These stocks may pull back after exceeding analyst price targets
Stocks that have exceeded their analysts’ price targets may be overvalued and could see a pullback, according to CNBC Pro. Despite facing numerous hurdles this year, stocks have remained generally higher, with the S&P 500 up 9.5% and the Nasdaq Composite surging 24%. However, some stocks could be in trouble, with the S&P 500 stocks showing an implied downside of at least 3% after exceeding their average price targets. T. Rowe Price Group, Advanced Micro Devices, and Lam Research all made the list, with potential downsides of 13%, 10%, and 9%, respectively.
Investment management firm T. Rowe Price Group is already down 2.5% this year, and no analysts recommend buying the stock. Citi analyst Christopher Allen gave the stock a sell rating this week, with an anticipated 9% downside, according to StreetAccount. Advanced Micro Devices has a 10% downside risk, according to consensus expectations of its price target, but 57% of analysts still recommend buying the stock. Lam Research also has only half of analysts recommending investors buy it, with an expected 9% fall predicted. Other stocks on the list included HP and CarMax.
FAQs:
What is an implied downside?
An implied downside is the potential decrease in value of a stock, based on analysis and projections, that is not yet reflected in the current stock price.
Why might a stock pull back after exceeding its price target?
When a stock’s price rises beyond its average price target, it may be seen as overvalued, leading investors to sell and causing the price to pull back.
Should investors avoid these stocks altogether?
Not necessarily. One should consider the potential downside, but also consider other factors such as the company’s financials and future prospects. It’s best to consult with a financial advisor before making any investment decisions.
After surpassing analyst price targets, these stocks could undergo a pullback.
Investors have been warned that numerous stocks may be due for a pullback as they have overshot analysts’ price targets, according to CNBC Pro. Despite numerous obstacles this year, stocks are generally higher. The S&P 500 has risen by 9.5%, Nasdaq Composite has surged by 24%, and the Dow Jones Industrial Average is down slightly this year. However, numerous stocks could run into trouble going forward. According to FactSet data, our analysis found S&P 500 stocks that have exceeded their average price targets and now have an implied downside of at least 3%. T. Rowe Price Group was found to be the first stock at risk, with an expected downside of 13%, according to FactSet data. No analysts recommended buying the stock, which is already down 2.5% this year. Other stocks on the list included Advanced Micro Devices, Lam Research, HP, and CarMax.