Investors reacted strongly to recent market developments this week, leading to significant sell-offs in shares of Blackstone amid rising concerns over the private credit sector. A combination of soaring oil prices and geopolitical tensions linked to the ongoing conflict in Iran has heightened fears of increased inflation coupled with stagnating economic growth, negatively impacting market sentiment. This led to declines across all three major U.S. indexes, with the Dow Jones Industrial Average down by approximately 2% for the week, and both the S&P 500 and Nasdaq Composite experiencing losses exceeding 1%.
Particular stocks faced heavier selling pressures during this downturn. Utilizing CNBC Pro’s stock screener tool, analysts identified which stocks were most oversold based on their 14-day relative strength index (RSI). An RSI below 30 suggests that a stock is oversold and ripe for a potential rebound, while a reading above 70 indicates that a stock may be overbought and subject to a downturn.
Blackstone shares experienced a 3.3% drop this week, marking an RSI of 23. The selling spree was largely attributed to investors seeking redemptions from less liquid private credit investments. Despite the downward trend, Bank of America reaffirmed its buy rating on Blackstone, with analyst Craig Siegenthaler projecting a robust fundraising quarter ahead. Siegenthaler estimated that Blackstone could raise $66 billion, driven by credit and private equity sectors. He highlighted a pipeline of future IPOs, including notable names such as Copeland and Ancestry.com, which could serve as catalysts for future monetization, albeit with likely delayed timings. Siegenthaler adjusted his price target for Blackstone to $157, down from $158, still suggesting that shares could increase by 47% from their closing price on Friday.
Similarly, homebuilder LennarCorp also saw a significant sell-off this week, closing down more than 6% with a corresponding RSI of 23. The company reported first-quarter earnings of 93 cents per share, falling short of the FactSet consensus estimate of 95 cents, and provided guidance for new orders that did not meet expectations.
In contrast, several companies displayed signs of being overbought this week. Chemical manufacturer Dow gained approximately 10% during the week, finishing with an RSI of 71. This uptick followed upgrades from both KeyBanc Capital Markets and Citi, with Citi analyst Patrick Cunningham raising the price target to $40 from $28, indicating a potential upside of about 9%. Cunningham noted that geopolitical issues, such as the Iran conflict and the resulting disruption to energy prices and supplies, would necessitate upward revisions to forecasts for commodity chemicals.
LyondellBasell Industries was another standout on the overbought list, with an RSI of 77 and a nearly 8% weekly gain. The company also received upgrades from both Citi and KeyBanc, with Cunningham suggesting that higher valuations could be justified given the asymmetrical risks posed by prolonged conflicts and evolving valuations of North American assets.
As market dynamics continue to shift under the influence of external pressures, analysts and investors are closely monitoring these developments to gauge the potential for future rebounds or declines in stock performance.
