In this article, we will discuss the 10 stocks whose price targets were recently trimmed by analysts.
European stocks started the day on May 21 with a slightly weaker note, marking a retreat from their recent impressive performance, with attention now shifting towards the upcoming earnings report from NVIDIA Corporation (NASDAQ:NVDA). The Stoxx 600 index dipped by 0.2%, showing a predominantly negative trend across most sectors, while futures for US equities remained relatively unchanged. Options markets in the US indicate significant anticipation for NVIDIA Corporation (NASDAQ:NVDA) earnings report this Wednesday, with traders expecting a notable shift in the chipmaker’s shares, reported Reuters.
Predictions suggest an 8.7% swing in either direction by Friday, potentially resulting in a staggering $200 billion market cap fluctuation, exceeding that of most S&P 500 companies. While substantial, this projected move falls short of the remarkable 16.4% surge witnessed in Nvidia’s shares after its previous quarterly report, and it’s also less aggressive than historical averages. NVIDIA Corporation (NASDAQ:NVDA), a key player in the AI industry, boasting a market value of approximately $2.3 trillion, is anticipated to deliver robust quarterly results, reflecting its pivotal role in the market. This optimism extends beyond NVIDIA Corporation (NASDAQ:NVDA), with other sectors such as power, commodities, and utilities benefiting from the broader AI theme.
While expectations are high, there’s recognition that the upcoming earnings announcement could trigger significant market activity. Implied volatility for options suggests traders are prepared for both upward and downward movements in the stock price. Despite Nvidia’s impressive performance this year, investors remain vigilant, aware that a substantial downturn in NVIDIA Corporation (NASDAQ:NVDA) shares could test the resilience of the broader AI trade, emphasizing the significance of NVIDIA Corporation (NASDAQ:NVDA) role in shaping market sentiment and trends.
Meanwhile, in Asia, shares took a breather following a week-long streak of gains. Investors remained vigilant regarding commodity prices, especially with the Bloomberg Commodity Spot Index hitting its highest point since January 2023. Notably, gold and copper were trading near their historical peaks, adding to the market’s attention.
On another front, oil prices experienced a decline, influenced by various market metrics suggesting a subdued outlook, despite heightened geopolitical tensions ahead of an OPEC+ meeting on supply. Brent crude’s prompt spread narrowed to its smallest backwardation since January, indicating a potential shift in market dynamics, while the reduction in bets on crude price increases continued among money managers. Futures trading reflected a period of consolidation, with implied volatility levels nearing lows not seen since 2019.
From Chinese property market side, analysts suggest that China’s recent efforts to bolster the property sector will require patience to yield results. Despite these initiatives, S&P maintains its view that the market is still “searching for a bottom.” Edward Chan from S&P emphasizes the government’s seriousness in stabilizing the property sector but notes that significant stabilization requires improvements in homebuyers’ demand and confidence, which have been affected by a nearly three-year market downturn. According to CNBC, recent measures, including lowered down payment minimums and enhanced liquidity for developers, aim to address the challenges. However, analysts like Goldman Sachs’ Hui Shan and Nomura’s Ting Lu believe more substantial actions are needed, estimating a significant funding requirement to address inventory excess and stabilize prices. While progress is noted, challenges persist, as indicated by declining real estate investment and slower-than-expected retail sales growth. Rebuilding homebuyer confidence is crucial, particularly concerning delivery delays and economic uncertainty. Analysts anticipate further efforts from Beijing, including a national survey to assess funding needs for completing residential projects. Ultimately, restoring confidence in the presale system is seen as essential for a genuine recovery in China’s housing markets. As market players navigate these developments, attention remains keenly focused on unfolding events and their potential impact on investment strategies and market sentiment.
On the stock market front, analysts are bearish on stocks such as NICE Ltd. (NASDAQ:NICE) and KALA BIO, Inc. (NASDAQ:KALA) by lowering their price targets. For a comprehensive overview of these and other stocks affected by such adjustments, delve into the full article to explore the intricacies of the changes made to their price targets.
Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks
10. Under Armour, Inc. (NYSE:UAA)
Price Reaction after the Price Target Cut: +0.07(+1.04%)
On May 20, Barclays revised the price target for Under Armour, Inc. (NYSE:UAA) downward from $9 to $6, maintaining an Equal Weight rating on the stock. Despite this reduction, Under Armour, Inc. (NYSE:UAA) stock price experienced a slight positive reaction, rising by 1.04%. The analyst highlighted that Under Armour, Inc. (NYSE:UAA), a prominent player in the athletic apparel industry, is undergoing a significant strategic overhaul. This “deep reset” in the company’s fiscal expectations for 2025 is anticipated to extend into fiscal 2026. The process involves not only enhancing the brand but also streamlining operations and revamping its consumer messaging.
Rowan Street Capital made the following comment about Under Armour, Inc. (NYSE:UA) in its second quarter 2023 investor letter:
“Now, the bottom 3 performers from all the companies that we’d sold were Docusign (DOCU) -76%, TripAdvisor (TRIP) -59% and Under Armour, Inc. (NYSE:UA) -57%. These represent the losses we would have incurred had we held on to these positions until now. We must note that all 3 of these were sold for purely fundamental reasons and we ended up being correct on all of them.”
09. Deere & Company (NYSE:DE)
Price Reaction after the Price Target Cut: +2.59(+0.66%)
On May 20, DA Davidson adjusted the price target for Deere & Company (NYSE:DE) from $483 to $465 while maintaining a Buy rating on the stock. Following this adjustment, Deere & Company (NYSE:DE) stock price increased by 0.66%. The company, which operates in the agricultural machinery industry, delivered a “strong beat” in its Q2 earnings. However, it revised its guidance downward as it aims to significantly reduce its inventory levels. The analyst noted that the recent flooding in Brazil could positively impact row-crop prices and improve the outlook in other regions. Additionally, with easier comparisons, upcoming new product launches, and continued favorable pricing, the firm expects agricultural growth to be feasible next year.
Oakmark Fund stated the following regarding Deere & Company (NYSE:DE) in its first quarter 2024 investor letter:
“Deere & Company (NYSE:DE) is a leading manufacturer of agricultural equipment with dominant market share in North America and Brazil. Despite its brand strength, technological capabilities and distribution advantages, the company’s stock price has recently fallen due to fears about a downturn in the agriculture business cycle. Longer term, world population and food demand are expected to increase annually yet land and labor devoted to agriculture are expected to decline. Deere seems well-positioned to benefit from this dynamic as farms will have to become more productive. We were pleased to purchase shares in Deere at a low double-digit multiple of our estimate of normal earnings power.”
08. D.R. Horton, Inc. (NYSE:DHI)
Price Reaction after the Price Target Cut: +0.53(+0.35%)
On May 20, Citi analyst Anthony Pettinari revised the price target for D.R. Horton, Inc. (NYSE:DHI), a leading company in the homebuilding industry, from $191 to $181 while maintaining a Buy rating. Following this price target adjustment, D.R. Horton, Inc. (NYSE:DHI) stock price saw a modest increase of 0.35%. Pettinari’s update reflects new assumptions about interest rates and recent activity levels from late April and early May. Despite anticipating a low double-digit year-over-year growth in single-family housing starts for 2024, the analyst now predicts more subdued pricing due to sustained higher interest rates, which are likely to keep incentives elevated. Additionally, Pettinari notes that the group’s current valuations appear to be “fair-to-full.”
Baron Real Estate Fund stated the following regarding D.R. Horton, Inc. (NYSE:DHI) in its fourth quarter 2023 investor letter:
“The share prices of our investments in homebuilder companies – Toll Brothers, Inc., D.R. Horton, Inc. (NYSE:DHI), Inc., and Lennar Corporation – gained 39.4%, 41.8%, and 33.2%, respectively, in the most recent quarter, in part due to the continuation of strong quarterly business results, management optimism about 2024 prospects, and a more than 100 basis point decline in 30-year mortgage rates during the quarter.
2023 was an excellent year for the public homebuilders. Housing fundamentals were resilient despite the affordability challenges of elevated mortgage rates and home prices. Several years of pent-up demand, fears that mortgage rates could move higher, a dearth of inventory in the existing home market, and an overall housing supply shortage drove home buyers off the sidelines to “stretch their wallet,” in part due to fears that they could miss out on the opportunity to buy a home. The Fund’s homebuilding companies Toll Brothers, D.R. Horton, and Lennar increased 108.0%, 71.4%, and 66.3%, respectively, in 2023.
Though we anticipate more modest gains for the Fund’s homebuilder investments in 2024, we remain optimistic about the long-term prospects for Toll Brothers, D.R. Horton, and Lennar. Further, we continue to believe there is a compelling case for the homebuilder valuations to re-rate higher over time.
Since the beginning of 2020, D.R. Horton, Lennar, and Toll Brothers have demonstrated substantial resilience and operating prowess. Despite several black swan events – COVID-19, a sharp increase in mortgage rates from 3% to 8%, and supply-chain disruptions – each company has managed its business exceptionally well and demonstrated that the demand to buy homes is resilient.”
07. MongoDB, Inc. (NASDAQ:MDB)
Price Reaction after the Price Target Cut: +0.88(+0.24%)
On May 20, Bank of America (BofA) lowered the price target for MongoDB, Inc. (NASDAQ:MDB) from $500 to $470 while maintaining a Buy rating on the stock. Following this adjustment, MongoDB, Inc. (NASDAQ:MDB) stock price increased by 0.24%. MongoDB operates in the database software industry and is set to release its Q1 results on May 30. According to BofA’s Cloud View report, MongoDB, Inc. (NASDAQ:MDB) Atlas platform is expected to show significant growth, with Q1 revenues projected to increase by 34.5% year-over-year to $320 million. The analyst reiterated that MongoDB, Inc. (NASDAQ:MDB) is well-positioned to capture a significant portion of the $108 billion database market.
ClearBridge Aggressive Growth Strategy stated the following regarding MongoDB, Inc. (NASDAQ:MDB) in its fourth quarter 2023 investor letter:
“New addition MongoDB, Inc. (NASDAQ:MDB), in the IT sector, offers a leading modern database platform that handles all data types and is geared toward modern Internet applications, which constitute the bulk of new workloads. Database is one of the largest and fastest growing software segments, and we believe it is early innings in the company’s ability to penetrate this market. MongoDB is actively expanding its potential market by adding ancillary capabilities like vector search for AI applications, streaming and real-time data analytics. The company reached non-GAAP profitability in 2022, and we see significant room for improved margins as revenue scales.”
06. Zscaler, Inc. (NASDAQ:ZS)
Price Reaction after the Price Target Cut: -0.45(-0.25%)
On May 20, Barclays analyst Saket Kalia revised down the price target for Zscaler, Inc. (NASDAQ:ZS) from $240 to $205 while maintaining an Overweight rating on the stock. Following this adjustment, Zscaler, Inc. (NASDAQ:ZS) stock price experienced a slight decrease of 0.25%. Zscaler, Inc. (NASDAQ:ZS) operates in the cybersecurity industry and is set to release its fiscal Q3 report on May 30. Kalia’s analysis anticipates billings of $584 million, but suggests that hitting $600 million is feasible, potentially alleviating concerns regarding the implied ramp-up in Q4. Despite expressing a desire to be more optimistic about the stock leading up to earnings, the analyst questions whether the Street’s projection of 23% billings growth for fiscal 2025 needs adjustment for the stock to be more attractive for investors.
Artisan Mid Cap Fund made the following comment about Zscaler, Inc. (NASDAQ:ZS) in its Q3 2023 investor letter:
“Notable trims in the quarter included Zscaler, Inc. (NASDAQ:ZS), BioNTech and Ingersoll Rand. Zscaler provides cloud-based Internet security solutions. In the quarter, it announced solid financial results including 43% revenue growth and 38% growth in billings, which were both ahead of expectations. We believe the dual trends of rising security vulnerability and increased enterprise digitization will lead to sustained demand, even in a recession. Cybersecurity remains a top concern for businesses and governments as cyberattacks can have devastating financial and reputational consequences. Meanwhile, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (e.g., Office 365 and Salesforce) and more remote workers than before the pandemic make operating IT infrastructures increasingly complex. The stock has been a top performer this year, and we decided to trim the position based on valuation considerations.”
05. Burlington Stores, Inc. (NYSE:BURL)
Price Reaction after the Price Target Cut: -2.42(-1.24%)
On May 20, TD Cowen analyst John Kernan opted to uphold his stance on Burlington Stores, Inc. (NYSE:BURL), maintaining a Hold rating on the stock. However, he adjusted the price target downward from $230 to $209. Following this revision, Burlington Stores experienced a price drop of 1.24%. Burlington Stores, Inc. (NYSE:BURL) operates in the retail industry. Kernan’s decision reflects his assessment of the Burlington Stores, Inc. (NYSE:BURL) performance and potential, aligning with his updated projections and analysis of market dynamics.
ClearBridge SMID Cap Growth Strategy stated the following regarding Burlington Stores, Inc. (NYSE:BURL) in its fourth quarter 2023 investor letter:
“Interest rate relief also had a strong impact on more cyclical companies and those with ties to general consumer spending. For example, consumer discretionary holdings and discount retailers Burlington Stores, Inc. (NYSE:BURL) and Five Below both rose during the quarter thanks to improving outlooks. Five Below, a specialty value retailer for products including apparel, accessories, novelty items, décor, cosmetics and accent furniture, rebounded from being one of the third quarter’s worst-performing stocks. We believe both Five Below and Burlington are particularly well-positioned for an economic environment where consumer budgets are being tightened but demand for discretionary goods remains stable.”
04. KALA BIO, Inc. (NASDAQ:KALA)
Price Reaction after the Price Target Cut: -0.13(-1.95%)
On May 20, H.C. Wainwright revised down the 12-month price target for KALA BIO, Inc. (NASDAQ:KALA) from $21 to $18, despite maintaining a Buy rating on the stock. This adjustment followed the company’s first-quarter financial report earlier in the week, which disclosed a net loss of $11.8 million, or $4.20 per share, surpassing the expected loss of $8.8 million. Despite the financial setback, KALA BIO, Inc. (NASDAQ:KALA) management has conveyed that the Phase 2b CHASE trial for KPI-012, designed to address persistent corneal epithelial defect (PCED), is progressing according to plan, with topline results anticipated by the end of 2024. KPI-012, an innovative therapy based on mesenchymal stem cell secretome (MSC-S), integrates various biological factors with the potential to target the multiple causes of PCED.
The absence of FDA-approved treatments covering all underlying causes of PCED underscores the significance of KPI-012, which also holds promise for addressing Limbal Stem Cell Deficiency (LSCD) and other corneal ailments. Additionally, KALA BIO, Inc. (NASDAQ:KALA) is engaged in preclinical research on KPI-014, aimed at inherited retinal degenerative diseases such as retinitis pigmentosa and Stargardt disease. The company’s valuation currently stands at $91 million. With an estimated 5.0 million shares outstanding by the close of the first quarter of 2025, the valuation per share amounts to approximately $18. Hence, despite the reduction in the price target, the Buy rating remains intact based on these prospects.
03. NICE Ltd. (NASDAQ:NICE)
Price Reaction after the Price Target Cut: -5.05(-2.54%)
On May 17, BofA Securities revised its forecast for NICE Ltd. (NASDAQ:NICE) shares, lowering the price target from $300 to $270. Following this adjustment, there was a notable price reaction, with the stock decreasing by 2.54%. NICE Ltd. (NASDAQ:NICE), operating in the technology sector, faced this downward revision in its price target, signaling potential challenges ahead.
Vulcan Value Partners stated the following regarding NICE Ltd. (NASDAQ:NICE) in its first quarter 2024 investor letter:
“NICE Ltd. (NASDAQ:NICE) is a global enterprise software company that provides mission-critical contact center software. The company continues to perform well, and fundamentals are strong. Cloud revenue has grown in line with our expectations. We believe that generative AI will continue to drive cloud adoption and that AI is an opportunity rather than a threat to NICE’s business.”
02. Globant S.A. (NYSE:GLOB)
Price Reaction after the Price Target Cut: -9.98(-5.62%)
On May 17, Needham maintained its buy rating on Globant S.A. (NYSE:GLOB) while revising down its price target from $275 to $200. This adjustment, which led to a price reaction of -5.62%, came on the heels of Globant S.A. (NYSE:GLOB) first-quarter financial results for 2024. Despite reporting revenue that exceeded expectations and meeting forecasts for earnings per share, the technology industry player experienced a significant reduction in its price target. Globant S.A. (NYSE:GLOB) impressive performance in the first quarter included a 20.9% year-over-year revenue growth, with organic constant currency growth reaching 12.7%. Notable achievements during this period included securing a lucrative contract with a major global airline, forging a partnership with Formula 1, and acquiring seven new clients, each contributing over $1 million in revenue.
However, despite these successes, Globant S.A. (NYSE:GLOB) provided a slightly conservative outlook for the second quarter and revised its full-year guidance downward, citing increased foreign exchange pressures as the primary reason. It’s worth noting that this adjustment in the annual forecast does not reflect a change in the company’s organic growth projections, which still anticipate a 10% year-over-year increase. This growth trajectory stands in stark contrast to the flat trends projected by Globant S.A. (NYSE:GLOB) competitors for fiscal year 2024. Needham emphasized that, based on an ex-cash forward price-to-earnings (P/E) multiple of approximately 21 times for fiscal year 2025, the current valuation offers an attractive risk-reward proposition for investors. Despite the adjustment in the price target in response to the updated company guidance and prevailing market conditions, Needham reiterated its positive stance on the stock.
Polen Global Growth Strategy stated the following regarding Globant S.A. (NYSE:GLOB) in its first quarter 2024 investor letter:
“Finally, we added to our existing position in Globant S.A. (NYSE:GLOB) with the proceeds from trimming back our Accenture position. We think this is prudent because Globant’s valuation isn’t much higher than Accenture’s, but it should be able to grow EPS faster at ~20%+ over the next five years. We see both as excellent businesses benefiting from similar tailwinds behind the increasing need for trusted third party IT services providers and continue to feel good about holding both companies for the long term.”
01. DXC Technology Company (NYSE:DXC)
Price Reaction after the Price Target Cut: -3.36(-16.90%)
On May 17, BMO Capital analyst Keith Bachman opted to uphold his Market Perform rating on DXC Technology Company (NYSE:DXC), a prominent global technology services firm, while reducing the price target from $23 to $17.5. This adjustment triggered a notable price reaction, with the stock declining by 16.90%. DXC Technology Company (NYSE:DXC) operates in the technology sector and faced this substantial reduction in its price target, indicative of potential challenges ahead. Despite the downgrade in price target, Bachman maintained his Market Perform rating, suggesting a neutral outlook on the stock’s performance relative to the market.
In a recent development, DXC Technology Company (NYSE:DXC) has unveiled a new collaboration with Dell Technologies aimed at advancing Enterprise Intelligence Services (EIS). This strategic partnership signifies a significant stride forward in harnessing cutting-edge technologies, including AI, machine learning, data analytics, and intelligent automation, to transform raw data into a comprehensive enterprise perspective.
Carillon Chartwell Mid Cap Value Fund made the following comment about DXC Technology Company (NYSE:DXC) in its Q3 2023 investor letter:
“The Russell Midcap Value Index declined 4.5%, with only the energy and financials sectors generating positive returns. The healthcare, communication services, and consumer staples sectors were the weakest. DXC Technology Company (NYSE:DXC) provides a broad range of information technology services to enterprises. Revenue and booking declines caused concerns about the company’s competitive positioning.”
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Disclosure. None. Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks is originally published on Insider Monkey.
