Wells Fargo Cuts Targets and Coverage on Carnival and More

After last week’s rally, markets have been under pressure this week, giving more credence to a bear market rally. But while some stocks saw a bounce recently, one major Wall Street firm was warning about a handful of stocks that are not done falling yet.
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Wells Fargo recently issued a few negative calls across its coverage universe. Even though we may be in the midst of a bear market, or even recession, the investment house warns that this handful of stocks could do even worse than the broader markets.

It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Blueprint Medicines

Wells Fargo’s Derek Archila initiated coverage on Blueprint Medicines Corp. (NASDAQ: BPMC | BPMC Price Prediction) with an Underweight rating and a $40 price target. That implies downside of 33% from the most recent closing price of $60.15.

Archila believes that Ayvakit likely will get approved in non-advanced systemic mastocytosis but says this seems to be priced into the stock at these levels. He would not be buying the shares ahead of the Pioneer data later this summer. Archila thinks that the data will be a “sell the news” event and Blueprint has limited remaining catalysts in 2022.

Further, he believes a capital raise seems likely and that outyear consensus estimates are too bullish for the non-advanced systemic mastocytosis opportunity.

Blueprint Medicines’ stock has a 52-week trading range of $43.46 to $117.86, and it traded near $53 a share Wednesday. The stock is down about 50% year to date.
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Carnival

Daniel Politzer was on the Carnival Corp. & PLC (NYSE: CCL) call. He reiterated an Underweight rating and cut the $21 price target to $13, which implies upside of 20% from the most recent closing price of $10.85.

Politzer notes in the report that Carnival reported a downside second-quarter result with revenue/EBITDA below his and Wall Street estimates, though the focus remains on demand commentary, specifically as it relates to bookings and pricing for the second half of 2022 and 2023. Net, he does not believe the incremental positives in Carnival’s report are enough to win over shorts, while the incremental negatives likely are not bad enough to derail longs.

The stock traded near $9 on Wednesday, in a 52-week range of $8.70 to $27.53. Shares are down around 49% year to date.
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Deckers Outdoor

Kate Fitzsimons resumed coverage with an Equal Weight rating and a $280 price target on Deckers Outdoor Corp. (NYSE: DECK). The implied upside is 2% from the most recent closing price of $273.32.

While Fitzsimons is compelled by the high-quality brand portfolio and strong balance sheet, her biggest concern is risk to the company’s already industry-leading margins into a slowing macro and with backing up channel inventories. Ultimately, Fitzsimons sees a balanced risk/reward at current levels, particularly with the tougher catalyst path in the medium term across the group given her further expectation for downside risk to estimates on slowing sales and rising markdowns.

The stock has a 52-week trading range of $212.93 to $451.49, and it traded near $263 a share early Wednesday. The share price is about 28% lower year to date.