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7 downgrades to watch: Carvana slashed again

Stock Markets Nov 28, 2022 14:10
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MDT
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UGI
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CVNA
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These stocks warrant caution in the coming days after last week's negative analyst actions, all covered first on InvestingPro+.

1. Carvana Co (NYSE:CVNA) was downgraded by Argus to Sell from Hold. The analyst commented, "As used car prices fall, we believe that Carvana will struggle to make a profit on vehicles previously purchased at high prices. The company is also highly leveraged, with a debt/capital ratio of 95%. CVNA shares are down sharply from their 52-week highs, reflecting both the company's recent results and weak industry trends, as more consumers defer large purchases amid rising interest rates and increased economic uncertainty." Shares were off 7.2% for the week to $8, ad are down 96.7% for the year.

2. Medtronic (NYSE:MDT) was downgraded by at least two analysts after disappointing earnings: Medtronic reported a revenue drop and cut its full-year profit guidance to reflect macro pressure and FX headwinds. Citi downgraded the stock to Neutral from Buy with a price target of $85 per share (from $108), and Oppenheimer downgraded it to Perform from Outperform with an $85 price target.

The Citi analyst said, "This was one of those quarters when investors (and we) question the ability of Medtronic to deliver MSD revenue growth over time." Oppenheimer said, “We continue to see solid long-term pipeline opportunities and valuation is supportive, but with visibility on near-term fundamentals still low, we step to the sideline,” Lichtman wrote. Shares were down 0.8% for the week to $79.12.

3. Victory Capital Holdings (NASDAQ:VCTR), Inc. was downgraded by at Piper Sandler to Underweight from Overweight with a price target of $29 (from $34).The analyst commented, "We are cautious on the traditional asset management space into year-end and are downgrading VCTR to Underweight given the pressure to revenues from turbulent markets and outflows which are driving continued AUM and revenue declines. We also expect headwinds to fee yields over the NTM from the retail and equity outflows." Shares were down 9.9% for the week to $28.87.

4. UGI (NYSE:UGI) Corporation was downgraded by BofA Securities to Underperform from Neutral with a price target of $41 (from $43).The analyst commented, "We reduce our FY23 EPS estimate to $2.77, now below Street as propane volumes hold steady to FY22 performance, and volume reductions and divestiture losses as UGI exits European energy marketing pose a ~$0.22 EPS drag in FY23. We also flag 4Q22’s negative operating cash flow of -$132M, unheard-of for UGI having posted OCF-positive fourth-quarters for over two decades." Shares were up 4.3% for the week to $39.71.

5. Abercrombie & Fitch Company (NYSE:ANF) was downgraded by CFRA to Strong Sell from Sell with a price target of $11 (from $7). Shares were up 23.1% for the week to $23.77.

6. Lyft (NASDAQ:LYFT) was downgraded by Cowen to Market Perform from Outperform with a price target of $12.The analyst cited "near-term challenges including (i) higher insurance costs, which could persist due to inflationary pressures; (ii) potential for revenue per rider to be affected by weaker consumer; (iii) regulatory overhang; and (iv) uncertainty around reaching 2024 EBITDA guide." Shares were down 3.6% for the week to $11.14.

7. Dropbox (NASDAQ:DBX) was initiated at Underperform with a price target of $20. Shares were off fractionally for the week at $22.28.

7 downgrades to watch: Carvana slashed again
 

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