Sea cut at Morgan Stanley, Lululemon downgraded at Wells Fargo: 4 big analyst cuts

Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed today: downgrades at Sea, Lululemon Athletica , Alcon, and Allegion.

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Sea stock drops on Morgan Stanley downgrade

Sea (NYSE:SE) shares fell more than 2% pre-market today after Morgan Stanley downgraded the company to Equalweight from Overweight and cut its price target to $47.00 from $55.00.

The analysts highlighted that competition in the ASEAN e-commerce (EC) sector has intensified since the summer. Contrary to expectations that the temporary closure of TikTok Shop in Indonesia in early October would reduce marketing expenditures by incumbents, it has led to an increase in spending as companies strive to expand their market share in ASEAN's largest EC market.

The recent news of the relaunch of TikTok's EC operations in Indonesia will likely mean that this spend will remain elevated for longer. As such, we think SE's earnings predictability for the next 6-12 months is quite low.

Lululemon Athletica downgraded at Wells Fargo

Lululemon Athletica (NASDAQ:LULU) shares fell more than 1% pre-market today after Wells Fargo downgraded the company to Equal Weight from Overweight with a price target of $445.00, as reported in real-time on InvestingPro.

The initial upgrade of Lululemon's stock in January was influenced by factors such as inventory normalization after the holiday season and strong growth in international markets. These factors, as noted by the analysts, have played out and likely contributed to the stock's outperformance in fiscal year 2023.

LULU's fundamentals have been impressive the past 24 months—and as such, they don't have any "easy" P&L lines to play with (except for SG&A, which we don't believe the market will reward). At the same time, valuation is no longer cheap—with multiples back in line with history.

Two more downgrades

Morgan Stanley downgraded Alcon (NYSE:ALC) to Underweight from Equalweight and cut its price target to $65.00 from $85.00. As a result, shares dropped more than 3% pre-market today.

Barclays downgraded Allegion (NYSE:ALLE) to Equalweight from Overweight with a price target of $119.00 (from $130.00).

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