Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at FOX, Fortinet , Southern, and JPMorgan.
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FOX slashed at JPMorgan following Q1 results
JPMorgan downgraded Fox Corp (NASDAQ:FOXA) to Neutral from Overweight and cut its price target to $36.00 from $40.00 following the company’s reported Q1 results yesterday, as reported in real-time on InvestingPro.
Although the revenue reached $3.21 billion, surpassing the anticipated consensus of $3.18B, the quarter’s profits declined by nearly 33%. This drop in earnings can be attributed to a decrease in political advertising and increased costs associated with broadcasting the women's soccer World Cup, along with investments made in enhancing its digital platform.
"We like Fox’s concentrated news, sports, and broadcast strategy, which has buoyed shares vis-à-vis media peers during the industry-wide selloff of the last two years, but long-term strategic questions remain. We particularly question the lack of a wider digital strategy, as linear ecosystem subscriber losses remain elevated in the coming years and the pace of affiliate increases will fade, leaving Fox subject to a tough linear affiliate trend more similar to peers," commented JPMorgan.
Fortinet hit with a number of downgrades following disappointing guidance
Today, Fortinet (NASDAQ:FTNT) faced a series of downgrades following its third-quarter earnings report and lowered guidance, which was driven by weak corporate spending amidst economic uncertainties. This news triggered a sharp decline in the company’s shares, which fell over 23% in pre-market today.
JPMorgan shifted Fortinet's rating from Overweight to Neutral, slashing the price target from $67.00 to $52.00. The analysts expressed concerns about increased risks during this economic cycle, citing Fortinet's billing and revenue falling short of expectations and a consecutive reduction in full-year billing and revenue guidance. They attributed the quarter's weakness to both sales execution issues and softness in sectors like Service Providers and Retail.
Evercore ISI adjusted Fortinet's rating from Outperform to In Line, revising the price target from $78.00 to $51.00. Despite maintaining confidence in Fortinet's management and long-term execution capabilities, the analysts noted that the reorganization focusing on Secure Networking, Security Operations, and Universal SASE core growth areas might introduce short-term uncertainties, especially given the current challenges in the firewall appliance market.
Oppenheimer downgraded Fortinet from Outperform to Perform. Stifel altered its rating from Buy to Hold, reducing the price target from $69.00 to $52.00. William Blair changed Fortinet's rating from Outperform to Market Perform. Lastly, Cantor Fitzgerald moved Fortinet from Overweight to Neutral, cutting down the price target from $75.00 to $50.00.
Southern cut at Scotiabank
Scotiabank downgraded Southern (NYSE:SO) to Sector Perform from Sector Outperform with a price target of $78.00 following the company’s reported Q3 results yesterday.
EPS for the quarter came in at $1.42, beating the consensus estimate of $1.33. However, the revenue of $7B missed the consensus of $8.22B. Following the report, shares rose more than 2% yesterday.
JPMorgan slashed to Hold at Odeon Capital
Odeon Capital downgraded JPMorgan Chase (NYSE:JPM) to Hold from Buy, adjusting the price target to $140.00 from $161.00. Despite viewing JPMorgan as the best U.S. bank, analysts anticipate near-term challenges that could impact its stock performance.
Regulatory concerns have arisen post-2008, as the U.S. government regulates bank growth due to potential large bank impacts. According to the analysts, new regulations, like the Basel Endgame, might reduce profitability in market making, limit core lending activities, create operational challenges, and drive the need for more capital much higher. The analysts believe JPMorgan, the country's largest bank, could be significantly affected by these regulations if they go into effect.
On the profit front, JPMorgan's net interest income stands at $80 billion, but falling interest rates might lead to a reduction in earnings by $2-$3 billion. The bank's current net charge-off rate is expected to rise due to consumer sector challenges. Furthermore, the analysts noted that expenses might see an uptick, and anticipated trading rule changes could affect JPMorgan's capital markets revenue.
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