By Davit Kirakosyan
Today, several brokerages downgraded the shares of three big names, including NCR Corp. (NYSE:), Tronox (NYSE:) and Adobe (NASDAQ:). Below, we provided the details for each downgrade:
Morgan Stanley downgraded NCR Corp. to Equalweight from Overweight and lowered its price target to $27.00 from $38.00. The analysts expect the shares to be range-bound in the near term until there is greater clarity on the key details of the recently announced transaction, according to which the company plans to spin off into two new publicly traded standalone companies. While the analysts acknowledge value could potentially be unlocked longer term, they believe it pays for investors to have patience, given the lack of historical outperformance prior to the spin date (which is approximately 15 months away) when risks are elevated.
BMO Capital downgraded Tronox to Market Perform from Outperform and lowered its price target to $16.00 from $21.00. Given the company’s geographic footprint is weighted to Europe/APAC, the analysts believe it faces a challenging outlook with TiO2 prices expected to come down on reduced demand and improved supply chains. Furthermore, the analysts believe the company will face challenges from elevated energy costs in the near term. As such, the company is not expected to outperform the broader group until there is a significant relief in European energy prices.
Wells Fargo downgraded Adobe to Equal Weight from Overweight and lowered its price target to $310.00 from $425.00, highlighting the string of disappointing earnings results and the acquisition announcement of Figma for approximately $20 billion. While the product/strategic fit is clearly aligned, the analysts believe the price tag will likely lend credence to the bear case, at least for now. With the deal not expected to close until 2023, the analysts expect concerns will linger and the company’s shares will remain range bound.