10 stocks Wall Street analysts hate heading into 2023

December 18, 2022

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Wall Street analysts aren’t expecting S&P 500 companies to blow the doors off with their fourth quarter earnings reports when they begin to trickle out in January.

Actually, quite the contrary, as sluggish economic growth, rising interest rates, and stubborn inflation has strategists cautious about the stock market in 2023.

Fourth quarter earnings for S&P 500 companies are seen dropping 2.8%, according to fresh data from FactSet. If that turns out to be correct, it would mark the first earnings decline reported by the S&P 500 since the third quarter of 2020 when profits fell 5.7%.

Expectations have already begun to trend lower for corporate profits, FactSet data shows. Earnings per share estimates for the fourth quarter have declined 6.1% since September 30.

Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 14, 2022. REUTERS/Andrew Kelly

“Slowing nominal activity means less top-line growth and downward pressure on margins,” wrote 22V Research founder Dennis DeBusschere in a client note. “At the same time, management sentiment towards forward earnings, measured with the Amenity natural language processing tool, has turned deeply negative. The long-anticipated decline in earnings has arrived.”

Despite a long list of reasons — with the aforementioned profit weakness chief among them — to be cautious on stocks into the looming earnings season, analysts continue to stay upbeat with their ratings.

There are 10,835 ratings on stocks in the S&P 500, points out FactSet. Of these 10,835 ratings, 55.3% are buy ratings, 38.8% are hold ratings, and 5.9% are sell ratings.

But a few stocks in the S&P 500 that do have sell ratings — suggesting analysts really do not care for these stories.

Companies such as Principal Financial Group, T. Rowe Price Group and ConEd have more than 50% of the analysts covering them rating the stock a Sell.

So as investors look to rebound from a challenging year in markets, these are a few names Wall Street is least confident will help turn things around for your portfolio.