4 big analyst cuts: Sea loses Buy rating at Citi after Q2 miss
Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Sea, Kimco, Agiliti, and Chesapeake Energy.
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Sea shares extend decline following Citi’s downgrade
Sea Ltd (NYSE:SE) shares fell more than 3% premarket today after Citi downgraded the company to Neutral from Buy and cut its price target to $50.00 from $98.00, as reported in real time on InvestingPro.
Shares plunged more than 28% yesterday after the company reported worse-than-expected Q2 EPS/revenues.
Sea reported a mixed 2Q23 with gaming operating metrics like QAU and paying users and ecommerce metrics like gross order growth and active users achieving sequential growth while missing on ecommerce adjusted EBITDA as it has stepped up investment pace to regain GMV.
Management anticipates that continued accelerated investment might result in Shopee's EBITDA and overall group-level profit returning to a loss in the upcoming quarters. While Citi agrees that this strategy is fitting to defend market share in the face of heightened competition, the absence of a definite path for GMV growth and the management's tolerance of turning back to loss-making suggest a lack of visibility regarding the investment's effectiveness.
Kimco cut to Neutral at Goldman Sachs
Goldman Sachs downgraded Kimco Realty (NYSE:KIM) to Neutral from Buy and cut its price target to $21.00 from $23.00.
The firm updated its model to incorporate recent Q2/23 earnings. While expectations remain for robust demand and pricing to persist, Goldman anticipates FFO growth to be more limited than it previously thought. This is attributed to several factors, such as near-term vacancies, refinance headwinds, and a slower transaction environment.
Two more downgrades
Agiliti (NYSE:AGTI) fell 5% yesterday after Citi downgraded the company to Neutral from Buy and cut its price target to $13.00 from $20.00.
With its size/scale, along with its distinctive offering as the sole provider of outsourced end-to-end medical device rental and repair services, Citi still holds the belief that Agiliti is well positioned to wallet share and foster long-term growth.
However, recent developments, including the second lower rebasing of its peak need rental business since 2Q22, coupled with delays on the maturity ramp for large complex contracts, cloud visibility around EBITDA margin stability/turnaround following difficult COVID-related comps.
JPMorgan downgraded Chesapeake Energy (NASDAQ:CHK) to Neutral from Overweight and cut its price target to $96.00 from $97.00.
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