In this article, we will discuss the 10 stocks whose price targets were recently trimmed by analysts. If you want to see more such stocks on the list, go directly to Analysts Are Cutting Price Targets of These 5 Stocks.
On May's final trading day, the S&P 500 neared erasing all its monthly gains, driven by concerns about rapid market growth and global economic risks. On Wednesday, May 31, the index dropped below the critical level of 4,200 due to disappointing economic data from China and Europe, raising worries about a possible economic downturn. According to Bloomberg, the decline persisted with the release of the Labor Department's JOLTS report, revealing a surprising surge in US job vacancies to over 10 million, surpassing expectations. These numbers further fueled speculation of the Federal Reserve's potential interest rate hike in July. Regarding the latest data, there was positive news in terms of employment. In May, the non-farm payrolls saw an addition of 339,000 new jobs, surpassing the predicted 195,000. Moreover, there were upward adjustments made to the March and April figures, further emphasizing the stronger data for May, which was better than anticipated. However, the unemployment rate experienced a slight increase from 3.4% in April to 3.7% in May, surpassing the expected levels. On the other hand, the labor force participation rate remained unchanged at 62.6% in May, aligning with the predicted outcome.
As reported by Bloomberg, debate among market strategists surrounds whether investor positioning in the Nasdaq 100 Index is becoming overcrowded, posing a potential threat to the ongoing rally. With a remarkable 31% surge this year, concerns arise regarding investor exposure and its impact. Citigroup's Chris Montagu highlights a three-year high in long positions for Nasdaq 100 futures, accompanied by elevated profit levels, raising worries of profit-taking, and a potential headwind against the rally. Montagu's analysis suggests a bias towards investors taking profits, which may exert pressure on the market.
In its annual default study released on Wednesday, Deutsche Bank has warned that a wave of debt defaults by companies in the United States and Europe is looming, reported Reuters. This is attributed, in part, to the current monetary tightening cycle, which is the fastest seen in the past 15 years. According to Deutsche Bank's projections, default rates are expected to reach their highest point in the fourth quarter of next year. The study forecasts peak default rates of 9% for U.S. high-yield debt, 11.3% for U.S. loans, 4.4% for European high-yield bonds, and 7.3% for European loans.
A recent Reuters poll of property analysts suggests that U.S. home prices are projected to experience a smaller decline than previously anticipated this year, followed by a period of stagnation in 2024. This is despite the widespread belief that interest rates will remain elevated for an extended period of time. Despite the Federal Reserve implementing its most aggressive tightening cycle in forty years, average home prices have only dropped by slightly over 5% from their recent peaks. This decline is relatively minor compared to the significant 45% surge during the COVID-19 pandemic.
On the stock market front, tech stocks, including Alibaba Group Holding Limited (NYSE:BABA) and Autodesk, Inc. (NASDAQ:ADSK), came into the spotlight after receiving price-target cuts from analysts. In addition, renewable energy stock Enphase Energy, Inc. (NASDAQ:ENPH) and financial services company Citigroup Inc. (NYSE:C) were also trending after analysts cut their price targets for them. Check out the complete article below to see specific details behind the updated price targets for these stocks.
10. Paysafe Limited (NYSE:PSFE)
Number of Hedge Fund Holders: 23
Paysafe Limited (NYSE:PSFE) is a digital commerce solutions provider based in London, United Kingdom. It enables companies to process transactions, run data analytics, operate digital wallets, and make payments. Paysafe Limited (NYSE:PSFE) became an independent publicly traded company in late 2020 after it merged with Foley Trasimene Acquisition Corp. II.
On May 23, BofA analyst Aditya Buddhavarapu reduced the target price for Paysafe Limited (NYSE:PSFE) from $17 to $13.70 and maintained an Underperform rating on the company's shares. Although acknowledging the early indications of operational improvement in Paysafe Limited (NYSE:PSFE) Q1 results, the firm has adjusted its sum-of-the-parts-based target primarily to reflect the market value of payment processor peers.
09. Victoria's Secret & Co. (NYSE:VSCO)
Number of Hedge Fund Holders: 26
Victoria’s Secret & Co. (NYSE:VSCO) is an apparel retailer headquartered in Reynoldsburg, Ohio. The firm is one of the more famous companies in the world when it comes to women’s undergarments and it makes and sells a host of different products. Shares of Victoria’s Secret & Co. (NYSE:VSCO) slipped nearly ten percent during the previous week ending May 27. The drop came after UBS trimmed its price target for the lingerie, clothing, and beauty retailer from $27 to $21 per share.
Jay Sole, an analyst at UBS, on May 23, reduced the target price for Victoria’s Secret & Co. (NYSE:VSCO) from $27 to $21 and maintained a Sell rating on the company's shares. UBS predicts that Victoria’s Secret & Co. (NYSE:VSCO) will likely revise its earnings per share (EPS) forecast for fiscal year 2023 downward. This revision is expected due to a difficult first quarter characterized by slowing trends in the Specialty Retail sector, as stated by the analyst in a research note addressed to investors.
08. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Hedge Fund Holders: 36
On May 23, James Fish, an analyst at Piper Sandler, decreased the price target for Zoom Video Communications, Inc. (NASDAQ:ZM) from $78 to $76 and maintained a Neutral rating on the company's shares. This adjustment is based on revised free cash flow estimates following Zoom Video Communications, Inc. (NASDAQ:ZM) Q1 report. Although the company's performance exceeded expectations, the analyst notes that the commentary and anticipated growth in the Online segment suggest a potentially weaker performance in the Direct segment later in the year. The selling environment is expected to become more challenging, and the analyst believes that Zoom Video Communications, Inc. (NASDAQ:ZM) shares lack a significant catalyst. Additionally, the Direct segment is decelerating faster than initially anticipated.
Evercore ISI also reduced the price target for Zoom Video from $85 to $75 on May 23 and maintained an In-Line rating on the company's shares. Despite the quarter's results being better than anticipated, the firm finds it challenging to identify a short-term catalyst that could potentially revaluate Zoom Video Communications, Inc. (NASDAQ:ZM) shares. This difficulty arises from the fact that the market for video communication platforms has become highly competitive, and it is still in its early stages. Furthermore, the uncertain macroeconomic environment adds to the hesitation.
07. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Number of Hedge Fund Holders: 36
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is a British-American multinational insurance company providing consumers with data-driven solutions. In the first quarter of 2023, Willis Towers Watson Public Limited Company (NASDAQ:WTW) generated revenue of $2.2 billion, up 4% from the same period last year. The company’s operating cash flow for the quarter came in at $134 million, and its free cash flow for the quarter amounted to $92 million.
On May 23, Michael Zaremski, an analyst at BMO Capital, decreased the price target for Willis Towers Watson Public Limited Company (NASDAQ:WTW) from $260 to $230 and maintained a Market Perform rating on the company's shares. According to the analyst's research note, Willis Towers Watson Public Limited Company (NASDAQ:WTW) has undergone significant changes recently and is currently focused on its expense efficiency program following the terminated merger with Aon. The analyst prefers waiting for a more favorable entry point in the stock, which would include better visibility into the improvement of free cash flow conversion, especially in light of the company's restructuring initiatives and the costs associated with its increased hiring activities.
06. Ovintiv Inc. (NYSE:OVV)
Number of Hedge Fund Holders: 38
Founded in 2002, Ovintiv Inc. (NYSE:OVV) is an oil and gas company that produces and markets oil, natural gas, and natural gas liquids. The company’s multi-basin portfolio includes Anadarko Basin in West-Central Oklahoma, the Permian Basin in Texas, and Montney in Western Canada. Other assets of Ovintiv Inc. (NYSE:OVV) include Bakken, a multi-bench oil resource in North Dakota, and the Uinta basin in Utah. The company's operating segments comprise the US operations, the Canadian operations, and Market Optimization.
CIBC, on May 23, reduced the price target for Ovintiv Inc. (NYSE:OVV) from $55 to $50 and maintained a Neutral rating on the company's shares. Although the analyst recognizes value within the large-cap energy sector, they believe that the relative valuation compared to the longer-term strip has decreased since earlier in the year. The analyst notes that the second quarter is expected to have the highest production downtime due to planned turnarounds.
Click to continue reading and see Analysts Are Cutting Price Targets of These 5 Stocks.
Disclosure: None. Analysts Are Cutting Price Targets of These 10 Stocks is originally published on Insider Monkey.