In this article, we discuss the 5 stocks receiving price-target cut from analysts. If you want to see more such stocks on the list, go directly to Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks.
05. The Procter & Gamble Company (NYSE:PG)
Price Reaction after the Price Target Cut: -0.86 (-0.58%)
On January 18, JPMorgan Chase & Co. implemented substantial adjustments to its evaluation of The Procter & Gamble Company (NYSE:PG), a major player in the consumer goods industry. The financial institution lowered the price target from $169.00 to $162.00 while maintaining an “overweight” rating on the stock. In response to this revision, the closing bell on January 18 witnessed a notable negative price reaction, with The Procter & Gamble Company (NYSE:PG) experiencing a decline of 0.58%. Despite the reduction in the price target, the decision to retain an “overweight” rating suggests a positive outlook, indicating the belief that The Procter & Gamble Company (NYSE:PG) may outperform relative to its industry peers.
Hayden Capital made the following comment about The Procter & Gamble Company (NYSE:PG) in its third 2023 investor letter:
“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, Coca-Cola trades at ~30x P/E despite having the same earnings as 10 years ago. The Procter & Gamble Company (NYSE:PG) is likewise at ~27x P/E, with earnings only ~12% higher than a decade ago (or a ~1% annual growth rate). This equates to a mere 3.3% – 3.7% earnings yield.
Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.
I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Proctor & Gamble is facing disruption from direct-to-consumer brands that offer their products for a fraction of the price.
But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.
Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”
04. The Charles Schwab Corporation (NYSE:SCHW)
Price Reaction after the Price Target Cut: -0.73 (-1.15%)
On January 18, Barclays analyst Benjamin Budish made significant adjustments to the evaluation of The Charles Schwab Corporation (NYSE:SCHW), a key player in the financial services industry. Budish lowered the price target from $68.00 to $64.00 while maintaining an “equal weight” rating on the stock. Following this revision, the closing bell on January 18 witnessed a notable negative price reaction, with The Charles Schwab Corporation (NYSE:SCHW) experiencing a decline of 1.15%. Despite the reduction in the price target, the decision to uphold an “equal weight” rating suggests a neutral stance, indicating that The Charles Schwab Corporation (NYSE:SCHW) is expected to perform in line with industry peers. The significant negative market response observed on January 18 adds depth to The Charles Schwab Corporation (NYSE:SCHW) ongoing narrative within the financial services industry.
Right Tail Capital stated the following regarding The Charles Schwab Corporation (NYSE:SCHW) in its fourth quarter 2023 investor letter:
“Some of Right Tail’s larger investment decisions this year involved moving on from an investment. Charlie would say don’t avoid mistakes because they are inevitable. Instead, focus on repeating what works.
Notably, I sold The Charles Schwab Corporation (NYSE:SCHW) in March. Now that some time has passed, I’ll share how I approached the decision. In March, Charles Schwab stock declined ~25% during the banking challenges that crippled First Republic Bank and Silicon Valley Bank. Schwab has some similarities in that it is a bank (investing idle cash in their customers’ accounts allows them to charge less for other products and services) and had invested in bonds during the low interest rate years that would be worth less if Schwab needed to liquidate today. Also, Schwab clients were leaving less cash in their accounts favoring higher interest alternatives that were a more expensive cost of funds for Schwab. However, Schwab had many positives relative to the troubled banks such as limited uninsured deposits and sticky assets. For example, investment advisors such as Right Tail who custody at Schwab have limited options. It would be a hassle (though quite doable) to switch to a different custodian (and I would absolutely make the change if I thought it was in the best interest of our investors). I carefully considered the pros and cons. Something had changed in that I had always considered Schwab to be a beneficiary of rising interest rates – now the company was rooting for lower rates in the intermediate term. I thought Schwab may have to raise capital to deal with their short-term liquidity challenges (they indirectly raised capital by pausing their stock repurchase program). I also thought regulators may ask more of Schwab as an important institution that no one wants to fail. Positively, I was still rooting for Schwab and thought they’d continue to be a blue chip brokerage firm that would likely keep taking share over time.
Ultimately, I felt my time and energy would be better spent trying to find the next great Right Tail investment than in trying to untangle Schwab. I sold the stock in the mid to high $50s and used the proceeds to add to our existing positions that I felt best about. I estimate that owning Schwab reduced our returns by less than 100 bps since inception and ~250 bps for 2023.”
03. Tesla, Inc. (NASDAQ:TSLA)
Price Reaction after the Price Target Cut: -3.67 (-1.70%)
On January 18, Barclays analyst Dan Levy made notable adjustments to the evaluation of Tesla, Inc. (NASDAQ:TSLA), a major player in the electric vehicle and clean energy industry. Levy lowered Tesla, Inc. (NASDAQ:TSLA) price target from $260 to $250 while maintaining an “Equal Weight” rating on the shares. Following this revision, the closing bell on January 18 witnessed a significant negative price reaction, with Tesla, Inc. (NASDAQ:TSLA) experiencing a decline of 1.70%. Despite the reduction in the price target, the decision to maintain an “Equal Weight” rating suggests a balanced outlook, indicating that Tesla, Inc. (NASDAQ:TSLA) is expected to perform in line with industry peers.
Tsai Capital Corporation stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its fourth quarter 2023 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) ($248.48 – up 101.7% for the year. Recent high $299.29): Tesla has significant and underappreciated competitive advantages across multiple verticals including electric vehicles, software and energy storage. Misunderstood by much of Wall Street – and consequently a favorite of short sellers – Tesla continues to grow rapidly and increase its lead over the competition while delighting consumers in the process. Despite his unconventional (and sometimes off-putting) personality, Elon Musk is a visionary who has created enormous shareholder value. Musk is also a long-term thinker who has embraced the scale-economies-shared business model favored by Henry Ford and Jeff Bezos, intentionally reducing prices, increasing the customer value proposition and expanding the total addressable market. Tesla’s massive scale and cost advantages are now challenging the viability of legacy auto, which has hundreds of billions of dollars of outdated property, plant and equipment in a world that is rapidly transitioning to electric vehicles (EVs). While we expect competition for EVs to intensify and for Tesla to lose market share over time, we also believe the company will increase production and deliveries from approximately 1.8 million vehicles today to approximately 15 million vehicles in 2030 and further its lead in autonomous driving capability. In fact, we expect Tesla will eventually license its autonomous driving software, creating high-margin (70-80%), recurring licensing revenue. Tesla is also one of only two companies that dominate the energy storage market, which has the potential to grow to several hundred billion in revenue as power plants around the world increase their focus on renewable energy. Our investment in Tesla is aligned with our preference for companies that have strong balance sheets and the managerial skill to reinvest capital at high rates of return into large addressable markets.”
02. Halozyme Therapeutics, Inc. (NASDAQ:HALO)
Price Reaction after the Price Target Cut: -1.11 (-3.08%)
On January 18, HC Wainwright took significant steps to reassess the valuation of Halozyme Therapeutics, Inc. (NASDAQ:HALO), a key player in the biopharmaceutical industry. The financial firm lowered the price objective on Halozyme Therapeutics, Inc. (NASDAQ:HALO) from $61.00 to $48.00 while affirming a “buy” rating for the company. Following this adjustment, the closing bell on January 18 witnessed a substantial negative price reaction, with Halozyme Therapeutics, Inc. (NASDAQ:HALO) experiencing a decline of 3.08%. In the case of Halozyme Therapeutics, Inc. (NASDAQ:HALO), stakeholders may scrutinize how the company navigates challenges in the biopharmaceutical market, progresses with clinical developments, and strategically positions itself to understand the broader impact of the revised price objective.
Artisan Small Cap Fund made the following comment about Halozyme Therapeutics, Inc. (NASDAQ:HALO) in its second quarter 2023 investor letter:
“Halozyme Therapeutics, Inc. (NASDAQ:HALO) is a biotechnology firm with a unique technology platform that allows for the conversion of biologics and small molecule drugs administered intravenously into a subcutaneous formulation. This technology is licensed to pharmaceutical companies, which allows them to optimize their valuable therapies and Halozyme to generate predictable and durable royalties. In Q2, partner Johnson and Johnson announced the denial of a co-formulation patent for subcutaneous Darzalex in Europe. While this unfavorable news continued to impact Halozyme’s share price, we anticipate several value-generating catalysts in the second half. The first catalyst is FDA approval of Argenx’s VYVGART Hytrulo. This approval also benefits Halozyme as it is the subcutaneous enabler. The approval is due shortly after the quarter ends. We also expect clinical data for three more indications by year end, which will further expand the commercial opportunities for VYVGART and VYVGART Hytrulo. In addition, we are excited about the potential partnership opportunity with Argenx to develop Halozyme’s autoinjector. VYVGART’s potential as a multibillion-dollar drug, coupled with the dependence on Halozyme’s subcutaneous formulation platform and autoinjector pens, presents an important growth opportunity for Halozyme.”
01. biote Corp. (NASDAQ:BTMD)
Price Reaction after the Price Target Cut: -0.6300 (-13.6069%)
On January 18, Truist Financial made significant revisions to its evaluation of biote Corp. (NASDAQ:BTMD), a participant in the biotechnology sector. The financial institution lowered the target from $10.00 to $9.00 while maintaining a “Buy” recommendation. The current market price stands at $4.00, reflecting a notable change in market value, specifically a decline of 13.6% in response to the adjusted target. This development sheds light on the dynamic nature of the biotechnology sector, where financial analysts like Truist Financial are adapting their outlooks based on various considerations. Despite the reduction in the target, the decision to uphold a “Buy” recommendation suggests a positive outlook, indicating Truist Financial’s belief that biote Corp. (NASDAQ:BTMD) may still present an attractive investment opportunity.
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