Analysts often downgrade stocks they feel have run up in price too much or if some bad news comes out that can negatively impact a stock. But it’s unusual to see downgrades come after stocks have been pummeled, have no recent bad news and are near or at 52-week lows.
The reason it’s unusual is that analysts who downgrade stocks or slice price targets near 52-week lows run the risk of piling on too late and being embarrassed as an oversold stock rebounds and performs very well over the next few months.
An example of this occurred earlier this year when several analysts jumped on the bandwagon to downgrade or cut the price target of SL Green Realty Corp. (NYSE:SLG) after it had already fallen from $41 to $21 in just two months. One particularly bad call was on March 28, when Citigroup maintained a Sell on SL Green and dropped the price target from $35 to $17, only to see it gap higher…
