3 Stocks Vulnerable to Downgrades

Underperforming ARM Holdings plc (ADR) (NASDAQ:ARMH), LinkedIn Corp (NYSE:LNKD), and Goldcorp Inc. (USA) (NYSE:GG) could be at risk for a round of negative analyst notes

Aug 5, 2015 at 2:05 PM
facebook X logo linkedin


Analyst ratings allow traders an at-a-glance assessment of how Wall Street views a particular equity -- and make up one of the sentiment indicators we use to gauge whether or not a stock is ripe for the contrarian picking. For example, an outperforming security with a number of negative analyst notes may be poised for a round of upgrades, which could create fresh tailwinds.

Conversely, an underperforming equity with a majority of upbeat brokerage notes could be at risk of downgrades -- and additional losses. Three such laggards that are currently vulnerable to negative analyst notes are chipmaker ARM Holdings plc (ADR) (NASDAQ:ARMH), professional networking site LinkedIn Corp (NYSE:LNKD), and commodity concern Goldcorp Inc. (USA) (NYSE:GG).

  • downgrade in late June sent ARMH tumbling -- a sell-off only exacerbated by last month's poorly received earnings report. In fact, since its June 25 close at $53.86, the stock has surrendered 17.2% to trade at $44.60 -- near year-to-date lows. There's plenty of room for analysts to issue additional bearish brokerage notes, too. Of the 15 covering the shares, 80% maintain a "buy" or better rating. Plus, the average 12-month price target for ARM Holdings plc is $57.70 -- in territory yet to be charted.

  • LNKD's recent technical turmoil began when the equity plunged following a late-April earnings report. An attempt to fill this bear gap last month was quickly halted by the stock's 200-day moving average, and since then, LinkedIn Corp has suffered another earnings swoon, and now sits south of $192  -- 16.5% lower year-to-date. Nevertheless, 21 out of 28 analysts maintain a "buy" or better rating on the stock, while the consensus 12-month price target of $255.16 stands at a 33% premium to current trading levels. While some brokerages have started to change their upbeat tune, the door is wide open for another round of negative analyst notes.

  • GG has been tracking the downward trajectory of gold, shedding 28% of its value year-to-date, and 53% year-over-year. More recently, the shares bottomed at a 10-year low of $12.35 on July 24, and last week's earnings were met with a relatively "meh" reaction. Regardless, 14 out of 18 analysts believe Goldcorp Inc. is worthy of a "buy" or better rating, with not a single "sell" to be found. Plus, the consensus 12-month price target of $30.76 represents expected upside of 131% to the security's present price of $13.32. An unwinding of this optimism could create more trouble for the shares.
 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!

 

 
 
 


 
 

Rainmaker Ads CGI