By Davit Kirakosyan
Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: Initiation at Affirm, downgrades at Ballard Power Systems , Catalent, and California Water Service.
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Affirm initiated with Sell rating
BTIG initiated coverage on Affirm (NASDAQ:AFRM) with a Sell rating and a price target of $10.00, as InvestingPro reported in real-time.
While noting that Affirm is a leading buy-now-pay-later operator which has exhibited strong gross merchandise volume growth since its IPO, BTIG said that the company’s business model is under pressure as we enter a new stage in the macro environment where discretionary spend is tightening quickly.
According to the firm, increasing interest rates are having a negative effect on funding costs and the gain on sale premium, while both variable and fixed costs are outstripping revenue growth. In an environment where achieving scale and profitability are crucial, the firm believes it's difficult to justify Affirm's premium valuation to peers.
Ballard Power Systems downgraded following Capital Markets Day
Ballard Power (TSX:BLDP) Systems (NASDAQ:BLDP) shares fell nearly 3% pre-market today after BMO Capital downgraded the company to Underperform from Market Perform and cut its price target to $4.25 from $4.50.
The firm noted that the shares have risen 24% since Friday’s close heading into yesterday’s Capital Markets Day and have significantly outpaced its primary peers YTD. According to the firm, the investor event confirmed that the inflection to positive gross margins and EBITDA remain further out in time (2025 and 2028, respectively).
2 more downgrades
Catalent (NYSE:CTLT) shares fell around 2% pre-market today after Jefferies downgraded the company to Hold from Buy and cut its price target to $44.00 from $45.00.
UBS downgraded California Water Service (NYSE:CWT) to Sell from Neutral and cut its price target to $51.00 from $59.00. Shares fell 1% in pre-market today.
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