In this article, we’ll take a look at the 10 stocks recently downgraded by analysts. If you want to see more such downgrades on the list, you can directly visit Analysts Downgrade These 5 Stocks.
US equities have mostly traded in the red this month due to investor concerns over future rate hikes. Moreover, the producer price index for the month of November was higher than expected. Wholesale prices rose 0.3% last month, above consensus forecasts for a 0.2% gain. Investors are now concerned that the Fed is likely to keep interest rates higher to bring down inflation.
Meanwhile, the changing macro environment forced analysts to revise their ratings for several stocks. Salesforce, Inc. (NYSE:RCMP), Shopify Inc. (NYSE:WAREHOUSE) and Mondelez International, Inc. (NASDAQ:MDLZ), were among the notable companies that were recently downgraded by analysts due to macroeconomic headwinds.
In addition, online accommodation marketplace Airbnb, Inc. (NASDAQ:ABNB) and cruise line Royal Caribbean Cruises Ltd. (NYSE:RLC), were also downgraded by analysts. See the full article for details on these downgrades.
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10. The Boston Beer Company, Inc. (NYSE:SAT)
Number of hedge fund holders: 18
Deutsche Bank turned bearish on The Boston Beer Company, Inc. (NYSE:SAM) on Tuesday, December 6. The research firm downgraded the premium liquor company from “Hold” to “Sell,” citing weakness in its hard seltzer core. segment.
Analyst Steve Powers pointed to declining seltzer sales amid intensified competition and growing pressure on consumer spending. Powers expects Truly’s sales to fall into the low numbers next year due to these factors. Additionally, the analyst expects rising costs to weigh on the profitability of The Boston Beer Company, Inc. (NYSE: SAM).
Separately, investment management firm Artisan Partners also referenced Boston Beer’s hard seltzer business in its Q3 2022 letter to investors. Here is what the firm said about The Boston Beer Company, Inc. (NYSE: SAM):
“We ended our campaigns in boston beer company. Boston Beer Company sells a focused portfolio of alcoholic beverage brands. In recent years, the company has established itself as one of the leaders in the hard seltzer category, which has grown over 150% in each of the past three years (2018-2020). Boston Beer’s Truly brand, the second-largest seller of hard seltzer, benefited from this growth and was central to our investment thesis. However, growth in the hard seltzer category has recently slowed to single digits, failing to meet high investor expectations and putting pressure on Boston Beer’s earnings. Truly’s growth was central to our investment thesis, and a recovery is uncertain; thus, we have ended our investment campaign.
9. Tripadvisor, Inc. (NASDAQ:TRIP)
Number of hedge fund holders: 33
Wolfe Research lowered its ratings for Tripadvisor, Inc. (NASDAQ:TRIP) from “Peer Perform” to “Underperform” on Wednesday, November 7. The research firm pointed to weak travel demand.
Analyst Deepak Mathivanan believes travel demand will likely moderate amid the weakening macroeconomic environment over the coming quarters. Mathivanan added that the consensus expectations do not really reflect the real situation.
The analyst also believes that the company’s core auction market could face challenges as demand drops in fiscal 2023. In addition, Mathivanan also cut its ratings for the online travel sector, which includes Tripadvisor, Inc. (NASDAQ:TRIP), of “Marketweight”. to “Market Underweight”.
8. Unity Software Inc. (NYSE:you)
Number of hedge fund holders: 34
Unity Software Inc. (NYSE:U) is best known for its software solutions used by developers to build games and other content for mobile and PC. The company recently received a demotion from BTIG.
The research firm lowered its rating for Unity Software Inc. (NYSE:U) from “Buy” to “Neutral” on Thursday, December 8. Analyst Clark Lampen expects the potential pressure on the mobile games market to persist over the next two years. Lampen also mentioned the risk of short-term deterioration and the longer-than-expected recovery in the global mobile games market.
Unity Software Inc. (NYSE:U) has struggled to gain value so far in 2022. The stock has lost more than 70% of its value since the start of the year.
7. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of hedge fund holders: 42
JPMorgan lowered its ratings for Royal Caribbean Cruises Ltd. (NYSE:RCL) from “overweight” to “underweight” on Tuesday, December 6. Analyst Daniel Adam estimates the Florida-based cruise line could face a funding shortfall of around $400 million by the end of 2023.
Adam added that the company would likely need to raise an additional $3.5 billion in capital through an asset or stock sale that would be dilutive for shareholders. It cut its price target for Royal Caribbean Cruises Ltd. (NYSE: RCL) from $106 per share to $47 per share.
Besides Royal Caribbean Cruises Ltd. (NYSE:RCL), analysts also recently cut their ratings for Salesforce, Inc. (NYSE:CRM), Shopify Inc. (NYSE:SHOP) and Mondelez International, Inc. (NASDAQ:MDLZ).
6. Carvana Co. (NYSE:CVNA)
Number of hedge fund holders: 43
Wedbush analyst Seth Basham lowered his rating for Carvana Co. (NYSE:CVNA) from “Neutral” to “Underperforming” on Wednesday, December 7. Basham also cut its price target for the used-car retailer to $1 per share, down sharply from $9. per share.
The downgrade came after multiple reports suggested Carvana Co. (NYSE:CVNA) could be heading for bankruptcy. Carvana shares fell more than 42% on December 7 following the reports.
Used vehicle prices have fallen in recent months as rising interest rates have impacted the purchasing power of potential buyers. The affordability factor has weighed on growth at Carvana Co. (NYSE:CVNA), which has fallen nearly 100% year-to-date, including the latest decline.
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Disclosure: none. Analysts Downgrade These 10 Stocks is originally published on Insider Monkey.
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