Today’s article introduces three stocks whose price targets have recently been cut by analysts on Wall Street. So far this year, the stocks market has tumbled on the back of rampant inflation and investors’ shaken confidence. Indeed, the S&P 500 Index posted its worst return for the first half of a year since 1970, triggering many stock price target cuts.
Companies’ earnings have also not grown much this year. Meanwhile, the Fed continues to signal that it will raise interest rates, although at a slower pace than earlier in the year.
And with the second-quarter earnings season now mostly behind us, investors are focusing on analysts’ forecasts. That makes sense because paying attention to stock price target cuts can help investors evaluate the potential risk/reward profile of equities.
That said, here are three popular stocks whose price targets have been cut by Wall Street analysts. While these companies might have lost some of their competitive momentum, many are still attractive for long-term investors at today’s prices.
Caterpillar (NYSE:CAT) manufactures construction and mining equipment, along with different types of gas and diesel engines. Because of its global network, the brand is well-known worldwide.
The industrial giant announced its Q2 results on Aug. 2. CAT’s revenue grew 11% year-over-year to $11.2 billion. Its earnings per shares, excluding certain items, was $3.18, up 22.3% compared to the same time a year earlier.
On June 8, Caterpillar, a dividend aristocrat whose payout has risen for more than 25 straight years, confirmed that it would raise its quarterly cash dividend by 8%. However, the decreases of its sales volumes in Asia/Pacific countries, primarily in China, have raised concerns about its revenue outlook for the rest of 2022.
On Aug. 3, private wealth management firm Sanford C. Bernstein downgraded Caterpillar stock from an “outperform” rating to a “market perform” and cut its price target on the name to $195. Meanwhile, UBS (NYSE:UBS) lowered its price objective on the shares to $225 from $250.
CAT currently has a dividend yield of 2.45%.The company’s forward price-earnings (P/E) and price-sales (P/S) ratios are 15.8 times and 1.98 times, respectively. Wall Street’s 12-month median price forecast for CAT stock stands at $217.
Cognizant Technology Solutions (CTSH)
Global IT services company Cognizant Technology Solutions (NASDAQ:CTSH) offers IT outsourcing and consulting services to a wide range of businesses and industries. The company reported its Q2 earnings on July 27.
In Q2, its revenue increased 7% year-over-year to $4.9 billion. The firm’s earnings per share, excluding certain items, climbed 15% YOY to a$1.14. Cognizant’s Q2 free cash flow came in at $485 million, up from $466 million during the same period a year earlier.
However, its bookings fell 3% YOY in Q2. Still, the firm’s management bought back 4.2 million shares for $300 million during the quarter, leaving a hefty $1.4 billion remaining under the existing share-repurchase program.
On July 28, JPMorgan Chase (NYSE:JPM) downgraded CTSH stock from “overweight” to “neutral” and lowered its price target on the shares from $82.00 to $77.00. And UBS slashed its price target on CTSH from $89.00 to $76.00 on July 28.
CTSH stock has a dividend yield of 1.57%. The shares are changing hands at 15 times analysts’ average forward earnings estimate and 1.9 times its trailing sales. Analysts’ 12-month median price forecast on Cognizant is $78.
Expedia (NASDAQ:EXPE) is one of the world’s largest online travel agencies. It operates more than 20 global brands.
The travel giant released its Q2 results on Aug. 4. Its revenue jumped 51% YOY to $3.2 billion, and it reported adjusted EPS of $1.96, compared to a loss of $1.13 per share during the same period a year earlier. Its free cash flow fell 37% YOY to $1.47 billion.
On Aug. 1, Deutsche Bank (NYSE:DB) trimmed its price objectives on several travel-related stocks, cutting its price target on Expedia’s shares from $235 to $130. Similarly, Credit Suisse (NYSE:CS) lowered its price target on EXPE stock to $216 on Aug. 9.
Expedia’s shares are currently trading at 18.80 times analysts’ average forward earnings estimate and 1.70 times its trailing sales. Wall Street analysts’ 12-month median price forecast for Expedia stands at $133.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.