Investing

5 Big Analyst Downgrades Into the Rally: Amazon, BHP Billiton, Conagra, General Electric, Disney

Jon C. Ogg

Published: April 25, 2017 2:59 pm

Last Updated: January 12, 2020 12:40 pm

While the last week of April has seen two serious rallying days in the stock market, there have been some analyst downgrades which might almost seem to be too large to ignore. After all, this is earnings season and the Nasdaq just hit 6,000 for the first time ever.

24/7 Wall St. reviews dozens of analyst research reports each day of the week. The goal is to find new investing ideas for our readers. Some of the key analyst reports cover stocks to buy, while other analyst reports cover stocks to sell or stocks to avoid.

What seemed hard to imagine was the number of analyst downgrades seen in key market-driving or sector-driving stocks this week. Some of the calls should have raised some eyebrows. After all, it might not be that easy telling investors to sell on days when the stock market has been so strong again.

One more consideration is that traditional retail investors hear from brokers and advisors all the time about when they should buy. They do not get told to sell shares as often. These were the top analyst downgrades and top negative calls seen from Monday, April 24 to Tuesday, April 25, 2017.

Amazon.com, Inc. (NASDAQ: AMZN) has seen upgrade after upgrade in recent weeks. Yet Team Bezos was downgraded to Market Perform from Outperform at Raymond James on Tuesday, with the firm noting that a lack of margins and profits may ultimately catch up. Was this analyst trying to garner more headline attention with it being right before earnings?

Amazon closed up 1% at $907.41 on Monday. The stock was indicated down 0.2% at $905.50 on Tuesday morning, and it was down 0.1% at $906.65 late in afternoon trading.

BHP Billiton Limited (NYSE: BHP) was downgraded to Sell from Neutral by Goldman Sachs on Tuesday. The call is after recent activist investor pressure, but BHP Billiton’s ADSs have held up fine over the last week. In fact, BHP shares were down only 2-cents at $36.14 late on Tuesday.

BHP’s 52-week range is $25.75 to $41.79 and its consensus analyst target price is $39.93.

ConAgra Brands, Inc. (NYSE: CAG) is a $16 billion food company and might seem insulated against selling trends. After all, food is defensive and ConAgra pays a 2% dividend yield. It was downgraded to Sell from an already cautious Neutral rating with a $35 price target (versus $40.93 close) at UBS.

In Tuesday’s trading, ConAgra shares were down 4.1% at $39.25. Its 52-week range is $33.08 to $41.68.

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General Electric Company (NYSE: GE) was downgraded to Neutral from Buy and the price objective was cut to $31 from $35 at BofA Merrill Lynch on Tuesday. The call might feel outrageous to some G.E. shareholders after this same exact firm and analyst just came out with a flash Buy-rating that was very positive right after Friday’s earnings report. Merrill Lynch now feels that investors should move to the sidelines as expectations are still too high for 2018.

GE’s 52-week range is $28.19 to $33.00. GE was indicated down 0.6% at $29.37 on Tuesday morning, and the stock was down 0.15% at $29.50 in late-day trading.

Walt Disney Co. (NYSE: DIS) was downgraded to Hold from Buy at Loop Capital on Monday, after shares had just hit a 52-week high the prior week.  Loop Capital’s view is that the good news is now reflected in the stock at the current price and that Disney’s growth is the same that it always been. One special note here was that Loop is worried that the prior concerns over succession for Bob Iger will continue in the next couple of years even though a contract extension was made.

Loop’s view is that its $118 price target is fair value. Shares closed down 0.3% at $114.44 on Friday but were indicated up 0.5% at $115.00 on Monday and were up at $115.44 on Tuesday’s afternoon trading. Disney’s 52-week range is now $90.32 to $115.52 and consensus price target was $118.70.