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 on Wall Street Lower Ratings for These 10 Stocks.
05. Medical Properties Trust, Inc. (NYSE:MPW)
Price Reaction after the Downgrade: -0.12 (-1.63%)
On August 31, Medical Properties Trust, Inc. (NYSE:MPW), a significant player in the healthcare real estate sector, encountered a notable shift in its market position. This transformation was initiated by a downgrade in its stock rating by Mizuho, a strategic move that marked a substantial alteration in perspective regarding the company’s prospective performance. Formerly categorized as a “Buy,” a designation indicating positive expectations for the stock’s potential, Medical Properties Trust, Inc. (NYSE:MPW) rating was revised to “Neutral” by Mizuho. This adjustment highlights a more balanced viewpoint, implying that the stock’s growth trajectory may align more with prevailing market trends. The immediate market response became apparent as the stock’s price experienced a decline of -1.6%, ultimately reaching $7.22.
Miller Value Partners Income Strategy made the following comment about Medical Properties Trust, Inc. (NYSE:MPW) in its second quarter 2023 investor letter:
“Medical Properties Trust, Inc. (NYSE:MPW) gained after it reported 1Q23 revenues of $350.2MM, -14.5% Y/Y, below consensus of $352.5MM, and Normalized Funds from Operations (FFO)/share of $0.37, -21.3% Y/Y, slightly below consensus of $0.38. The company’s CEO noted “The terms of recently announced transactions including Springstone, the acquisition by CommonSpirit of Steward’s Utah operations, Healthscope, and Prime, have valued our hospital investments near and in excess of our original purchase prices. This confirmation of our underwritten asset values by sophisticated market participants, as well as our existing liquidity and prudently planned debt structure, position us to have no debt maturities until 2025.” The REIT saw a modest uptick in leverage during the quarter, with the company’s Adjusted Net Debt to Annualized Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (EBITDAre) ratio standing at 6.5x as of quarter-end, compared to 6.4x as of 12/31/22. Management maintained its quarterly dividend of $0.29/share, or a 12.5% annualized yield. Management updated full-year 2023 (FY23) guidance for Normalized FFO/share of $1.56 (vs. prior guidance for $1.58), implying a P/FFO multiple of 5.9x, to account for the impact of announced deleveraging asset sales (and expected $1.4B in debt reduction).”
04. Ero Copper Corp. (NYSE:ERO)
Price Reaction after the Downgrade: -0.83 (-3.86%)
On August 31, Ero Copper Corp. (NYSE:ERO), a prominent player in the mining industry, found itself amid a significant market shift. This transformation was initiated by a deliberate decision from Scotiabank to downgrade its stock rating, signifying a notable change in perspective regarding the company’s potential performance. Having previously held the distinction of being a “Sector Outperform,” which pointed towards positive expectations for the stock’s performance within its sector, Ero Copper Corp. (NYSE:ERO) rating was adjusted down to “Sector Perform” by Scotiabank. This recalibration signifies a more impartial viewpoint, indicating that the trajectory of the stock’s growth might align more closely with the broader performance trends prevalent in its sector. The immediate reaction from the market was mirrored in the stock’s present value of $20.68, which underwent a decline of -3.9%.
03. Palantir Technologies Inc. (NYSE:PLTR)
Price Reaction after the Downgrade: -1.35 (-8.27%)
On August 31, Palantir Technologies Inc. (NYSE:PLTR), a prominent figure in the technology sector, encountered a significant transformation in its market position. This change was prompted by a strategic decision from Morgan Stanley to downgrade its stock rating, marking a notable shift in perspective regarding the company’s potential performance. Having been categorized as “Equal Weight,” which indicated a balanced assessment of the stock, Palantir Technologies Inc. (NYSE:PLTR) rating was revised to “Underweight” by Morgan Stanley. This shift in perspective implies a more cautious viewpoint, suggesting that the stock’s growth trajectory may now face headwinds compared to prevailing market expectations. Of particular significance, the price target for the stock also changed from $8.00 to $9.00 as part of the downgrade. This adjustment adds an additional layer of insight, highlighting the comprehensive evaluation carried out by analysts as they gauge the stock’s potential within the market. The immediate market response was discernible in the stock’s current price of $14.98, which experienced a substantial decline of -8.3%.
02. Gaotu Techedu Inc. (NYSE:GOTU)
Price Reaction after the Downgrade: -0.3600 (-11.11%)
On August 31, Gaotu Techedu Inc. (NYSE:GOTU), a significant player in the education technology sector, experienced a notable market shift. This shift was instigated by a downgrade in its stock rating by CLSA. Previously classified as an “Outperform,” indicating positive expectations for the stock’s potential, Gaotu Techedu’s rating was altered to “Underperform” by CLSA. This shift underscores a more cautious viewpoint, suggesting that the stock’s growth trajectory might now face challenges compared to prevailing market expectations. Significantly, the price target for the stock also experienced a change from $3.32 to $3.30 as part of the downgrade. This adjustment adds a layer of insight, demonstrating the comprehensive analysis conducted by analysts as they evaluate the stock’s potential within the market. The immediate market response became evident through the stock’s current price of $2.88, which encountered a significant decrease of -11.1%.
Here is what Bireme Capital has to say about Gaotu Techedu Inc. in its Q3 2021 investor letter:
“GSX (now GOTU), a Chinese education company which was accused of falsifying a majority of its online customer base, has seen its share price whipsaw in 2021 from $50 to $140 to today’s price of below $4. The plunge began in early March, as GSX announced earnings results that included a wider quarterly loss and a 30% weaker Q2 revenue forecast than Wall Street had expected.
Then a few weeks later rumors surfaced of an impending regulatory crackdown on for-profit education companies in China. Simultaneously one of their largest shareholders, Archegos Capital Management, was collapsing. Archegos’s margin calls forced their brokers to sell massive blocks of shares in various tech and media stocks, including GSX, which seems to have hastened the price decline.The final nail in the coffin for GSX came on 7/23, when Chinese regulators banned for-profit after-school tutoring.”
01. Dollar General Corporation (NYSE:DG)
Price Reaction after the Downgrade: -19.16 (-12.15%)
On August 31, Dollar General Corporation (NYSE:DG), a significant player in the retail sector, underwent a substantial market transformation. This shift was initiated by a downgrade in its stock rating by Oppenheimer, a strategic decision that marked a noteworthy change in perspective regarding the company’s potential performance. Formerly characterized as an “Outperform,” indicating positive expectations for the stock’s potential, Dollar General Corporation (NYSE:DG) rating was revised to “Market Perform” by Oppenheimer. This adjustment signifies a more neutral viewpoint, suggesting that the stock’s growth trajectory might now align more closely with the prevailing market trends. The immediate market response was reflected in the stock’s current price of $138.50, experiencing a significant decrease of -12.2%.
Here is what Aristotle Atlantic Partners has to say about Dollar General Corporation (NYSE:DG) in its Q2 2023 investor letter:
“We sold our position in Dollar General, following a weaker-than-expected quarterly earnings report and a lowered earnings outlook. The company’s core consumer, while still employed, continues to be impacted by higher inflation. Additionally, we saw the negative impacts of lower-than-expected tax refunds and reductions in the Federal Supplemental Nutrition Assistance Program (SNAP). Dollar General remained committed to spending on customer experience and investing in price to help their customers through the tougher economic environment, as a result, reducing the earnings guidance by a greater amount than the sales reductions.”
You can also take a peek at 15 Most Profitable Cutting Edge Technologies That Will Make You Rich and Dow 30 Stocks List: Ranked By Hedge Fund Bullishness Index.
