Investing

9 Stocks Wall Street Analysts Want You to Sell Now!

Bulls usually win over bears in the long-term. Can long-term value win over growth?

 

Investors hear Wall Street analysts issuing new “Buy” and “Outperform” ratings almost all day and every day. What investors hear a lot less frequently, outside of those who issue panic-inducing reports of gloom and doom, is when they should actually sell a stock. Many analyst reports issued by Wall Street do not exactly issue screaming “Sell” reports on stocks. Investors often have to dig deeper into the underlying message where an analyst is telling investors they should not be buying the stock any longer.

Sometimes there are “sell” ratings based on valuation after huge gains. Then there are the reports that are issuing a “Sell” recommendation because the news flow or fundamentals specific to a company have changed. Investors should pay close attention regardless of when and why a “sell” rating is issued.

Tactical Bulls reviews the daily flow of Wall Street analyst upgrades and downgrades as a source for many new investor ideas all in one spot. Sometimes the “Sell” ratings just stand out like a sore thumb. After all, Wall Street’s number of stocks with “sell” ratings is probably about 10% or 15% of most analyst coverage universes. That should make “Sell” ratings stand out from the pack.

Tactical Bulls again reminds its readers that no single analyst report should ever be used as a sole decision to buy or sell a stock. That decision ultimately needs to be made by each investor and their financial advisor.

Here are some of the key downgrades and “sell” ratings, even though some may not actually say “Sell” in the ratings, seen in recent days.

Altria Group, Inc. (NYSE: MO) may be the king of tobacco in the United States, but the stock is now trading above its consensus price target. Barclays maintained its Underweight rating (an equivalent of “Sell” at other firms) even though it raised its price target to $43 from $37 — that’s versus $51.35 on last look. The Barclays report pointed out that tobacco stocks had a strong second quarter. The target price uptick was based on rolling multiples forward that the market is willing to pay, moving the price target up by 6 months and increasing its multiples 10%. Altria does still offer that massive 7.6% dividend yield.

Ballard Power Systems Inc. (NASDAQ: BLDP) is supposed to be one of the hydrogen winners, but that promise has been the case going all the way back to 2000 when its shares had gone parabolic. The stock initially fell after earnings and guidance, but it’s still just at $1.89 on last look. Wells Fargo reiterated its Underweight rating and the firm slashed its price target to $2.00 from $3.00 after noting its order backlog is down again and pointing out that management sees a hydrogen market adoption getting pushed out by several years. Ballard Power Systems was also downgraded to Sell from Hold and its price target was cut to $1.50 from $2.50 at TD Securities. CIBS also downgraded Ballard to Underperform from Neutral and slashed its target to $1.60 from $3.50. BMO Capital Markets reiterated its Underperform rating and cut its target to $1.70 from $2.25.

Etsy, Inc. (NASDAQ: ETSY) was last seen down 1.6% at $53.20, and its 52-week range of $=$52.54 to $89.58 may help outline the overall sentiment for the online seller of arts and crafts items. Etsy was maintained with a Sell rating at Loop Capital, but the firm is calling for more pain ahead as it lowered its price target down to $45.00 from $50.00 on August 12.

The Hershey Company (NYSE: HSY) has been around for generations, but at $201.00 its stock has been stuck in a range of about $180 to $220 for most of the last four years. Hershey was initiated with a Sell rating at Goldman Sachs on August 12, and its $185 price target would indicate more of the same is coming over the next year. The consensus analyst price target is closer to $203 here, and there is a 2.7% dividend yield.

Intuit Inc. (NASDAQ: INTU) may have seen its shares recover from the “A.I. Layoffs” news debacle, but at $628 it has a 52-week trading range of $473.56 to $676.62. Morgan Stanley did not exactly kill the stock with an “Underweight” rating, but the firm did downgrade Intuit to Equal Weight from Overweight and the firm cut its price target down to $685 from $750. The Morgan Stanley report pointed toward consistent solid growth hover time has allowed for its “multiples premium” over peers. The company now sees volatility from its recent buyout of CK and Mailchimp and there may be continued share losses at TurboTax after recent price hikes and risks at QuickBooks. The reason this was pointed out as a “sell” when it is actually not is because most other firms have stuck with their Buy and Outperform ratings for a long time on Intuit. It has just been rare to see big analyst downgrades here.

Kraft Heinz Co. (NASDAQ: KHC) was initiated with a Sell rating and assigned a $34 price target at Goldman Sachs on August 12. With shares at $34.75, the stock has spent most of the last year in a $32 to $39 trading band. Wall Street’s consensus analyst target price is up at $38.72, and analysts did raise their targets by $1 to $2 each after the post-earnings action at the start of August. A separate report from TD Cowen even pointed out that Kraft Mac & Cheese is losing market share and is struggling to reach single adult households who are buying higher quality options.

Pacira BioSciences, Inc. (NASDAQ: PCRX) already had a rough July, but its shares fell from $22 to the latest $12.50 price after the U.S. District Court for the District of New Jersey ruled that the company’s patent on EXPAREL is not valid. Two “double downgrades” were seen. Truist Securities issued a “double downgrade” down to Sell from Buy and slashed its target down to $8 from $30 as it sees a generic Exparel launch now as imminent within next 12 months. The firm also believes that a court victory on appeal to the recent patent ruling looks unlikely and that Pacira will face investor credibility concerns. JPMorgan also downgraded Pacira to Underweight from Overweight and slashed its target to $10 from an even more aggressive $45 before the news. Other firms did not issue sell ratings but downgrades and target price cuts were seen out of RBC, Raymond James and Piper Sandler.

Paysafe Limited (NYSE: PSFE) traded north of $21 after earnings were deemed a “beat and raise” quarter, but some are calling it overvalued. Paysafe was maintained with a Sell rating at UBS, even though the firm did raise its target to $17.00 from $16.50 after the report. UBS had raised its target up from $11 back in May. Paysafe shares were last seen trading at $20.25.

ZoomInfo Technologies Inc. (NASDAQ: ZI) was weak coming into the summer after falling from $16 to $12, but the shares fell down to $8 after the first week of August. The stock has since recovered back to $9.00 but weak guidance and news of a CFO transition have created a vacuum here. BofA Securities downgraded ZoomInfo in a “double downgrade” to Underperform from Buy and the firm slashed its price objective down to $8 from $23 in that call. Other firms did not issue “Sell” ratings but downgrades to Neutral and Hold equivalents were seen from Daiwa, Raymond James, KeyBanc and D.A. Davidson with equally weak price targets. ZoomInfo’s 52-week trading range is $7.65 to $19.39.

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