4 big analyst cuts: American Express slashed to underweight following Q2
Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at American Express, Progressive, Estee Lauder, and ZoomInfo Technologies.
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American Express downgraded to Underweight on student debt headwinds
American Express (NYSE:AXP) shares fell 1% yesterday after Piper Sandler downgraded the company to Underweight from Neutral and cut its price target to $149.00 from $172.00 following last week’s Q2 earnings, highlighted by an EPS beat but lower-than-expected revenues.
"We have become increasingly concerned AXP will have difficulty hitting its targeted 10%+ revenue growth and ~15% EPS growth with network volume experiencing a sizable slowdown."
Furthermore, Piper Sandler's survey on the re-start of federal student debt payments indicates that the 25-34 years old age group will likely be the most affected, experiencing slower spending and higher default rates. Taking into account these negative comps, the firm expects American Express to encounter headwinds in revenue growth and operating margins, which could have an impact on its earnings in 2024.
Progressive falls on Morgan Stanley downgraded
Progressive (NYSE:PGR) shares fell more than 1% pre-market today after Morgan Stanley downgraded the company to Underweight from Equalweight and cut its price target to $114.00 from $135.00, as reported in real time on InvestingPro.
Despite Progressive's impressive track record in underwriting, the company is currently facing challenges, particularly with continued reserve charges that have been impacting earnings this year.
"The increased severity in personal auto and slowdown in policy in force (PIF) growth are unlikely to dissipate until 2024, and weigh on EPS going forward."
2 more downgrades
Piper Sandler downgraded Estee Lauder (NYSE:EL) to Neutral from Overweight and cut its price target to $195.00 from $265.00. Shares fell more than 1% yesterday.
Despite the recent decline in shares, which reflects a "weakened" sentiment, Piper Sandler believes that there is still further downside risk. This is despite the potential positive impact of "eventual China recovery tailwinds," which many are currently anticipating and factoring into the company's current valuation.
ZoomInfo Technologies (NASDAQ:ZI) shares fell more than 3% yesterday after RBC Capital downgraded the company to Sector Perform from Outperform and cut its price target to $28.00 from $30.00, reflecting concerns over GenAI and intensifying competition, as well as ongoing macro challenges.
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