ASX 200 stocks with the most downside to analyst targets: Reece, Fortescue and Altium

Some of the biggest winners this reporting season such as Altium (ASX: ALU) and Cochlear (ASX: COH) have wound up as stocks with the largest downside to analyst targets, which begs the question – Are bearish analysts are contrarian indicator?

ASX 200 stocks with the biggest downside

Minus reporting season names such as Altium, Cochlear, ARB Corp and Harvey Norman – The list remains relatively unchanged compared to two weeks ago.

Reece, Commonwealth Bank and Invocare remain some of the most unloved stocks among analysts. Despite this, they've held up relatively well over the past month.

‘Target price’ reflects an aggregate of all target prices within Refinitiv’s data base as at 04/09/2023. ‘Last Update’ reports the latest broker coverage on the stock – Stocks that have not received coverage in the past month are not included. Close price as at 01/09/2023 close (Table: Market Index | Source: Refinitiv)

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We highlight the four reporting season winners as well as a few broker responses below.

Altium: FY23 sales and earnings came out 2% ahead of Goldman Sachs expectations. The broker said the highlight was the FY24 revenue guidance, which expects 20-23% revenue growth. Altium shares rallied 26% on the day of its results, pushing right past most analyst targets which vary between $39 to $50.

Altium 12-month price chart (Source: Market Index)

Cochlear: FY23 sales were 6% ahead of Macquarie expectations thanks to a a combination of market growth, improved clinical capacity, market share gains and COVID catch-up surgeries. The stock is up around 15% since its report on 14 August. Macquarie says its looking for more evidence of sustained sales growth and at a valuation of 44 times FY24 EPS, "we see greater appeal in CSL and ResMed."

Cochlear 12-month price chart (Source: Market Index)

Harvey Norman: UBS hit Harvey Norman with a Sell rating and $3.25 target, reflecting the sour near-term outlook for retail sales.

Harvey Norman 12-month price chart (Source: Market Index)

ARB Corp: "ARB is a quality business with long-term growth optionality, but our analysis indicates growth in the US market will be slow and steady rather than a rapid acceleration," warned Macquarie analysts. The stock was downgraded from Neutral to Underperform with a $25.70 target price.

Arb Corp 12-month price chart (Source: Market Index)