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Philip van Doorn

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Feb. 24, 2020, 8:53 a.m. EST

Wall Street has slashed these S&P 500 companies’ estimates by as much as 70%

Analysts still love half of the companies with the greatest cuts in sales estimates

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By Philip van Doorn, MarketWatch


Bloomberg
Pedestrians walk past the Michigan Avenue Under Armour storefront in Chicago. Analysts have cut the company's 2020 consensus sales estimate has by 7% and its earnings-per-share estimate by 70% since the end of 2019.

Wall Street analysts tend to accentuate the positive — after all, their broker colleagues have stocks to sell. Indeed, there currently is not a single company within the S&P 500 with majority “sell” or equivalent ratings among analysts polled by FactSet, and that’s hardly unusual.

Analysts will lower their revenue and earnings estimates for various reasons, including poor financial quarters, negative guidance from companies, legal challenges or sales and supply disruptions from world events, such as the coronavirus. But a sharp decline in consensus may not be bad news, as it might not mean analysts have soured on a company’s prospects. It may reflect an accounting change, the sale of a business unit or other events. So it’s important to do your own research on any company listed below that interests you.

Severe estimate cuts may be particularly alarming now, because stock valuations have risen so much. The weighted aggregate forward price-to-earnings ratio for the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.36%  has increased to 19 from 16.3 over the past 12 months, according to FactSet.

Also see: Wall Street has boosted 2020 estimates for these S&P 500 companies the most

Still, focusing on negative events can provide insight into industry developments and may even highlight investment opportunities if you can become confident, through your own research, that a company is likely to improve from its current distress.

So here are lists of companies whose consensus revenue or earnings estimates for this calendar year have been cut the most since the end of 2019.

Largest sales estimate cuts

Here are the 10 S&P 500 companies with the largest declines in consensus 2020 revenue estimates since the end of 2019:

Company Ticker Industry Decline in sales estimate from Dec. 31 to Feb. 20 Change in EPS estimate from Dec 31 to Feb. 20
Boeing Co. /zigman2/quotes/208579720/composite BA Aerospace & Defense -20.0% -70.1%
Global Payments Inc. /zigman2/quotes/201234787/composite GPN Data Processing Services -16.1% 0.3%
Danaher Corp. /zigman2/quotes/210555154/composite DHR Medical Specialties -13.7% -4.7%
Cabot Oil & Gas Corp. /zigman2/quotes/205804016/composite COG Integrated Oil -12.2% -31.4%
eBay Inc. /zigman2/quotes/204653455/composite EBAY Other Consumer Services -11.4% 4.0%
Wynn Resorts Ltd. /zigman2/quotes/208845907/composite WYNN Casinos/Gaming -10.4% -50.3%
Abiomed Inc. /zigman2/quotes/202106417/composite ABMD Medical Specialties -7.5% -6.3%
CF Industries Holdings Inc. /zigman2/quotes/209482112/composite CF Chemicals: Agricultural -7.2% -25.1%
Under Armour Inc. Class A /zigman2/quotes/204420722/composite UAA Apparel/Footwear -7.0% -69.9%
Hologic Inc. /zigman2/quotes/201671131/composite HOLX Medical Specialties -6.9% 0.5%
Source: FactSet

You can click on the tickers for more about each company.

The consensus 2020 sales estimate for Global Payments /zigman2/quotes/201234787/composite GPN +4.26%  declined 16% between Dec. 31 and Feb. 20. The company explained that this reflected a change in how it calculates adjusted net revenue.

Global Payments completed its merger with Total System Services on Sep. 18. Global Payments Chief Operating Officer Cameron Bready said during the company’s third-quarter earnings conference call Oct. 31 that “based on feedback from the SEC [Securities and Exchange Commission],” the company expected, going forward, “to report on an adjusted net revenue basis excluding the addition of network fees,” according to a transcript provided by FactSet.

Bready further explained: “Although we believe adjusted net revenue plus network fees provides useful insight into the economics of our business in a manner consistent with how the company assesses and measures performance, the SEC has requested we discontinue its use. As a result, we’ll report without the addition of network fees in the future, consistent with how TSYS [Total System Services] has reflected this item historically.”

Here’s a link to the company’s third-quarter earnings press release , which further explains the accounting changes. For all of 2019, Global Payments reported GAAP revenue of $4.92 billion, increasing 46% from $3.37 billion in 2018. Adjusted net revenue for 2019 rose 48% to $4.59 billion from $3.10 billion in 2018. The adjusted revenue numbers excluded $1.05 billion in network fees in 2019 and $0.87 billion in 2018. Here’s a link to the fourth-quarter earnings release .

Here’s a summary of current analyst opinion for all the companies on the list above, which includes changes in consensus price targets:

Company Ticker share 'buy' ratings Share neutral ratings Share 'sell' ratings Closing price - Feb. 20 Cons. price target Implied 12-month upside potential Change in price target since Dec. 31
Boeing Co. /zigman2/quotes/208579720/composite BA 31% 65% 4% $336.28 $352.05 5% -9%
Global Payments Inc. /zigman2/quotes/201234787/composite GPN 81% 16% 3% $208.47 $223.43 7% 14%
Danaher Corp. /zigman2/quotes/210555154/composite DHR 79% 16% 5% $160.26 $175.76 10% 9%
Cabot Oil & Gas Corp. /zigman2/quotes/205804016/composite COG 52% 41% 7% $15.35 $19.33 26% -11%
eBay Inc. /zigman2/quotes/204653455/composite EBAY 27% 64% 9% $37.69 $39.20 4% -2%
Wynn Resorts Ltd. /zigman2/quotes/208845907/composite WYNN 67% 33% 0% $133.33 $149.88 12% 10%
Abiomed Inc. /zigman2/quotes/202106417/composite ABMD 56% 33% 11% $168.08 $216.00 29% -5%
CF Industries Holdings Inc. /zigman2/quotes/209482112/composite CF 47% 47% 6% $39.48 $47.78 21% -9%
Under Armour Inc. Class A /zigman2/quotes/204420722/composite UAA 21% 64% 15% $16.50 $17.96 9% -14%
Hologic Inc. /zigman2/quotes/201671131/composite HOLX 47% 42% 11% $52.70 $56.89 8% 5%
Source: FactSet

It’s interesting to see that half of these companies have majority “buy” or equivalent ratings from the same analysts that cut their sales estimates so severely.

Here’s a different list showing the 10 S&P 500 companies with the largest decreases in consensus 2020 earnings-per-share estimates since the end of 2019:

Company Ticker Industry Cons. EPS estimate - Feb. 20 Cons. EPS estimate - Dec. 31 Decline in EPS estimate from Dec. 31 to Feb. 20 Change in sales estimate from Dec. 31 to Feb. 20
Hess Corp. /zigman2/quotes/203832174/composite HES Integrated Oil -$0.26 $0.29 N/A 2.6%
Apache Corp. /zigman2/quotes/200648444/composite APA Integrated Oil -$0.01 $0.04 N/A 0.0%
Boeing Co. /zigman2/quotes/208579720/composite BA Aerospace & Defense $5.43 $18.20 -70.1% -20.0%
Under Armour Inc. Class A /zigman2/quotes/204420722/composite UAA Apparel/Footwear $0.14 $0.48 -69.9% -7.0%
Wynn Resorts Ltd. /zigman2/quotes/208845907/composite WYNN Casinos/Gaming $2.89 $5.81 -50.3% -10.4%
Mosaic Co. /zigman2/quotes/203825795/composite MOS Chemicals: Agricultural $0.68 $1.27 -46.7% -5.7%
MGM Resorts International /zigman2/quotes/209932643/composite MGM Casinos/Gaming $0.86 $1.42 -39.3% -4.8%
UDR Inc. /zigman2/quotes/200760603/composite UDR Real-estate investment Trusts $0.22 $0.34 -34.9% 2.4%
Cabot Oil & Gas Corp. /zigman2/quotes/205804016/composite COG Integrated Oil $0.89 $1.30 -31.4% -12.2%
IPG Photonics Corp. /zigman2/quotes/203325788/composite IPGP Semiconductors $3.47 $4.86 -28.5% -6.3%
Source: FactSet

Here’s a summary of current analyst opinion for the group, which includes changes in consensus price targets:

Company Ticker share 'buy' ratings Share neutral ratings Share 'sell' ratings Closing price - Feb. 20 Cons. price target Implied 12-month upside potential
Hess Corp. /zigman2/quotes/203832174/composite HES 42% 58% 0% $64.72 $73.70 14%
Apache Corp. /zigman2/quotes/200648444/composite APA 29% 65% 6% $28.58 $31.34 10%
Boeing Co. /zigman2/quotes/208579720/composite BA 31% 65% 4% $336.28 $352.05 5%
Under Armour Inc. Class A /zigman2/quotes/204420722/composite UAA 21% 64% 15% $16.50 $17.96 9%
Wynn Resorts Ltd. /zigman2/quotes/208845907/composite WYNN 67% 33% 0% $133.33 $149.88 12%
Mosaic Co. /zigman2/quotes/203825795/composite MOS 58% 37% 5% $18.47 $24.78 34%
MGM Resorts International /zigman2/quotes/209932643/composite MGM 53% 42% 5% $32.34 $35.88 11%
UDR Inc. /zigman2/quotes/200760603/composite UDR 33% 62% 5% $50.73 $51.00 1%
Cabot Oil & Gas Corp. /zigman2/quotes/205804016/composite COG 52% 41% 7% $15.35 $19.33 26%
IPG Photonics Corp. /zigman2/quotes/203325788/composite IPGP 31% 69% 0% $140.87 $158.23 12%
Source: FactSet

Now read: Wall Street has boosted 2020 estimates for these S&P 500 companies the most

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/zigman2/quotes/210599714/realtime
US : S&P US
3,122.87
+42.05 +1.36%
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/zigman2/quotes/208579720/composite
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Dividend Yield
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/zigman2/quotes/204653455/composite
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$ 46.45
+0.47 +1.02%
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7.71
Dividend Yield
1.38%
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$32.64 billion
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/zigman2/quotes/208845907/composite
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$ 93.50
+9.40 +11.18%
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$ 238.04
+7.38 +3.20%
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53.78
Dividend Yield
N/A
Market Cap
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Rev. per Employee
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/zigman2/quotes/209482112/composite
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$ 31.91
+1.00 +3.24%
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14.96
Dividend Yield
3.76%
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$ 10.30
+0.89 +9.46%
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N/A
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Market Cap
$4.68 billion
Rev. per Employee
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/zigman2/quotes/201671131/composite
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$ 53.69
+1.02 +1.94%
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P/E Ratio
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Market Cap
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/zigman2/quotes/201234787/composite
US : U.S.: NYSE
$ 189.11
+7.73 +4.26%
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P/E Ratio
89.10
Dividend Yield
0.41%
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Rev. per Employee
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/zigman2/quotes/208579720/composite
US : U.S.: NYSE
$ 173.16
+19.85 +12.95%
Volume: 66.49M
June 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$97.72 billion
Rev. per Employee
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/zigman2/quotes/201234787/composite
US : U.S.: NYSE
$ 189.11
+7.73 +4.26%
Volume: 2.17M
June 3, 2020 4:00p
P/E Ratio
89.10
Dividend Yield
0.41%
Market Cap
$56.56 billion
Rev. per Employee
$306,033
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/zigman2/quotes/210555154/composite
US : U.S.: NYSE
$ 169.64
+2.68 +1.61%
Volume: 4.06M
June 3, 2020 4:00p
P/E Ratio
44.87
Dividend Yield
0.42%
Market Cap
$119.94 billion
Rev. per Employee
$280,183
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/zigman2/quotes/205804016/composite
US : U.S.: NYSE
$ 20.35
+0.14 +0.69%
Volume: 4.47M
June 3, 2020 4:00p
P/E Ratio
17.86
Dividend Yield
1.97%
Market Cap
$8.11 billion
Rev. per Employee
$7.07M
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/zigman2/quotes/204653455/composite
US : U.S.: Nasdaq
$ 46.45
+0.47 +1.02%
Volume: 7.60M
June 3, 2020 4:00p
P/E Ratio
7.71
Dividend Yield
1.38%
Market Cap
$32.64 billion
Rev. per Employee
$768,143
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/zigman2/quotes/208845907/composite
US : U.S.: Nasdaq
$ 93.50
+9.40 +11.18%
Volume: 8.27M
June 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$10.09 billion
Rev. per Employee
$258,372
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/zigman2/quotes/202106417/composite
US : U.S.: Nasdaq
$ 238.04
+7.38 +3.20%
Volume: 729,426
June 3, 2020 4:00p
P/E Ratio
53.78
Dividend Yield
N/A
Market Cap
$10.70 billion
Rev. per Employee
$644,608
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/zigman2/quotes/209482112/composite
US : U.S.: NYSE
$ 31.91
+1.00 +3.24%
Volume: 2.32M
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14.96
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3.76%
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$6.82 billion
Rev. per Employee
$1.48M
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/zigman2/quotes/204420722/composite
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$ 10.30
+0.89 +9.46%
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N/A
Market Cap
$4.68 billion
Rev. per Employee
$346,212
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/zigman2/quotes/201671131/composite
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$ 53.69
+1.02 +1.94%
Volume: 4.16M
June 3, 2020 4:00p
P/E Ratio
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N/A
Market Cap
$13.86 billion
Rev. per Employee
$521,033
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$ 52.11
+0.37 +0.72%
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P/E Ratio
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Dividend Yield
1.92%
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$16.01 billion
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$ 12.53
+0.30 +2.45%
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Dividend Yield
0.80%
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Rev. per Employee
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/zigman2/quotes/208579720/composite
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$ 173.16
+19.85 +12.95%
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P/E Ratio
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Dividend Yield
0.00%
Market Cap
$97.72 billion
Rev. per Employee
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/zigman2/quotes/204420722/composite
US : U.S.: NYSE
$ 10.30
+0.89 +9.46%
Volume: 11.61M
June 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.68 billion
Rev. per Employee
$346,212
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/zigman2/quotes/208845907/composite
US : U.S.: Nasdaq
$ 93.50
+9.40 +11.18%
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Rev. per Employee
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US : U.S.: NYSE
$ 13.72
+1.13 +8.98%
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P/E Ratio
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Dividend Yield
1.46%
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Rev. per Employee
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US : U.S.: NYSE
$ 20.35
+0.14 +0.69%
Volume: 4.47M
June 3, 2020 4:00p
P/E Ratio
17.86
Dividend Yield
1.97%
Market Cap
$8.11 billion
Rev. per Employee
$7.07M
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US : U.S.: Nasdaq
$ 162.94
+3.05 +1.91%
Volume: 229,819
June 3, 2020 4:00p
P/E Ratio
54.28
Dividend Yield
N/A
Market Cap
$8.64 billion
Rev. per Employee
$234,706
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/zigman2/quotes/203832174/composite
US : U.S.: NYSE
$ 52.11
+0.37 +0.72%
Volume: 2.25M
June 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
1.92%
Market Cap
$16.01 billion
Rev. per Employee
$3.59M
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US : U.S.: NYSE
$ 12.53
+0.30 +2.45%
Volume: 16.12M
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P/E Ratio
N/A
Dividend Yield
0.80%
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$4.73 billion
Rev. per Employee
$2.15M
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/zigman2/quotes/208579720/composite
US : U.S.: NYSE
$ 173.16
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Volume: 66.49M
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P/E Ratio
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Dividend Yield
0.00%
Market Cap
$97.72 billion
Rev. per Employee
$660,961
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US : U.S.: NYSE
$ 10.30
+0.89 +9.46%
Volume: 11.61M
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P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.68 billion
Rev. per Employee
$346,212
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/zigman2/quotes/208845907/composite
US : U.S.: Nasdaq
$ 93.50
+9.40 +11.18%
Volume: 8.27M
June 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$10.09 billion
Rev. per Employee
$258,372
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/zigman2/quotes/203825795/composite
US : U.S.: NYSE
$ 13.72
+1.13 +8.98%
Volume: 5.26M
June 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
1.46%
Market Cap
$5.20 billion
Rev. per Employee
$743,201
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US : U.S.: NYSE
$ 20.26
+2.06 +11.32%
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June 3, 2020 4:00p
P/E Ratio
3.65
Dividend Yield
0.05%
Market Cap
$9.99 billion
Rev. per Employee
$213,874
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/zigman2/quotes/200760603/composite
US : U.S.: NYSE
$ 39.19
+1.53 +4.06%
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P/E Ratio
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Dividend Yield
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Rev. per Employee
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/zigman2/quotes/205804016/composite
US : U.S.: NYSE
$ 20.35
+0.14 +0.69%
Volume: 4.47M
June 3, 2020 4:00p
P/E Ratio
17.86
Dividend Yield
1.97%
Market Cap
$8.11 billion
Rev. per Employee
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/zigman2/quotes/203325788/composite
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$ 162.94
+3.05 +1.91%
Volume: 229,819
June 3, 2020 4:00p
P/E Ratio
54.28
Dividend Yield
N/A
Market Cap
$8.64 billion
Rev. per Employee
$234,706
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Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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