4 big analyst cuts: Morgan Stanley sours on Alcoa
Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Alcoa, DigitalOcean, Teleflex, and Xcel Energy.
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Alcoa stock drops on Morgan Stanley downgrade
Alcoa (NYSE:AA) shares fell more than 3% pre-market today after Morgan Stanley cut the company to Underweight from Equalweight and lowered its price target to $33.00 from $43.00.
Morgan Stanley said it sees "material downside to consensus estimates for Alcoa," adding, "As negative earnings revisions materialize, we believe the stock will face downward pressure and underperform."
The firm's estimates for EBITDA in Q2, 2023, and 2024 are substantially lower than the consensus, and it noted that Alcoa shares are currently trading well above their historical average. In terms of its lowered expectations, the firm noted:
The large negative revisions in our earnings estimates and [price target] are mainly due to the high operating leverage AA has to aluminum prices; our commodity team has lowered its aluminum price forecasts in the near to mid-term.
DigitalOcean stock plunges on downgrade
Piper Sandler downgraded DigitalOcean (NYSE:DOCN) to Underweight from Neutral with a price target of $35.00. As a result, shares plunged more than 5% pre-market today.
The company reported its Q1 earnings last month, with revenue beating the consensus estimate, while EPS coming in worse than expected. Furthermore, the company provided a strong outlook, which was above the Street estimates.
2 more downgrades
Teleflex (NYSE:TFX) shares fell more than 3% yesterday after Needham downgraded the company to Hold from Buy, noting that UroLift expectations may still be too high.
According to Needham, their checks indicate that urologists are reducing their use of UroLift due to its retreatment rates, reimbursement cuts, and increasing use of competing procedures. This is also supported by their Google Trends data analysis, which indicates decreasing search interest in UroLift.
BMO Capital downgraded Xcel Energy (NASDAQ:XEL) to Market Perform from Outperform and cut its price target to $64.00 from $69.00 to reflect the lower-than-expected terms of the company’s regulatory settlement in Colorado.
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