3 Rare Skeptical Ratings From The Street’s Top Analysts (AMZN, BABA, GOOGL)

 

Analysts tend to lean away from more bearish ratings as it can sour corporate relations and- in extreme cases- even lead to dismissal: see Mike Mayo and Adnaan Ahmad as two warning cases. “My views have been controversial in the global tech space and I have taken a fair amount of abuse” Ahmad said after he was fired for his relentlessly bleak Apple predictions in 2015.

So, given their rarity, these more cautious ratings are worth tracking even for stock bulls. Why has a particular analyst decided to go against the crowd on a top stock? Rare hold or sell ratings have added weight if they come from the Street’s best-performing analysts who have proven track records of successful stock predictions.

We can find the latest bearish ratings by selecting the right filters on TipRanks’ popular Daily Analyst Recommendations tool. We chose hold / sell ratings and excluded rating upgrades. Cut out underperforming analysts by limiting the results to only ratings from four or five-star analysts.

You can also select the stock type (by sector and market cap) and filter how experts are ranked (against the sector for example, or the S&P 500). Now let’s use these filters to find three hot stocks with rare neutral/ bearish ratings:

1. Amazon (AMZN)- this is one of the Street’s top stocks, hence its strong buy analyst consensus rating on TipRanks. In the last three months only 2 out of 35 analysts have published hold rather than buy ratings on the stock. Five-star Raymond James analyst Aaron Kessler downgraded the stock yesterday with a bearish price target of $925 (2% upside from current share price). He blamed margins for Amazon’s cloud business AWS.

“We expect less near-term upside for AWS given December price cuts and increasing competition (e.g. Google),” writes Kessler, following 7 price cuts announced for December 1. “At current levels, we believe Amazon will need to begin to show greater operating leverage for shares to move meaningfully higher and reach our bull case.”

Despite this Kessler is estimating Amazon’s Q1 report (out Thursday after closing) to show revenue of $35.5 billion and EPS of $2.37, above consensus of $35.34 billion and $2.35 EPS.

2, Alibaba (BABA)- only one top analyst has published a sell rating on this Chinese e-commerce giant in the last three months; five-star Standpoint Research analyst Ronnie Moas. He downgraded the stock to Sell on April 20. Moas says that since he recently reinstated Alibaba on January 9th the stock has already jumped by more than 20%. “The stock is now at an all-time high and fairly valued at 33X” writes Moas, and concludes: “I can no longer leave my highest recommendation attached to this name given the absolute and relative move it has made recently.” Alibaba is currently trading at $115.

3. Alphabet (GOOGL)-Google’s parent company Alphabet has a strong buy analyst consensus rating. Even if we narrow it down to only the best-performing analysts, 26 out of 30 ratings published in the last three months have been buy ratings. However four-star BMO Capital analyst reiterated his hold rating on April 17. The analyst is cautious that Alphabet’s long-term story assumes that Google’s main rival in the lucrative ad market is Facebook. However, Salmon notes the increasing momentum of Amazon’s business and believes that the e-commerce site could become a competitor to GOOGL. Salmon, whose price target on the stock is just $900 (compared to the average analyst price target of $989-11% upside) has an impressive track record on GOOGL:

 

Disclaimer: TipRanks is an independent cloud based service that measures and ranks digitally published financial advice. TipRanks' natural language ...

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