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 Just Trimmed Price Targets for These 5 Stocks.
Despite recent stock market challenges, Wall Street remains cautiously optimistic about potential returns in the coming months. In August, global stocks had their second-worst month of the year, dropping 2.96%. Rising bond yields and concerns about China's economy contributed to this decline. JPMorgan's Madison Faller believes 2023 can end on a positive note, reported CNBC. She notes that valuations have become more attractive after late-summer market turbulence, offering opportunities to rebuild equity exposure. Higher interest rates, driven by the Federal Reserve's actions, may create better bond entry points and protect against surprises. The debate on monetary policy has shifted from rate heights to how long central banks will keep them elevated. If inflation cools while rates stay high, it might set the stage for future rate cuts. Goldman Sachs has reduced the likelihood of a U.S. recession 2024 to 15%, supporting a "soft landing" scenario, which is typically favorable for equities. JPMorgan Private Bank shares a similar view, not anticipating a recession despite higher interest rates but rather a "softish landing." Consumers have maintained solid spending habits, with recent retail data showing resilience, albeit with some shifts toward thriftier options and goods. The latest earnings season brought positive surprises, with S&P 500 earnings exceeding expectations and rising steadily. Companies increasingly focus on long-term growth, with AI investments surging across industries. Technology stocks, especially AI ones, have driven market gains this year, though selectivity remains essential. Companies with strong balance sheets, cash generation, and the ability to compound returns over time are gaining favor in a rising-rate environment. As interest rates rise, this trend benefits profitable, strong balance sheet tech companies over speculative, unprofitable counterparts.
On September 7, US stock futures experienced a decline, and the dollar reached a six-month high as investors increased their expectations of further Federal Reserve policy tightening. Nasdaq 100 futures have fallen by 0.7%, with notable drops in premarket trading for companies like Apple Inc. (NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA), down approximately 2%. Concerns arose after news of China's intention to prohibit iPhones in certain government agencies, impacting US technology stocks, which have been at the forefront of this year's market gains. The rally in oil prices has paused as traders shift their focus to stockpile levels. After a nine-day winning streak, West Texas Intermediate (WTI) crude oil began to dip towards $87 per barrel. This remarkable run, the longest in over four years since January 2019, pushed prices into overbought territory. The surge was triggered by OPEC+ leaders' decision to extend supply cuts until the end of 2023, providing strong support to oil prices. However, the recent decline in oil prices comes as the American Petroleum Institute (API) reported a substantial drop of 5.5 million barrels in US crude inventories. This suggests a potential rebalancing of supply and demand dynamics in the oil market, contributing to the overall sentiment among traders. While oil prices have paused, the market remains attentive to factors such as supply levels, geopolitical developments, and demand trends, which can influence the direction of crude oil prices in the coming months.
On the stock market front, just like the drop in Nasdaq 100 futures in premarket trading for companies like Apple Inc. (NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA), analysts are bearish on several stocks by trimming their price targets. Check out the complete article to see details of these stocks.
Analysts Just Trimmed Price Targets for These 10 Stocks
Price Reaction after the Price Target Cut: +0.47(+0.44%)
On September 6, RBC Capital revised its price target for Chesapeake Utilities Corporation (NYSE:CPK), setting a new target of $124, down from the previous $133. Furthermore, the investment firm has maintained its "Sector Perform" rating for its shares. This adjustment in the target price was driven by an update made by their analyst in response to the prevailing economic conditions, particularly a consistently higher interest rate environment. To reflect this persistent shift in interest rates, RBC Capital has reevaluated the valuation metrics for Chesapeake Utilities Corporation (NYSE:CPK) and other regulated utilities. Specifically, they have recalibrated the price-to-earnings (P/E) multiples, which serve as a key determinant in assessing the value of these companies. In this recalibration, RBC Capital employs a 4.5% 10-year Treasury yield as the benchmark, a notable departure from previous valuation methods. The adjustment in P/E multiples significantly impacted the valuations of Chesapeake Utilities Corporation (NYSE:CPK) and similar utilities, resulting in a 13% reduction. This highlights how changes in interest rates can affect utility companies' perceived value to investors. In summary, RBC Capital lowered the price target and kept a "Sector Perform" rating for Chesapeake Utilities Corporation (NYSE:CPK) due to recalibrated valuation metrics driven by persistent high interest rates, leading to a notable decrease in assessed valuations.
Just as the negative sentiment impacted premarket trading for Nasdaq 100 futures, with companies like Apple Inc. (NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA) seeing declines, analysts are adopting a bearish stance on Chesapeake Utilities Corporation (NYSE:CPK).
Price Reaction after the Price Target Cut: -0.51(-0.77%)
On September 6, RBC Capital revised its price target for NextEra Energy, Inc. (NYSE:NEE), adjusting it from $90 to $89. Despite this slight reduction, the investment firm holds an "Outperform" rating for the company's shares. This revision in the price target results from RBC Capital's commitment to providing accurate and up-to-date assessments in response to prevailing economic conditions, particularly the consistent presence of higher interest rates. To better align with this enduring trend of elevated interest rates, RBC Capital's analyst has reviewed the valuation metrics applied to NextEra Energy, Inc. (NYSE:NEE) and other regulated utility companies. Specifically, the valuation multiples, including the price-to-earnings (P/E) ratios, have been recalibrated. This recalibration now incorporates a 4.5% yield on the 10-year Treasury as a reference point, a shift from previous valuation methodologies.
The adjustment in the P/E multiples has notably impacted the perceived valuations of NextEra Energy, Inc. (NYSE:NEE) and similar utility firms. The new approach has resulted in a significant decrease of approximately 13% in the assessed valuations. This reduction highlights the pivotal role that changes in interest rates play in shaping the perceived value of utility companies for investors. In summary, RBC Capital's recent actions regarding NextEra Energy, Inc. (NYSE:NEE) include slightly lowering the price target and retaining an "Outperform" rating. These changes stem from a recalibration of valuation metrics in response to the persistent presence of higher interest rates. This recalibration has led to a considerable reduction in the estimated valuations of NextEra Energy, Inc. (NYSE:NEE), emphasizing the importance of adapting to evolving economic conditions when evaluating investments in the utility sector.
Price Reaction after the Price Target Cut: -0.67(-1.05%)
On September 6, RBC Capital adjusted its price target for SJW Group (NYSE:SJW), reducing it from $85 to $76. Despite this reduction, the investment firm has opted to maintain a "Sector Perform" rating for the company's shares. This change in the price target is a response to the ongoing economic environment characterized by consistently elevated interest rates. RBC Capital's analyst reviewed the valuation metrics applied to SJW Group (NYSE:SJW) and other regulated utility companies to align with this enduring trend of higher interest rates. Specifically, they recalibrated the valuation multiples, including the price-to-earnings (P/E) ratios, to incorporate a 4.5% yield on the 10-year Treasury as a benchmark. This marks a shift from previous valuation methodologies.
The adjustment in the P/E multiples has notably impacted the perceived valuations of SJW Group (NYSE:SJW) and similar utility firms. This new approach has resulted in a substantial decrease of approximately 13% in the assessed valuations. This reduction underscores the significant influence that fluctuations in interest rates can have on the perceived value of utility companies from an investor's standpoint. In summary, RBC Capital's recent actions concerning SJW Group (NYSE:SJW) involve a price target reduction and retention of a "Sector Perform" rating. These adjustments were made in response to the enduring presence of higher interest rates, prompting a recalibration of valuation metrics. This recalibration has led to a significant decrease in the estimated valuations of SJW Group (NYSE:SJW), emphasizing the importance of adapting to evolving economic conditions when evaluating investments in the utility sector.
Price Reaction after the Price Target Cut: -0.47(-1.37%)
On September 6, Loop Capital analyst Rob Sanderson opted to maintain his "Hold" rating for JD.com, Inc. (NASDAQ:JD), a prominent e-commerce company. However, he has made a downward adjustment to the price target, revising it from $42 to $39. This update from the analyst reflects his current assessment of JD.com, Inc. (NASDAQ:JD) performance and potential within the market. While the "Hold" rating suggests a neutral stance, the reduced price target indicates a less optimistic outlook than the previous valuation. Similar to the decline in premarket trading of Nasdaq 100 futures affecting companies like Apple Inc. (NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA), market analysts hold a pessimistic outlook for JD.com, Inc. (NASDAQ:JD).
Baron Emerging Markets Fund made the following comment about JD.com, Inc. (NASDAQ:JD) in its first quarter 2023 investor letter:
“JD.com, Inc. (NASDAQ:JD) is one of the three largest e-commerce platforms in China. Shares declined after the company reported a slowdown in fourth quarter sales and commented that deliberate culling of unprofitable SKUs would also be a drag on headline revenue growth in the first half of 2023. We believe the slowdown was driven by the peak in Chinese COVID lockdowns, which have since ended, and the elimination or reduction of unprofitable business is better for long-term margins and returns on capital. We remain investors.”
Price Reaction after the Price Target Cut: -0.84(-1.80%)
As of September 6, Mizuho analyst Anthony Crowdell upheld a "Neutral" rating on Dominion Energy, Inc. (NYSE:D), a significant energy company. However, he has made a notable downward adjustment to the price target, revising it from the previous target of $58 down to $46. This decision by the analyst reflects his current assessment of Dominion Energy, Inc. (NYSE:D) performance and prospects in the market. While the "Neutral" rating suggests a relatively balanced view, the reduced price target indicates a more cautious outlook than the prior valuation. Analysts regularly update their assessments based on various factors, including company financials, market conditions, and industry developments, to provide investors with the most up-to-date guidance.
Carillon Eagle Growth & Income Fund made the following comment about Dominion Energy, Inc. (NYSE:D) in its Q4 2022 investor letter:
“Dominion Energy, Inc. (NYSE:D) traded lower following the surprise announcement of the company’s strategic review. The company is likely to sell several business units, which will impact future earnings. As a result of earnings uncertainty, we decided to sell the stock.”
