Goldman Sachs names six stocks to avoid during the reporting season

Goldman Sachs analysts recommend investors to avoid shares of some companies before the reporting season. Most of the reports will be released next week, but already the bank is recommending selling securities that could disappoint investors. Its analytical note is cited by CNBC.

Shares of candy maker Hershey have lost 3% since the beginning of the year, and Goldman estimates they could fall another 3.6%. The bank holds a target on the stock at $157 since February. According to Goldman, Hershey is facing margin pressure from loss of market share in the confectionery segment, increased competition, and the risk of reduced impulse buying (e.g., in stores near checkout lines). Earlier in July, the securities sagged amid personnel reshuffles: the company leaves CEO Michelle Buck, who has worked at Hershey for almost two decades, eight of which - as head. She will be replaced by Kirk Tanner, who until recently worked as CEO of the Wendy's restaurant chain.

The new CEO has removed one of the major uncertainties surrounding Hershey stock, Mizuho analyst John Baumgartner wrote July 9 in a note cited by Barron's. Tanner's experience in consumer goods, brand building, innovation and working with customer partnerships "fits Hershey's needs well" and provides "an encouraging foundation for new approaches," he said. Baumgartner said net sales growth will remain at 2-4% and earnings at 6-8% over the long term, in line with the company's outlook. However, the new CEO is likely to step up investments in brand development, writes the analyst.

Hershey faces multiple challenges: rising cocoa prices, potential costs from duties and declining consumer interest in sweet snacks, Barron's explained. For the first quarter ended March 31, adjusted earnings per share fell 31.9% and revenue fell 13.8%.

According to Goldman Sachs, shares of Victoria's Secret lingerie brand may lose another 18% of their value, although they have already collapsed by 54% since the beginning of the year. The bank updated its target on the brand's shares on June 4 - it expects them to fall to $15. "While we are positive on stronger-than-expected first-quarter sales and profitability, we believe the incident with the data leak has dampened overall enthusiasm and increased caution about Victoria's Secret's ability to cope with a volatile operating environment," wrote Goldman analyst Brooke Roach. - Going forward, we expect investor attention to focus on management's comments on the drivers of quarterly growth, particularly the sustainability of current trends as the company implements its strategic initiatives."

On April 30, Wells Fargo reduced its rating on the securities to "below average," which amounts to a sell recommendation on the stock. The bank's analyst Ike Boruchow also lowered Victoria's Secret's target price to $12 from $25, down 37% from Monday's close. "While the company has seen improvements following the arrival of a new team and upgrades in product and marketing, we remain on the sidelines. The non-core lingerie segment is traditionally recession-sensitive, and we expect revenue to decline more than the sector average. The brand has not yet proven the ability to hold prices, which will be critical in the near term," the Wells Fargo analyst wrote.

According to Goldman, eBay's prospects are not the best. The bank holds a target on the company's shares at $56 with a recommendation to "sell" since February 27. Shares of the online platform have risen 25% since the beginning of the year, but the bank's analysts believe they could slip 28% over the next 12 months. In a note to investors, Goldman analyst Eric Sheridan explained that the company will face challenges in the second quarter due to macroeconomic uncertainty and the possible effects of trade duties.

In late April, Bernstein analyst Nikhil Devnani downgraded the securities to "neutral" and lowered his target price by $5 to $65, which implies about a 16% decline from current levels.

"One of the key growth areas - goods from China, including auto parts - may come under pressure due to uncertainty in tariff policy. Some of this may be offset by growth in second-hand sales and alternative suppliers, but overall eBay has a large share in non-customized categories. There are too many uncertainties to make an active bet," CNBC quoted Devnani as saying.

Goldman downgraded American Airlines from neutral to "sell" back in April, also lowering the target from $16 to $8 per share. That's 37% cheaper than the current price of the securities. The bank attributed this to declining demand for flights and rising economic uncertainty. The company's shares have lost more than 30% since the beginning of the year.

Jefferies analyst Sheila Kahyaoglu also revised her target price on American Airlines shares in May, lowering it from $12 to $10.5 while maintaining a "hold" rating. Kahyaoglu explained that she expects revenue from short domestic economy class routes to decline. These destinations make up 75% of the airline's network and were expected to see revenue declines in the mid to high single-digit percentages over the summer.

Goldman downgraded Supermicro to a "sell" recommendation back in March due to growing competition in the AI server hardware market. In May, Goldman Sachs analyst Michael Ng reiterated a "sell" recommendation on the securities, keeping their target price at $24. That's 55% below the current value. Ng explained that despite Supermicro's revenue growth, its gross margin has remained relatively low at 11.3%.

On July 10, Ruple Bhattacharya, an analyst at BofA Securities, said he doesn't expect Supermicro shares to rise significantly in the near term. The investment bank resumed coverage of the AI server assembler's securities with an "below market" rating and a target price of $35, down 34% from the current price. BofA explains that while the company is showing revenue growth, its margins are declining year-over-year, writes Barron's. It was 18% in fiscal 2023, 13.9% in 2024, will fall to 11.3% in 2025, and will reach 9.4% by fiscal 2027, according to BofA's projections.

Goldman does not recommend holding shares of Lazard, which engages in investment and M&A advisory services and asset management, ahead of the report. In May, the bank's analyst Richard Ramsdenraised his target price on Lazard shares to $40 from $35, 23% below the current value. In doing so, the bank reiterated a "sell" recommendation on the securities, which it has maintained for nearly two years. They have appreciated less than 1% since the start of 2025, but have gained 45% in the past three months. In the words of the company's management, the M&A market has come alive, where Lazard's advice is in demand. The company has also announced plans to incorporate AI into its processes.

On July 15, Wells Fargo raised its target price on Lazard shares to $52 from $50, maintaining its Neutral (Equal-Weight) rating. The bank improved the target because Lazard had an increase in assets managed by the company by the end of the second quarter. Consequently, Wells Fargo raised its earnings per share (EPS) forecast for the second quarter from $0.34 to $0.35 and for the full year 2025 from $2.1 to $2.15.

This article was AI-translated and verified by a human editor