Here is your Pro Recap of the biggest analyst cuts you may have missed since Friday: downgrades at AT&T, Twilio, PepsiCo, and Telus International.
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AT&T downgraded twice in as many days
AT&T (NYSE:T) was recently down some 1.7% pre-market Monday after Citi downgraded the company to Neutral from Buy and cut its price target to $16.00 from $22.00 - and also designated it "High-Risk."
Citi said that while it has "an opportunity to sustain positive revenue growth, improve margins and FCF, and find valuation support near current level," it also believes AT&T "could incur possible future liabilities and financial risk from the industry’s historical use of lead sheathed cabling."
JPMorgan, for its part, cut AT&T's rating to Neutral from Overweight with a price target of $17.00 (from $22.00).
The analyst cited the recently surfaced issue regarding the reported toxicity of its old lead-sheathed cables, calling it an "unquantifiable, long-term overhang for the stock, which adds to the risk premium" and drives much of the price target reduction.
JPMorgan also said even though AT&T is trading at very cheap levels, it sees very limited potential for potential upside given the many downward revisions on its fiber growth businesses, the macro high-interest environment, and the uncertainty regarding the lead-sheathed cables.
AT&T is set to report its Q2/23 earnings on July 26. Street estimates stand at $0.60 for EPS and $30.04 billion for revenues.
Twilio shares drop on Piper Sandler downgrade
Piper Sandler downgraded Twilio (NYSE:TWLO) to Neutral from Overweight with a price target of $71.00 (from $56.00). As a result, shares fell more than 2% pre-market today.
According to analysts, the surge in Twilio's stock since disappointing Q1 earnings in May was driven by positive conference comments, market trends, and potential activism. While Twilio appears to be more stable than in previous quarters due to reduced crypto and other headwinds, Piper Sandler believes uncertainties in the macroeconomic environment and recent divestitures will impact future sales estimates, which are currently deemed too optimistic.
2 more downgrades
PepsiCo (NASDAQ:PEP) shares fell around 1% pre-market today after Morgan Stanley downgraded the company to Equalweight from Overweight with a price target of $210.00, noting the stock is now fairly valued and it sees limited upside in H2 compared to Street estimates.
Last week, the company posted a strong Q2 earnings beat and raised its fiscal 2023 guidance.
TELUS International (NYSE:TIXT) received two downgraded following negative Q2 pre-announcement and fiscal 2023 guidance revision last week, which resulted in a share price drop of more than 31% on Friday.
Barclays downgraded the company to Equalweight from Overweight with a price target of $15.00 (from $23.00), while Citi slashed its rating to Neutral from Buy with a price target of $15.00 (from $24.00).
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