By Davit Kirakosyan
Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Palantir Technologies, Box, Chewy, and Victoria's Secret.
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Palantir Technologies shares drop on Morgan Stanley downgrade
Palantir Technologies (NYSE:PLTR) shares fell more than 4% pre-market today after Morgan Stanley downgraded the company to Underweight from Equalweight with a price target of $9.00 (from $8.00), as reported in real time on InvestingPro.
Near-term optimism in AI product cycle and valuation premium create an unfavorable risk-reward in shares, as visibility on AIP monetization still remains low, the government segment appears unlikely to provide an offset and estimates already imply a 2H re-acceleration.
Box slashed to Hold following Q2 earnings
Craig-Hallum downgraded Box (NYSE:BOX) to Hold from Buy and cut its price target to $30.00 from $35.00.
Shares dropped more than 12% yesterday after the company reported its Q2 results, highlighted by in-line revenues, worse-than-expected billings, and soft guidance.
Craig Hallum emphasized that Box's growth is experiencing a considerable slowdown due to a reduction in the rate of seat expansion among customers. Furthermore, the firm expects the rate of operating margin expansion to slow as Box approaches around 30% operating margin and will likely seek to invest to reaccelerate revenue growth as macro pressures eventually ease.
Two more downgrades
Evercore ISI downgraded Chewy (NYSE:CHWY) to In Line from Outperform and cut its price target to $35.00 from $53.00 following the company’s Q2 earnings announcement.
Shares fell nearly 5% pre-market today after the company offered a weaker-than-expected full-year sales forecast.
"What makes us incrementally cautious is the disappointing FQ2 decline in Net Adds (52K), after the FQ1 modest increase, as well as management’s subdued outlook for H2 Net Adds," mentioned Evercore.
Wells Fargo downgraded Victoria's Secret (NYSE:VSCO) to Equal Weight from Overweight and cut its price target to $18.00 from $34.00 following the company’s reported Q2 miss and weak guidance, which resulted in a share price drop of more than 5% pre-market today.
“The brand has largely struggled since 2015, and management's turnaround plan is now at risk as comps and margins have deteriorated,” noted Wells Fargo.
The firm believes that initiatives like cost reduction, resizing real estate, and a brand overhaul could potentially help Victoria's Secret to overcome recent challenges and evolve into a more stable business. However, ongoing loss of market share and deteriorating macroeconomic conditions are negatively impacting short-term earnings expectations.
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