Good evening,

We’re fortunate to live in a time when investors have access to so much information. However, that can lead to analysis paralysis. One tool that many investors use to find clarity is analyst ratings. 

When analysts upgrade a stock, that’s generally seen as a bullish signal. Conversely, when stocks receive analyst downgrades, that’s typically a bearish signal. 

But what typically happens doesn’t mean it happens in every case. Many factors can influence a stock price, and those factors can change quickly.  

Netflix is a good example of a stock that received several downgrades in early 2023. The concern was that the company would lose subscribers as consumers looked for ways to cut costs.  

However, the company has shown that not only have subscribers embraced a low-cost ad-supported tier, it also has successfully cracked down on password sharing. That made a lot of analyst downgrades look foolish.  

That's not to say that analyst ratings should be ignored. In general, investors should pay attention to analyst ratings. Industry analysts have access to information and company insiders, which add broader insight into their analysis.  

Also, it’s important to note Netflix is an extreme example. Many downgrades don’t equal a Sell rating. In fact, in many cases, a downgrade just means an analyst may lower a bullish price target to a target that’s a lower bullish target. 

That can add to the confusion. But in this special presentation, we used the Most Downgraded Stocks tool on MarketBeat to find seven stocks that have received downgrades from analysts in the 30 days ending October 23, 2024. In each case, the sentiment may be overly pessimistic, or it may signal that a bottom is in, or near, for the stock. 

The Earnings360 Team

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