Analysts often change target stock prices based on company performance. Sometimes the change is important, sometimes less so. The bottom line is that the reason for the downgrade must stem from certain concerns.

Quarterly results provide investors with a sort of snapshot of the progress of publicly traded companies. While the headline numbers show what has already been accomplished, the outlooks that companies provide give investors a glimpse of possible future trends.

Analysts often issue new ratings and price targets within hours or days after earnings results are released. A change in rating can significantly affect a stock's price, giving investors an idea of what institutional investors consider fair value.

Let's take a look at three stocks that JPMorgan Chase lowered their target price:

McDonald's $MCD+0.6%

McDonald's

MCD

$293.85 $1.82 +0.62%

Capital Structure

Market Cap

209.5B

Enterpr. Val.

260.3B

Valuation

P/E

25.6

P/S

8.1

Open $293.88

Day range $290.37 - $295.10

52 week range $243.53 - $302.39

McDonald's is known for its ability to beat expectations on sales from individual restaurants. Despite concerns about pricing and buying power, the company has typically managed to maintain investor confidence. However, recent results have indicated a change.

McDonald's reported a decline in single restaurant sales for the first time since 2020, despite expectations that the company would continue to thrive on "strategic price increases." McDonald's stock peaked at nearly $300 per share thanks to rising earnings, but now the price target has been lowered. JPMorgan Chase cut its target price from $290 to $270, with the closing share price on July 30 at around $266.

Novavax $NVAX-0.3%

Novavax, Inc.

NVAX

$12.52 -$0.04 -0.32%

Capital Structure

Market Cap

2.0B

Enterpr. Val.

1.6B

Valuation

P/E

-4.8

P/S

2.5

Open $12.95

Day range $12.42 - $13.38

52 week range $3.53 - $23.86

Novavax is on the list of stocks with lower target prices due to a valuation reassessment. Novavax shares are up 153% in 2024 and more than 200% in the six months to July 30. This increase is due to the expectation that the company will have a first-mover advantage with the vaccine against the JN.1 variant that the FDA has recommended as a booster dose target in 2024.

However, JPMorgan and other analysts are starting to question whether that premium is justified. JPMorgan lowered its price target and changed its rating to "Underweight" from "Neutral" (i.e., the equivalent of a "Sell" rating). Novavax also announced a partnership with Sanofi, which piqued investor interest. Still, given the high short interest of over 22%, investors will likely wait for a correction before investing in Novavax stock.

Frontier Group $ULCC-2.1%

Frontier Group Holdings,…

ULCC

$4.30 -$0.09 -2.05%

Capital Structure

Market Cap

985.5M

Enterpr. Val.

4.4B

Valuation

P/E

-15.1

P/S

0.3

Open $4.57

Day range $4.38 - $4.62

52 week range $2.79 - $8.33

Frontier Group is set to release its second quarter results on August 6. Some analysts expect the results to show 6.6% quarter-over-quarter revenue growth and 55% year-over-year earnings growth, which would confirm the expected capacity expansion.

However, JPMorgan did not issue a price target, but downgraded ULCC stock to "Underweight." Although Frontier Group's fleet includes 142 Airbus aircraft, allowing it to keep more planes in service, the company currently has a market capitalization of about $891 million, making it relatively small. Thus, the stock remains a speculative investment for long-term investors who may wait for more favorable conditions before potentially buying.

Disclaimer: There is a lot of inspiration to be found on Bulios, but stock selection and portfolio construction is up to you, so always do a thorough analysis of your own.

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