Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed today: downgrades at SolarEdge Technologies, Yum! Brands, Columbia Sportswear , and Blue Owl Capital.
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SolarEdge Technologies receives 3 downgrades after Q3 warning
SolarEdge Technologies (NASDAQ:SEDG) received multiple downgrades following the release of its preliminary Q3 results, which caused its stock to drop nearly 25% pre-market today.
The company's Q3 revenue is now expected to be in the range of $720-$730 million, significantly below the previous projection of $880-$920M.
Goldman Sachs downgraded the company from Buy to Neutral with a $131 price target. After two consecutive quarters of disappointing results and guidance, the bank finds it challenging to support the stock.
“We underestimated the effects of the combination of ongoing inventory, end market demand, and now margin issues that are likely to serve as headwinds for the stock for the foreseeable future given what appears to be a significant deterioration in visibility," commented the analysts.
Deutsche Bank shifted its rating from Buy to Hold with a $150 price target. The analysts cited the current weakness in US residential demand, expected to persist for the next 6 to 9 months before showing signs of improvement. Additionally, higher seasonality towards year-end, coupled with reduced demand trends in Q4 and Q1, is expected before improvements in March.
Meanwhile, Roth/MKM downgraded the company from Buy to Neutral with a $100 price target. The analysts pointed to management's reference to cancellations and pushouts by EU distributors. According to the analysts, challenges in the European and US residential markets are expected to persist.
“Combine this with FX headwinds and the Israeli conflict, we are stepping aside and downgrading to Neutral from Buy until visibility improves," added the analysts.
Yum! Brands slashed to Neutral
Redburn-Atlantic downgraded Yum! Brands (NYSE:YUM) to Neutral from Buy with a price target of $115.00, as reported in real-time on InvestingPro.
According to the analysts, the change in the company's capital structure since it spun off Yum! China in 2016 has been a key driver of recent earnings growth, with buybacks playing a significant role.
“For example, between FY16 and FY22, Yum’s operating profit grew 27%, but the aggressive embrace of buybacks led to shares outstanding fall by 28% and actual adjusted EPS grow 80%, more than double the rate of operating profit,” commented the analysts.
However, with the anticipation of a higher for longer environment, the analysts believe there is increased risk to the EPS growth outlook as Yum! pares back buybacks, prioritizes debt paydown, and faces higher interest expense. This is expected to result in EPS being 6-8% below consensus expectations between fiscal 2024 and 2026, according to the analysts.
Two more downgrades
Columbia Sportswear (NASDAQ:COLM) shares fell nearly 1% pre-market today after Seaport Global Securities downgraded the company to Neutral from Buy.
According to the analysts, this change is driven by concerns about the near-term outlook. Factors like a slow start to the fall/winter season, expectations of ongoing warm weather due to strong El Nino conditions, and the possibility of weak fall 2024 orders, have led to this more cautious stance.
UBS downgraded Blue Owl Capital (NYSE:OWL) to Neutral from Buy and cut its price target to $14.00 from $15.00.
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