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Today's most important downgrades

Published 07-02-2023, 03:38 am
© Reuters.

By Davit Kirakosyan

PayPal (NASDAQ:PYPL) shares fell more than 3% today after Raymond James downgraded the stock to Market Perform from Outperform and removed a $107 price target, noting it is cautious on PayPal ahead of this week’s earnings report. Q4 consensus estimates stand at $1.20 for EPS and $7.39 billion for revenues.

“While most investors expect initial 2023 revenue growth guidance to come in below the Street (buyside 5-7% vs Street +9%, RJe +7%), we believe the 2023 top line outlook will imply flat to negative growth for branded checkout (vs e-com MSD+) which will likely result in the share loss narrative growing even louder,” the analyst wrote in a note to clients,” said the firm.

Furthermore, the firm is not optimistic about PayPal's margin trajectory in 2024 and beyond, despite expectations of cost-cutting and exceeding a 15%+ EPS guide for 2023.

Pool Corp (NASDAQ:POOL) shares closed nearly 3% lower today after Stifel downgraded the stock to Hold from Buy while raising its price target to $360.00 from $355.00).

The company will report its Q4/22 earnings on Thursday, likely introducing fiscal 2023 guidance. The firm believes Pool will proceed cautiously given the uncertainty of the current environment with Pentair’s initial guidance likely framed by discussions with its largest customer.

Shares of RH (NYSE:RH) shares plunged more than 7% today after the company said it now expects full-year 2022 revenue growth at the lower end of its range, and received a downgrade from Telsey and Exane BNP.

The company now expects 2022 revenue growth at the lower end of the prior range of -3.5% -4.5% and adjusted operating margin toward the higher end of the prior range of 21.5% to 22.0%.

Telsey downgraded the stock to Market Perform from Outperform with a price target of $330.00. Meanwhile, Exane BNP Paribas downgraded the company to Neutral from Outperform with a price target of $350.00.

KeyBanc downgraded Datadog (NASDAQ:DDOG) to Sector Weight from Overweight, citing high multiple and increasing risks. Shares dropped more than 3% today.

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