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2 Downgraded Tech Stocks to Avoid in Q4 -Breaking

by Mike Robinson

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© Reuters. 2 Tech Stocks that have been downgraded to avoid in the fourth quarter

Due to prolonged shortages of semiconductor chips and other components, the technology boom that was driven by pandemics seems to have slowed down. Given the industry’s slowing growth, we think Infinera (NASDAQ:) and Latch, Inc. (LTCH) are best avoided now, considering their bleak fundamentals. These stocks have been downgraded by analysts in recent months. Read on.The COVID-19-pandemic-fueled tech boom seems to be cooling down due to supply chain disruptions. According to FactSet, S&P 500 information technology companies are expected to report 29% and 19% respective year-over-year earnings and revenue growth for the third quarter, compared to the second quarter’s 48% and 22%. Global supply chain disruptions are expected to cause shortfalls for industry leaders.

The tech sector has also become overpopulated with new businesses entering the market to capitalize on its long-term growth potential. Established companies dominate the sector, which means that smaller companies and those with weaker fundamentals face fierce competition.

Infinera Corporation, (INFN), and Latch, Inc., (LTCH) have been recently downgraded. INFN was downgraded by JPMorgan Chase & Co. (NYSE:) from ‘neutral’ to ‘underweight,’ and LTCH was downgraded by Goldman Sachs Group Inc. (NYSE:) from ‘Buy’ to ‘Neutral.’ Therefore, we think these two stocks are best avoided now.

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