5 big analyst cuts: DocuSign slashed after earnings | Pro Recap

By Davit Kirakosyan

Investing.com -- Here is your daily Pro Recap of the biggest analyst downgrades and sell initiations you may have missed on InvestingPro. Start your free 7-day trial to get this news first.

DocuSign slashed at JPMorgan

JPMorgan downgraded DocuSign (NASDAQ:DOCU) to Underweight from Neutral and cut its price target to $48.00 from $58.00 after yesterday's post-close earnings announcement.

The company reported Q4 results that topped analysts' expectations, but it also made a surprise announcement that CFO Cynthia Gaylor will step down after just over two years in the role.

Morgan Stanley additionally said that, despite the strong numbers, investors were disappointed that the company's recent workforce cuts and restructuring led to only a very slight improvement in the fiscal 2024 margin outlook: "Investors expected the 2nd RIF/restructuring to flow to FY24 margins. Instead, FY24 margin outlook improved by only ~1% while rest of savings reinvested in R&D."

Shares were recently off some 12% premarket today.

Allbirds downgraded following disappointing Q4 results

Telsey and Baird downgraded Allbirds (NASDAQ:BIRD) following the company’s worse-than-expected Q4 results reported yesterday.

Telsey downgraded the stock to Market Perform from Outperform with a price target of $2.25 (from $4.00) due to continued macroeconomic challenges and high inflation affecting discretionary demand, underperformance of new products, gross margin erosion expected in 2023 due to liquidation of inventory, and a lengthy transformation period required for positive results from business changes such as product innovation, store operations, and international go-to-market.

Meanwhile, Baird downgraded the stock to Neutral from Outperform with a price target of $2.00 (from $7.00).

"With major change in the product strategy, operating model, and leadership team on tap in an already uncertain macro backdrop, we are stepping to the sidelines until there are clearer signs of stabilization," the firm said.

Shares plunged more than 24% in premarket today following the company’s Q4 results report, with EPS of ($0.17) and revenue of $84.2 million missing the consensus estimates.

3 more cuts

UBS initiated coverage on McCormick & Company (NYSE:MKC) with a Sell rating and a price target of $71.00.

Shares are underperforming YTD due to the company’s lower-than-expected EPS outlook provided for fiscal 2023. The brokerage believes there is further risk ahead as the Street expects sales and EPS growth to recover in 2024 despite warning signs such as widening price gaps, declining volume share, and lower HH penetration.

Barclays downgraded Southwest Airlines (NYSE:LUV) to Equalweight from Overweight and cut its price target to $38.00 from $42.00.

UBS downgraded Caterpillar (NYSE:CAT) to Sell from Neutral with a price target of $225.00. Shares are down 2% premarket.