Key points
- Oversold large-cap stocks with favorable analyst ratings are attracting attention amid market changes, presenting potential buying opportunities.
- Lululemon shares are down 23% year to date, but beat estimates by $0.29 in its latest earnings report, with analysts predicting a potential upside of 27%.
- Despite Snowflake’s 20% year-to-date losses, its earnings report beat expectations, with analysts predicting a potential 25% increase.
- 5 stocks we like more than NIKE
As the first quarter unfolded, the resounding success of the semiconductor sector dominated the stock market narrative, pushing the broader market higher by nearly 10%. However, a notable change occurred towards the end of the quarter. Defensive sectors such as utilities and consumer staples have begun to gain traction and break out, suggesting a potential redirection of attention towards oversold large-cap stocks favorably positioned for a rebound.
In this changing landscape, an attractive proposition is to identify extremely oversold stocks with favorable analyst ratings and expected upside. Nike, Lululemon, Snowflake and Adobe found themselves in the spotlight, not for their recent highs, but for their significant declines. While the market has been fixated on the surge in the semiconductor sector and high-flying technology names, these companies have slipped quietly into highly oversold territory, potentially attracting the attention of investors seeking value amid volatility.
So let’s take a closer look at these stocks to assess whether they present attractive buying opportunities despite the current oversold conditions or whether further downside pressure looms.
Nike, a powerhouse in athletic apparel, has had a rough year, with shares down nearly 14% year to date. However, its latest earnings report on March 21, 2024 offered a ray of hope. Nike beat expectations with earnings per share of $0.98, beating estimates of $0.29, and reported revenue of $12.43 billion, beating forecasts.
Despite this year’s weakness, analysts remain bullish on Nike, predicting upside potential of nearly 25%. This indicates confidence in its resilience and growth prospects. The stock’s RSI of 34.79 indicates that it may be heavily oversold and entering a skewed risk-reward scenario on the long side.
After the latest earnings announcement, the stock gapped to the downside and continued to trade lower, resulting in year-to-date losses of close to 20%. Despite this, the cloud-based data storage, computing and analytics company beat analysts’ expectations by reporting EPS of ($0.44), $0.05 higher than the consensus estimate of ($0.49) . Additionally, the company generated revenue of $774.70 million for the quarter, beating analysts’ projections of $759.86 million.
After weeks of strong selling pressure, the RSI currently stands at 35, indicating oversold conditions in the near term. Analysts see significant upside for the stock, issuing a Moderate Buy rating and setting a price target that suggests a potential upside of nearly 25%.
Lululemon, a leader in activewear, has had a rough start to the year. Its shares are down more than 23% year to date, pushing it into bear market territory. Following the latest earnings report on March 21, 2024, the stock posted a significant gap to the downside, returning to its 2023 trading range.
Lululemon reported $5.29 earnings per share for the quarter, beating estimates of $0.29. Revenue was $3.21 billion, exceeding expectations and marking a 15.6% year-over-year increase. However, the earnings sell-off has left the stock in heavily oversold territory, with an RSI of 28.
Analysts remain bullish on Lululemon, with a Moderate Buy rating based on twenty-nine analyst ratings and a consensus price target indicating upside potential of nearly 27%.
Following its recent earnings report, Adobe saw a notable decline, with the stock gap significantly below previous support at $500, a level last seen in 2023. On March 14, 2024, Adobe released its quarterly earnings results, reporting earnings by period. share (EPS) of $4.48 for the quarter. This beat analysts’ consensus estimates of $0.10. Additionally, the company generated revenue of $5.18 billion during the quarter, slightly exceeding analysts’ estimates of $5.14 billion, reflecting an 11.3% year-over-year increase in quarterly revenue.
Despite the drop from the earnings report, Adobe maintains a Moderate Buy rating. Based on the consensus price target, analysts expect a potential upside of 23%. Additionally, the company expects earnings growth close to 13% for the full year ahead, indicating confidence in its ability to capitalize on market opportunities and drive continued growth.
Before you consider NIKE, you’ll want to hear this.
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