilever, a great company and sustainability leader that we believe faces margin headwinds as it invests to promote growth, and replaced it with McCormick, a leader in food seasonings and flavors. McCormick is a high-quality business that has lagged recently due to the negative COVID-19 impacts on the business, which provided us with an attractive entry point. The company is also levered to the healthy eating trend, as seasonings are a healthier substitute for sugar and fat.”
2. VMware, Inc. (NYSE:VMW)
Number of Hedge Fund Holders: 52
Raymond James downgraded VMware, Inc. (NYSE:VMW) from “Outperform” to “Market Perform” on Wednesday, July 6, 2022, citing Broadcom’s $61 billion acquisition offer for the company. Raymond James analyst Simon Leopold said that VMware, Inc. (NYSE:VMW) didn’t receive any competing offer during the go-shop period, which expired recently.
Broadcom first disclosed its offer to buy VMware, Inc. (NYSE:VMW) on May 26. The offer included a 40-day period in which potential buyers could place a competing bid on VMware, Inc. (NYSE:VMW). However, the 40-day go-shop period recently came to an end without any alternate buyout proposal.
1. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 89
Union Pacific Corporation (NYSE:UNP) is America’s leading railroad company connecting 23 states. It plays a critical role in the global supply chain by transporting essential materials for industries such as agriculture, automotive and chemical.
Susquehanna downgraded Union Pacific Corporation (NYSE:UNP) from “Positive” to “Neutral” on Wednesday, July 6, 2022. The research firm thinks macro headwinds and capacity challenges could impact volume recovery in the rail industry.
Union Pacific Corporation (NYSE:UNP) also appeared in the first-quarter 2022 investor letter of investment management firm Carillon Tower Advisers published last month. Here’s what the firm said:
“Union Pacific (NYSE:UNP) benefited from rising oil prices, which typically bring more demand for rail shipping as opposed to moving freight by truck. Rail transportation can be much more fuel-efficient than over-the-road trucking.”
You can also take a peek at Top 10 Stock Picks of Randall Smith’s Alden Global and David Abrams’ 2022 Portfolio: Top 10 Stock Picks.
