Apple slashed on towering valuation, 'soft growth' outlook: 4 big analyst cuts

Investing.com -- Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Apple, Emerson, Tritium DCFC, and B&G Foods.

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Apple falls on KeyBanc downgrade

Apple (NASDAQ:AAPL) lost its Overweight rating at KeyBanc Wednesday morning, as reported in real-time on InvestingPro.

The downgrade to Sector Weight came on Apple's valuation, which is near an all-time high and is rich vs. the Nasdaq Index as well, in addition to potential challenges in U.S. sales; possibly overly optimistic expectations for international growth; and the analysts' belief that Apple's top- and bottom-line estimates are already fully valued.

KeyBanc noted:

"We believe in order to justify upside to AAPL shares, peak valuations need to be applied or its growth profile needs to inflect higher."

KeyBanc also expects "soft growth" in key regions, with a focus on the US, which accounts for about 37% of Apple's revenue. The analysts expect a fourth consecutive year-over-year decline in Q4/23, potentially extending into Q1/24. KeyBanc's fiscal 2024 revenue growth projection is 3.5%, while the Street consensus stands at over 6%.

Apple is set to report its Q4/23 earnings on Oct 26.

B&G Foods plunges on {{0||Piper Sandler}} downgrade

B&G Foods (NYSE:BGS) was falling nearly 11% in recent trading after Piper Sandler cut the Crisco purveyor to Underweight from Neutral and lowered its price target to $8.00 from $14.00 late Tuesday,

The analysts said that the company, which owns a wide variety of other food brands, is seeing US measured retail sales trends "running behind our expectations for 3Q23, as measured retail sales declines continue to accelerate."

The analysts also pointed to share-count dilution and higher interest expense, which it believes will dilute earnings per share, as well as "risk from trade inventory de-loading, as its volume declines could drive resets to retailer inventories and potentially shelf space allocations."

Shares were lately changing hands at $8.45.

Emerson slashed at UBS

UBS on Tuesday downgraded Emerson Electric (NYSE:EMR) to Neutral from Buy with a price target of $104.00 (from $97.00) as “valuation now screens full." The analysts commented:

While we believe consensus numbers are going higher, our concern is valuation with EMR trading at ~19x pro-forma F'24 EPS and we think multiple upside is capped due to outsized O&G exposure and unclear M&A valuation creation.

Tritium cut at Raymond James

Tritium DCFC (NASDAQ:DCFC) shares fell around 4% Tuesday after Raymond James downgraded the company to Market Perform from Outperform due to concerns about the company's recent complex financing, involving Series A convertible redeemable preference shares.

This financing, with potentially variable terms and multiple covenants, is seen as unnecessary complexity compared to a straightforward issuance of common shares. Furthermore, it provides only a short runway of six to nine months before requiring additional capital, which could lead to further dilution in the coming years, according to Raymond James.

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