Why Citigroup Pumped the Brakes on These 3 Stocks After Earnings

Investors were running for cover on Friday, as markets were pulling back yet again. The Nasdaq was revisiting its worst trading session in the past month, after what was a strong rally in July, leading many to believe that the bear market is kicking back into gear. As the sell-off continues, analysts are pumping the brakes on their coverage as well, and one major Wall Street brokerage house is targeting three stocks in particular.

Citigroup issued calls across industries where it sees specific firms facing a rough patch in the near term. While the downgrades suggest that the brokerage firm is backing off these stocks, the price targets are cautiously optimistic, relatively speaking, with one huge exception.

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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Agilent Technologies

Citigroup reiterated a Neutral rating on Agilent Technologies Inc. (NYSE: A | A Price Prediction) but raised the $140 price target to $145, which implies upside of 9% from the most recent closing price of $132.77. Patrick Donnelly made this call following fiscal third-quarter results. Overall, Donnelly remains constructive on Agilent fundamentals, but he stays on the sidelines given the potential for the macro backdrop to limit the stock’s multiple expansion intra-quarter.

The stock traded at around $139 on Friday, in a 52-week range of $112.52 to $179.57. Shares are down over 11% year to date. Agilent has a 0.6% dividend yield.
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Huya

Citigroup downgraded Huya Inc. (NYSE: HUYA) to Neutral from Buy. It also cut its $6 price target to $4, implying upside of 14% from the most recent closing price of $3.52. Brian Gong was the lead on the call, in the wake of second-quarter earnings. He expects Huya to record more losses in the second half and expects live streaming revenue to sequentially decline by 3% in the third quarter. Gong added that he expects content costs to be more rational ahead, with the scaling back of content investment in the industry, which likely will result in a margin recovery in 2023.

The stock traded at around $3 on Friday, in a 52-week range of $3.04 to $11.75. Shares are down roughly 52% year to date.

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Weber

On Weber Inc. (NYSE: WEBR), Citigroup’s downgrade was to Sell from Neutral. Its $7 price target was slashed to $2.75, which now implies downside of 68% from the most recent close at $8.47. Chasen Bender was the lead analyst on the call. He noted in his report that sales have unwound over the past several quarters and with macro headwinds still pressuring the global consumer, the demand environment looks uncertain.

Bender further believes that Weber’s sales trends will continue to get worse before they get better. Fiscal 2023 sales look like they will be lower than he previously feared. While he sees multiple headwinds to profitability, Bender has “a hard time looking through” to a normalized valuation.

The stock traded at around $10 on Friday, in a 52-week range of $5.72 to $18.43. Shares are actually up over 39% year to date. The stock has a dividend yield of 2.3%.