But the drop that has followed some of these earnings fails could be a buying opportunity.
According to Refinitiv, 73% of S&P 500 companies have beaten their earnings estimates so far this earnings season, with earnings for the index up 2.9% for the second quarter.
Fears of a global economic slowdown and the trade war between the U.S. and China, not to mention the infamous yield curve inversion, has made for a wild ride in the market this month. These concerns have weighed on the minds of investors and companies alike, but many analysts on the Street are telling clients that there is still value to be had even with the gathering storm clouds.
On Tuesday, global investment management firm Victory Capital reported earnings that fell short of expectations and missed on the top line, according to analysts at William Blair.
After the disappointing report, the stock tanked after what an analyst called “a time issue, with inflows coming in late in the quarter rather than being spread evenly across the quarter.”
William Blair also noted that the reaction was “overblown” and that the firm “would be buyers on weakness.”
Victory Capital shares are currently down -15.58% over the last month. There are currently seven Buy ratings for the stock and analysts’ average price target is $18.75, suggesting possible upside of 17.26% over the next twelve months.
MercadoLibre also reported earnings this week, and while analysts at Deutsche Bank said the results were “strong,” the stock is being negatively impacted by the historic stock market and currency crash in its home country, Argentina, this week after a surprise election upset there.
Shares in the Latin American e-commerce company are down -5.07% over the last month.
“Given robust underlying fundamentals, large total addressable market, and MELI’s track record at weathering both regulatory and FX challenges in the past, we think the dip is largely an overreaction which has created a buying opportunity for investors who can withstand short term volatility,” Deutsche Bank said.
Up next, WWE is down -0.58% over the last month even after solid bottom line results delivered at the end of July.
The stock has seen several initiations and upgrades recently, including one from Rosenblatt last week.
“Our thesis on the media industry is content is king and view WWE as one of the best public market ways to benefit from this theme,” analysts at Rosenblatt wrote. “We see the recent pullback in shares driven by concerns over ratings and quarterly estimate revisions as a buying opportunity.”
Analysts’ average price target for WWE is $100.55, indicating possible upside of 35.41% over the next twelve months.
Fastly shares sank -26% earlier this month following its Q2 report that beat on top-line estimates, missed on the bottom line, and included higher capex and lighter margins.
The cloud computing stock has since recovered somewhat, and analysts at Baird gave it an Outperform rating.
“Overall, we were encouraged with the guidance and believe the story remains on track,” Baird analysts wrote.
And last, but not least, we have Bloom Energy, which is down -53% over the last month and -78% over the last twelve months.
Raymond James gave the energy stock an Outperform rating saying the reaction has been overblown.
“Stock gets hit in a classic overreaction: No, natural gas is not disappearing in CA and NY,” analysts at Raymond James said. They continued that the stock fell “in the context of what has always been a volatile, polarizing, and sentiment-driven stock. … While it is never easy to fight the tape and try ‘catching a falling knife,’ we want to underscore that nothing in what management said… was truly game-changing.”
“Our thesis remains fundamentally intact,” they continued, while noting the recent collapse in the stock is “an opportunity to pick up shares with a medium-term perspective in mind, hence our Outperform rating.”
The average price target for BE is $14.01, suggesting possible upside of 181.89% over the next twelve months.