We recently compiled a list of the Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks. In this article, we will examine how PG&E Corporation (NYSE:PCG) compares to other stocks whose price targets have been recently reduced by analysts.
On Tuesday, US stock futures remained stable, reflecting investor optimism following a significant rally in the technology sector on Wall Street, which drove the broader market to a new all-time high. This latest surge marks the 30th record peak for the major US benchmark index this year, defying concerns about market breadth and the possibility of prolonged high US interest rates. Across the Atlantic, European equities experienced a robust rebound, reversing previous losses. Market analysts from M&G are suggesting that the current risks in France could present a strategic buying opportunity for investors, particularly those looking to capitalize on temporary market dips.
In the commodities market, Treasury yields held steady, indicating a cautious stance among investors amidst the mixed economic signals. Meanwhile, crude oil prices experienced a slight decline, whereas copper prices saw a significant increase, reflecting varying demand dynamics across different sectors. Goldman Sachs economists have pointed out that the US labor market might be approaching a critical juncture. Jan Hatzius from Goldman emphasized that any further decrease in labor demand could lead to a reduction in job numbers, not just a decline in job openings. This concern is underscored by recent data showing healthy nonfarm payrolls but rising initial and continuing jobless claims. Philadelphia Fed President Patrick Harker echoed this sentiment, suggesting that the Federal Reserve might consider either two interest rate cuts or none this year, depending on future economic data.
Adding to the financial landscape, a highly reliable technical trading strategy has issued a sell signal for long-term Treasury securities. This strategy, which has maintained a perfect trading record this year, was triggered after BlackRock’s bond exchange-traded fund tracking long-term Treasuries surged last Friday. The fund’s performance breached what is known as the “trading envelope,” indicating overbought conditions. As a result, the strategy suggests that traders should sell these securities when they are overbought and buy them when they are oversold.
The European Union, despite not matching the economic scale of its counterparts in the U.S. and China, aims to strategically challenge them, according to Margrethe Vestager, the bloc’s competition chief. Vestager emphasized in an interview with CNBC on Tuesday that the EU has significantly improved its ability to defend against unfair trade practices. She highlighted recent moves, including the imposition of higher tariffs on Chinese electric vehicle imports due to findings of substantial unfair subsidies benefiting Chinese manufacturers, potentially undercutting European producers. Vestager stressed that the EU’s approach isn’t about outspending its rivals but rather strategically allocating resources. She acknowledged that while the EU cannot match the financial clout of China or the U.S., it can invest strategically in areas of common European interest, such as hydrogen, electric batteries, microelectronics, cloud computing, and healthcare. She pointed to a 100 billion euro fund dedicated to advancing these cutting-edge technologies, aiming to leverage public funds to attract private capital where market forces alone might fall short. Amid escalating trade tensions globally, particularly between the U.S. and China, Vestager reiterated the EU’s careful stance, seeking to maintain balanced relations with both economic giants while safeguarding its own interests and alliances. She emphasized that the EU’s investments in technology and sustainability are not mere imitations of its competitors’ strategies but rather tailored to Europe’s unique needs and strengths in the global marketplace. Vestager concluded by urging a focus on the EU’s agenda rather than comparisons with other regions, asserting that the EU’s approach aims to be effective and sustainable in achieving its economic and technological goals.
China’s recent property support measures have successfully stimulated sales in its major cities, but smaller regions continue to face significant challenges, indicating a prolonged downturn for much of the national real estate market. According to Reuters, on May 17, China lowered mortgage rates and downpayment requirements and directed local governments to purchase unsold apartments to convert them into social housing. This initiative has led to numerous cities easing their housing policies.
Data from real estate research firms and interviews with agents reveal that these measures have had a mixed impact. While they have revived demand in cities like Beijing and Shanghai, smaller cities have seen limited improvement. Reports of home price declines further underscore concerns that the property sector’s troubles may persist, especially in smaller cities burdened with a higher supply of unsold properties. This excess inventory is keeping buyer sentiment low, prompting calls for additional support from policymakers. Data from the China Index Academy show that the average daily transactions of second-hand homes in Shanghai between May 18 and June 5 were 27.7% higher than in April, and in Beijing, they increased by 8.1%. Meanwhile, new home transactions in these cities declined slightly. Agents reported a surge in inquiries and home viewings, particularly in Shanghai, where one agent noted a tripling of inquiries following a downpayment reduction. Despite these signs of activity in major cities, smaller cities continue to struggle. Jiaozhou, a city with under a million residents, has attempted to stimulate demand by allowing buyers to split downpayments into two installments, but this has had little impact. In Changsha, authorities have urged developers to offer full refunds on deposits if buyers cancel their purchases, hoping to boost buyer confidence. However, local agents report that demand remains weak, with many customers skeptical about the effectiveness of the new policies. Goldman analysts predict that additional easing measures are likely in the coming months, but they caution that these measures might only lead to a slow, L-shaped recovery in the sector over the coming years.
In our original article we listed 10 companies whose price targets were cut by analysts and ranked them by the change in their market prices. Negative changes signal that the market participants agree with the analysts’ assessment.
02. PG&E Corporation (NYSE:PCG)
Price Reaction after the Price Target Cut: -0.47(-2.58%)
On June 17, Barclays revised its outlook on PG&E Corporation (NYSE:PCG), lowering the price target from $22 to $21 while maintaining an “overweight” rating. The price reaction after the price target cut was a decline of 2.58%. In its latest quarterly earnings announcement on April 25, PG&E Corporation (NYSE:PCG) reported a normalized EPS of $0.37, which exceeded expectations by $0.03. However, PG&E Corporation (NYSE:PCG) revenue of $5.86 billion fell short of expectations by $872.05 million. The company forecasts a 10% growth compared to the previous year, with an expected earnings per share (EPS) ranging from $1.33 to $1.37. PG&E Corporation (NYSE:PCG) remains positive about its long-term growth, predicting an annual EPS increase of at least 9% from 2025 to 2028. As part of its five-year financial strategy, the company has outlined a $62 billion capital investment plan, which excludes the potential sale of a minority stake in Pacific Generation.
Third Point Management made the following comment about PG&E Corporation (NYSE:PCG) in its Q1 2023 investor letter:
“Our strategy is to preserve liquidity and buying power to take advantage of markets when they “break”. While overall indices remain elevated, we are finding more chances to provide liquidity across all three asset classes in which we invest – credit, structured credit, and equity – opportunities which have been key drivers of performance for the fund. Our portfolio is balanced across industries with a focus on event-driven names including companies involved in spin-offs, significant cost-cutting, or other types of under-appreciated business transformation. PG&E Corporation (NYSE:PCG), which is still our largest position, continues to deliver strong performance, down 50bps in the first quarter but up 6.2% for the year to date after the Fire Victims Trust sold another 60 million shares in a block trade.”
Overall PCG ranks 2nd on our list of the 10 stocks whose price targets were recently trimmed by analysts. You can visit Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks to see the other stocks whose price targets have been recently reduced by analysts. While we acknowledge the potential of PCG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PCG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
