Peloton stock (NASDAQ: PTON)
According to investing company Wedbush, Peloton must show that it is able to expand in a post-pandemic environment before the stock can outperform the market again.
Analyst James Hardiman downgraded the stock from outperform to neutral in a note to clients on Wednesday, stating that growth for the exercise equipment company will be more difficult to come by.
“PTON is now embarking on the next leg of its growth story, one that will require the company to generate its own momentum through savvy marketing and compelling new products in a post-pandemic era,” according to the note.
The stock soared in 2020 as gyms across the country were forced to close due to the pandemic, but shares have fallen by more than 20% this year.
According to Wedbush research, including social media and internet search trends, Peloton is experiencing a drop in customer engagement.
“In each case, y/y growth in the June quarter has seen significant deceleration, which should not be surprising given seasonal and reopening headwinds, but nonetheless would seem to mark a turning point for a company that has consistently defied gravity since its IPO, and presents evidence that the law of large numbers is finally catching up,” the note said.
Peloton’s price target has been reduced from $130 to $115 per share by the investment firm. The new target is 4% lower than the stock’s closing price on Tuesday.
Conagra Brands Stock (NYSE: CAG)
According to two Wall Street companies, rising inflation has halted the bull case of Conagra Brands till the business can raise prices to build up their profits.
After Conagra reported its fiscal fourth-quarter results and provided updated guidance on Tuesday, Bank of America and Stifel downgraded the consumer staple stock to neutral and hold, respectively.
However, Conagra also stated that raising prices would have a negative impact on margins in the coming year, particularly in the current quarter. Following the release of the report, shares fell 5.4 percent on Tuesday.
In a note to clients, Stifel analyst Christopher Growe stated that the guidance indicated Conagra was in a “inflation air pocket.”
“We see the shares remaining in a holding pattern as the company executes its pricing initiatives and experiences pricing lag as a result of rampant inflation,” Growe said. “We believe the negative reaction to Conagra’s updated (lowered) operating margin and EPS guidance today served as a clearing event for the shares, though we continue to see risk to the earnings outlook to the extent pricing continues to lag inflation.”
In a client note, Bank of America’s Bryan Spillane also stated that Conagra’s stock would struggle to move higher until pricing was under control.
“FY22, in our opinion, will be a transition year as CAG takes action to combat inflation while also cycling difficult, COVID-related volume comparisons,” Spillane said.
Bank of America reduced its price target for the stock from $44 to $36 per share, while Stifel reduced its target to $35 per share from $39.
On Tuesday, Conagra closed at just under $34 per share.
PepsiCo Stock (NASDAQ: PEP)
According to Credit Suisse, a good second quarter report will not enough to increase PepsiCo’s shares in the months ahead.
Analyst Kaumil Gajrawala downgraded the stock from outperform to neutral in a note to clients on Wednesday, saying that despite the “remarkable” results, the stock’s valuation was nearly full.
On Tuesday, the beverage and snack food company easily outperformed expectations for its second quarter, reporting $1.72 in adjusted earnings per share on $19.22 billion in revenue. Refinitiv polled analysts predicted $1.53 earnings per share and $17.96 billion in revenue.
On the news, the stock rose 2.3 percent, bringing its year-to-date gains to more than 3 percent. In the premarket on Wednesday, share prices were slightly lower. While Tuesday’s performance lagged behind the broader market, the move brought PepsiCo’s performance numbers in line with those of its industry.
Furthermore, according to Credit Suisse, the company’s price-to-earnings ratio is higher than its five-year average.
“Over the last 18 months, staples investors have profited from Pepsi’s consistency, pandemic resilience, and early investments, but [Tuesdayshare ]’s reaction signals cooling sentiment,” the note said.
Credit Suisse maintained its $155 per share price target for the stock, which is just 1.3 percent higher than where the stock closed on Friday.