By Davit Kirakosyan
Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Dollar General, Warner Music, Xcel Energy, and Ginkgo Bioworks.
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Dollar General downgraded at two firms following Q1 miss
Two Wall Street firms downgraded Dollar General (NYSE:DG) after the company reported a Q1 EPS and revenue miss, which resulted in a share price drop of more than 19% yesterday.
Piper Sandler downgraded the company to Neutral from Overweight and cut its price target to $178.00 from $275.00 on somewhat inexplicable sales/comp weakness, lack of conviction for a near-term rebound, and concerns that guidance wasn't reduced enough.
While noting that Dollar General highlights well-known macro headwinds, Piper Sandler cannot explain why it is seeing a more material impact (and lack of trade-down) versus other retailers serving lower-income customers.
Meanwhile, Atlantic Equities downgraded the company to Neutral from Overweight with a price target of $170.00 following the commentary on the most recent changes to consumer behavior. The firm highlighted that Q1 showed a steeper rate of change in Dollar General's core customer base.
Warner Music downgraded on slower growth & AI concerns
Atlantic Equities downgraded Warner Music Group (NASDAQ:WMG) to Neutral from Overweight and cut its price target of $26.00 from $39.00, as InvestingPro reported in real time.
The firm mentioned two key developments over the past six months: (1) loss of streaming share means recorded music streaming revenues are growing slower than expected, and (2) the rapid development of AI-created music is placing a major cloud over the whole sector.
2 more downgrades
Xcel Energy (NASDAQ:XEL) shares fell more than 2% premarket today after the company was downgraded at two Wall Street firms.
JPMorgan downgraded the stock to Neutral from Overweight and cut its price target to $68.00 from $79.00. Meanwhile, Wolfe Research downgraded to Peerperform from Outperform.
Goldman Sachs downgraded Ginkgo Bioworks (NYSE:DNA) to Sell from Neutral and cut its price target of $1.25 from $3.00. Shares fell nearly 5% premarket today.
While the bank thinks the end market shift towards Biopharma and Agriculture is a sound long-term strategy, it believes the macro environment and the softening spend seen in the biopharma end market may result in slower new program growth for the company.
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