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 Are Downgrading These 10 Stocks.
05. Canadian National Railway Company (NYSE:CNI)
Number of Hedge Fund Holders: 39
On August 1, Argus analyst John Eade adjusted his perspective on Canadian National Railway Company (NYSE:CNI), as the company’s revenue growth outlook is anticipated to present challenges in the coming quarters. Consequently, Eade has downgraded Canadian National Railway Company (NYSE:CNI) shares from a “Buy” recommendation to a “Hold” recommendation. While acknowledging Canadian National Railway’s effective management and its notable profitability within the industry, Eade has identified a potential stumbling block in the form of revenue growth. The composition of the company’s product mix, with a focus on segments such as autos that are experiencing weakness, is likely to impact its ability to achieve robust revenue growth in the near future.
Despite the company’s efforts, such as stock buybacks and a recent dividend increase of 10 percent, Eade highlights that Canadian National Railway Company (NYSE:CNI) historical performance in terms of shareholder returns has not been particularly impressive when compared to its peers. Additionally, the recent financial results reported by the railroad operator have fallen short of expectations. Given these factors, Eade suggests that the rail sector may currently offer more favorable opportunities for investment in the short term. He indicates that Canadian National Railway Company (NYSE:CNI) shares could regain a “Buy” recommendation if there are indications of improved revenue growth or if the share price experiences a decline to a support level near $70.
04. ZoomInfo Technologies Inc. (NASDAQ:ZI)
Number of Hedge Fund Holders: 40
After disappointing Q2 results, Deutsche Bank analysts on August 1 downgraded ZoomInfo Technologies Inc. (NASDAQ:ZI) stock from Buy to Hold and decreased the price target by $11 to $20 per share. The analysts expressed concerns about the company’s deteriorating tech customer vertical, management’s visibility issues, and potential downside risks associated with the stock’s valuation.
ZoomInfo Technologies Inc. (NASDAQ:ZI) shares dropped by around 20% in early Tuesday trading due to the company’s weaker-than-expected revenue guidance for the third quarter. The cloud-based sales and marketing platform maker reported adjusted earnings of 26 cents per share and revenue of $308.6 million, a 16% increase. Analysts had predicted earnings of 23 cents per share and revenue of $310.94 million. The stock fell 19% in after-hours trading and has declined about 15% this year.
ZoomInfo Technologies Inc. (NASDAQ:ZI) anticipates third-quarter adjusted earnings per share between 24 cents and 25 cents, with revenue ranging from $309 million to $312 million—below the consensus estimate of $325.7 million. For the full year, the company projects adjusted earnings per share of 99 cents to $1 and revenue of $1.225 billion to $1.235 billion, revising its prior guidance downward. The company’s board has also approved a $500 million share repurchase.
03. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS)
Number of Hedge Fund Holders: 42
Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is facing ongoing safety concerns about its vision loss drug Syfovre (pegcetacoplan), causing the stock to drop around 6% on August 1. BofA Securities downgraded Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) on the same day from “Buy” to “Neutral” due to uncertainty about reports of eye inflammation and reduced the price target to $40 from $114. According to BofA analyst Tazeen Ahmad, doctors might wait a few quarters before using the drug due to concerns about occlusive retinal vasculitis cases. This has led Ahmad to lower her sales forecasts for Syfovre: $40 million and $30 million for Q3 and Q4 respectively, and $159 million for 2024, down from the previous estimate of $393 million. She has also revised the estimated peak sales from $6 billion to $2.5 billion. Meanwhile, Baird maintains an “Outperform” rating for Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) but has reduced the price target to $70 from $115, indicating a potential upside of about 172%. These changes reflect the complex factors that influence a pharmaceutical company’s performance and market perception.
02. New Relic, Inc. (NYSE:NEWR)
Number of Hedge Fund Holders: 46
On August 1, RBC Capital shifted its evaluation of New Relic, Inc. (NYSE:NEWR) by downgrading it from “Outperform” to “Sector Perform.” The firm has also adjusted the price target for NEWR from $95 to $87. This adjustment comes after the company’s announcement of its acquisition agreement by TPG and Francisco Partners for $6.5 billion at $87 per share in cash. Similarly, Baird has made a parallel downgrade, moving New Relic, Inc. (NYSE:NEWR) rating from “Outperform” to “Neutral.” The company’s price target has been lowered from $92 to $87. These changes in rating and price target reflect the evolving landscape surrounding New Relic, Inc. (NYSE:NEWR) as it undergoes the acquisition process.
01. The Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Holders: 59
On August 1, Citi, undertook a significant shift in its assessment of The Estée Lauder Companies Inc. (NYSE:EL), a renowned beauty and cosmetics company. The firm has opted to downgrade its previous “Buy” rating for The Estée Lauder Companies Inc. (NYSE:EL) to a more neutral “Neutral” stance. This adjustment in the rating is accompanied by a corresponding modification in the price target for Estee Lauder’s shares, which has been adjusted downward from the earlier projection of $240 to a new target of $195. The underlying rationale for this adjustment resides in Citi’s perception of heightened risks pertaining to the recovery trajectory of The Estée Lauder Companies Inc. (NYSE:EL) Asian business. The firm’s analysis indicates that these risks are anticipated to exert their influence over the span of the upcoming 6-12 months. While the exact details of these potential risks are not explicitly outlined, the implications of such concerns are deemed significant enough to warrant the shift in the rating and price target.
Citi’s revised outlook underscores the complex interplay of factors that financial analysts weigh when providing insights into a company’s investment prospects. In this case, the anticipation of challenges in the recovery of the Asian business appears to be a pivotal consideration guiding the firm’s decision.
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