In this article, we discuss the 10 stocks that analysts recommend buying despite their earnings miss. If you want to read about some more stocks that analysts recommend buying, go directly to Analysts Say Buy These 5 Stocks Despite Earnings Miss.
The pessimists have been right about the contraction in the United States economy over the past few months, leading to intense debates around a recession and further moderating growth predictions for the second half of the year. Michael Gapen, the chief economist at Bank of America, expects a further 0.5% contraction in the US economy in the third quarter of 2022. He also predicts these contractions to continue into early 2023 despite robust employment and rising wages, as production numbers are starting to take a hit.
News platform Bloomberg has reported that five offbeat indicators that are useful as signposts for a crisis, including employment, consumer spending, personal income, and manufacturing sectors, are all trading down. The concerns around the macro environment have penetrated deep into the growth sector, with earnings of tech giants like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG) all coming under scrutiny since the start of the year.
Other major corporations are also painting a grim near-term picture for the economy. Walmart CEO Doug McMillon recently said that food and fuel inflation was “affecting how customers spend”. Unilever CEO Alan Jope has said that the “threat of recession is starting to impact consumer confidence and change spending patterns and behaviors”. In this overall environment, valuations are undergoing a historic correction, leaving plenty of buying opportunities for shrewd investors as panicked sellers try to exit the market.
Our Methodology
The companies that missed market estimates on earnings for the second quarter of 2022 but were assigned ‘Buy’ ratings by different investment advisors despite the earnings miss were selected for the list. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
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Analysts Say Buy These Stocks Despite Earnings Miss
10. Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Holders: 39
Las Vegas Sands Corp. (NYSE:LVS) owns and runs resorts. The company reported earnings for the second quarter of 2022 on July 20, posting a loss per share of $0.34, missing analyst expectations by $0.05. The revenue over the period was $1 billion, down 10% compared to the revenue over the same period last year and beating analyst estimates by $100 million.
On July 21, Stifel analyst Steven Wieczynski maintained a Buy rating on Las Vegas Sands Corp. (NYSE:LVS) stock and raised the price target to $50 from $46, noting that pent up demand for gaming and casino stocks seemed real.
Among the hedge funds being tracked by Insider Monkey, New York-based firm DE Shaw is a leading shareholder in Las Vegas Sands Corp. (NYSE:LVS), with 950,876 shares worth more than $36 million.
Just like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Las Vegas Sands Corp. (NYSE:LVS) is one of the stocks feeling the heat of an economic slowdown.
9. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 47
SolarEdge Technologies, Inc. (NASDAQ:SEDG) markets semiconductor equipment to the solar industry. The company reported earnings for the second quarter of 2022 on August 3, posting earnings per share of $0.95, smashing analyst expectations by $0.02. The revenue over the period was $727 million, up 51% compared to the revenue over the same period last year but missing analyst estimates by $1.8 million. The share of the solar segment in the revenue mix was more than $687 million.
On August 4, Truist analyst Bronson Fleig maintained a Buy rating on SolarEdge Technologies, Inc. (NASDAQ:SEDG) stock and raised the price target to $385 from $340, noting that the positive outlook on the shares was unchanged despite near-term earnings headwinds.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in SolarEdge Technologies, Inc. (NASDAQ:SEDG), with 588,056 shares worth more than $188 million.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and SolarEdge Technologies, Inc. (NASDAQ:SEDG) was one of them. Here is what the fund said:
“The Strategy is well-exposed to this secular shift and to accelerated spending on alternative energy sourcing and generation. Growth in renewables should benefit SolarEdge Technologies, Inc. (NASDAQ:SEDG), a company we repurchased on weakness in the first quarter that develops electronics for solar installations and should take advantage of greater incentives for solar installations in many geographies. SolarEdge Technologies, Inc. (NASDAQ:SEDG) has expanded its products offering to address larger markets in commercial and utility solar on top of its traditional residential solar market.”
8. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 54
Caterpillar Inc. (NYSE:CAT) markets construction and mining equipment. On August 2, the company posted earnings for the second quarter of 2022, reporting earnings per share of $3.18, beating analyst expectations by $0.16. The revenue over the period was $14.2 billion, up more than 11% compared to the revenue over the same period last year and missing market estimates by $190 million. The firm said the increase in revenue was due to favorable price realization and higher sales volume.
On August 3, UBS analyst Steven Fisher maintained a Buy rating on Caterpillar Inc. (NYSE:CAT) stock and lowered the price target to $225 from $250, backing the firm to achieve margin expansion in the coming months.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in Caterpillar Inc. (NYSE:CAT), with 7.2 million shares worth more than $1.6 billion.
In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and Caterpillar Inc. (NYSE:CAT) was one of them. Here is what the fund said:
“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.”
7. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 54
Snap Inc. (NYSE:SNAP) is a camera company headquartered in California. The company reported earnings for the second quarter of 2022 on July 21, posting a loss per share of $0.02, beating analyst expectations by $0.01. The revenue over the period was $1.1 billion, up 13% compared to the revenue over the same period last year but missing analyst estimates by $20 million. The company also did not provide guidance for the third quarter, citing uncertainties in the operating environment.
On July 22, MKM Partners analyst Rohit Kulkarni maintained a Buy rating on Snap Inc. (NYSE:SNAP) stock and lowered the price target to $17 from $26, noting that the forward-looking visibility of the firm remains challenging.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Snap Inc. (NYSE:SNAP), with 18 million shares worth more than $664 million.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Snap Inc. (NYSE:SNAP) was one of them. Here is what the fund said:
“Snap Inc. (NYSE:SNAP) is the leading social network among teens and young adults in North America and a growing number of overseas markets, including Western Europe and India. Shares fell this quarter on a greater-than anticipated impact from Apple’s new privacy changes for iOS mobile devices. These changes made it more difficult for Snapchat to measure the effectiveness of ads shown on its platform. We believe this is a near-term, industry-wide issue for which Snap Inc. (NYSE:SNAP) is already developing a solution. Longer term, we continue to view Snap Inc. (NYSE:SNAP) favorably as the company sustains its rapid pace of product innovation and expands its premium partnerships with advertisers.”
6. Match Group, Inc. (NASDAQ:MTCH)
Number of Hedge Fund Holders: 55
Match Group, Inc. (NASDAQ:MTCH) is a Texas-based firm that provides online dating platforms. On August 2, the firm posted earnings for the second quarter of 2022, reporting earnings per share of negative $0.11. The revenue over the period was in excess of $794 million, up more than 12% compared to the revenue over the same period last year and missing analyst expectations by close to $11 million. The firm guided revenue for the third quarter to around $800 million, below consensus expectations of $880 million.
On August 4, Deutsche Bank analyst Benjamin Black maintained a Buy rating on Match Group, Inc. (NASDAQ:MTCH) stock and lowered the price target to $85 from $100, noting that the new leadership of the firm had hit the reset button, a shift that was reflected in the earnings.
At the end of the first quarter of 2022, 55 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Match Group, Inc. (NASDAQ:MTCH), compared to 53 in the preceding quarter worth $2.4 billion.
In addition Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Match Group, Inc. (NASDAQ:MTCH) is one of the stocks feeling the twin pressures of inflation and rising interest rates.
In its Q4 2021 investor letter, Arch Capital Management, an asset management firm, highlighted a few stocks and Match Group, Inc. (NASDAQ:MTCH) was one of them. Here is what the fund said:
“We are long Match Group, Inc. (NASDAQ:MTCH stock because it is the dominant player in online dating, giving it immense and growing power over the population of single people worldwide. This may seem like a callous way to describe the business, but it is the proper way to look at it from an investment lens.
For those that are unaware, Match Group, Inc. (NASDAQ:MTCH owns every popular online dating property outside of Bumble, Badoo, and Grindr. Its apps and services include Tinder, Hinge, Match.com. BLK, Chispa, and many others…
In conjunction with this letter, we have published a report on Match Group. You can find it here: https://www.archcapitalfund.com/letters”
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Disclosure. None. Analysts Say Buy These 10 Stocks Despite Earnings Miss is originally published on Insider Monkey.
