5 Stocks With the Largest Fair Value Estimate Cuts After Q1 Earnings

Against an increasingly uncertain economic backdrop, the first-quarter earnings season brought an unusually high number of fair value estimate cuts from Morningstar analysts.

Among the 849 US-listed stocks on Morningstar’s coverage list, 6.7% saw their fair values slashed by a meaningful 10.0% or more—nearly double the 10-year average of 3.5% and the highest rate in almost three years. On average, fair value estimates declined by 0.39% this quarter, a sharp reversal from the 1.98% increase seen last quarter.

Stocks With the Largest Fair Value Estimate Cuts

• Nissan Motor NSANY: $5.00 per share from $8.40
• Plug Power PLUG: $1 per share from $1.50
• AMC Networks AMCX: $10 per share from $15
• Charles Rover Laboratories CRL: $155 per share from $215
• TreeHouse Foods THS: $23.50 per share from $32.50

A large cut or increase in a fair value estimate may signal a company’s fortunes are changing. However, it‘s important to consider how a stock trades compared with that estimate. Four of the five stocks with the largest fair value cuts still carry a 3-star Morningstar Rating, indicating they’re fairly valued for long-term investors. The fifth, AMC, holds a 4-star rating, suggesting it remains undervalued even after a significant reduction in its fair value estimate.

Here’s what Morningstar’s analysts had to say about these stocks.

Nissan Motor

• Fair Value Estimate: $5.00
• Fair Value Decrease: 40%
• Economic Moat: None
• Morningstar Uncertainty Rating: High

“Nissan reported 1% consolidated revenue decline for fiscal fourth quarter, due to weak volumes in Japan and Europe and soft pricing in the US,” says Morningstar senior analyst Vincent Sun. “Increasing incentives to clear inventory, inflation, losses at its China joint venture, and a restructuring impairment led to a net loss of JPY 613 billion.”

Sun continues: “Management introduced additional restructuring measures, including additional workforce and capacity reduction and strengthening partnerships with Renault and Dongfeng, to cut variable and fixed costs by JPY 500 billion from fiscal 2024 levels. We think Nissan needs more time to revamp its model portfolio and regain growth. We cut fiscal 2026-29 automotive revenue to reflect slower volume growth and reduce fiscal 2026-29 operating profit to factor in a 25% US tariff and lower profitability due to cost pressure and a stronger yen.”

Nissan is trading near its new fair value estimate and has a Morningstar Rating of 3 stars.

Take a deeper dive into Sun’s outlook for Nissan.

Plug Power

• Fair Value Estimate: $1.00
• Fair Value Decrease: 33%
• Economic Moat: None
• Morningstar Uncertainty Rating: Extreme

“Plug Power reported first-quarter revenue of $134 million, in line with guidance,” says Morningstar analyst Brett Castelli. “Cash burn was approximately $150 million, nearly a 50% year-on-year reduction. Second-quarter guidance calls for sequential revenue growth to $160 million, which is broadly in line with our expectations. Additional financing announced in recent weeks helps strengthen Plug’s balance sheet. As a result, the company does not plan to raise additional equity capital during 2025. Plug ended the quarter with nearly $300 million of unrestricted cash.”

Castelli continues: “We are lowering our fair value estimate for no-moat Plug Power to $1.00 from $1.50. The reduced valuation is a result of lowering our long-term revenue estimates as balance sheet constraints limit top-line growth. We are maintaining our Extreme Uncertainty Rating and Poor Capital Allocation Rating given Plug’s continued balance sheet constraints. We view shares as fairly valued.”

Plug Power is trading near its new fair value estimate and has a Morningstar Rating of 3 stars.

Castelli has more on Plug Power stock here.

AMC Networks

• Fair Value Estimate: $10
• Fair Value Decrease: 33%
• Economic Moat: None
• Morningstar Uncertainty Rating: Very High

“AMC’s first-quarter financial results looked terrible, but they were consistent with the shrinking ice cube that is AMC’s business, and its stock is already priced for this, in our view,” says Morningstar senior analyst Matthew Dolgin. “Sales declined 7% year over year, and adjusted operating income declined 30%. We assign AMC no moat.”

Dolgin continues: “We’re reducing our fair value estimate to $10 from $15. Changes to our explicit forecast are not driving this reduction. Rather, via a longer runway of decline and higher cost of capital, we believe we’re better accounting for the risk that that firm may eventually need a white knight.”

AMC is trading at a 37% discount to its new fair value estimate and has a Morningstar Rating of 4 stars.

Find Dolgin’s full take on AMC here.

Charles River Laboratories International

• Fair Value Estimate: $155
• Fair Value Decrease: 28%
• Economic Moat: Narrow
• Morningstar Uncertainty Rating: High

“We have completed a review of the US Food and Drug Administration’s plan to reduce animal testing, which could affect Charles River’s business, and our fair value estimate for the firm is no longer under review,” says Morningstar analyst Rachel Elfman. “The FDA’s shift away from animal toxicity testing has been decades in development, but new FDA Commissioner Marty Makary is putting a stronger emphasis on the effort. The FDA’s road map encourages drug developers to use artificial intelligence models and lab-grown organoids to predict drug behavior. We have lowered our fair value estimate to $155 per share from $215 to account for more conservative revenue growth in the low single digits during our 10-year forecast period. To account for heightened risk for narrow-moat Charles River, we have increased our Uncertainty Rating to High from Medium.”

Charles River is trading near its new fair value estimate and has a Morningstar Rating of 3 stars.

Read Elfman’s full take on Charles River here.

TreeHouse Foods

• Fair Value Estimate: $23.50
• Fair Value Decrease: 28%
• Economic Moat: None
• Morningstar Uncertainty Rating: High

“In TreeHouse‘s first quarter, adjusted net sales declined 3.2% as volume/mix declined 8.3%,” says Morningstar strategist Kristoffer Inton. “The acquisition of Harris Tea contributed 4.7% to positive volume growth but was more than offset by the exit from ready-to-drink categories and other margin management initiatives.”

Inton continues: “Focused entirely on private-label, TreeHouse lacks brand or pricing power, leaving volume as its primary path for growth. Thus, the sharp decline in volume is a challenge to the company’s long-term growth trajectory. It‘s hard to see any levers or opportunities that can improve TreeHouse‘s situation. Although private-label brands are beginning to create value for some retailers (for example, wide-moat Costco’s Kirkland, Aldi, and Trader Joe’s), minimal benefit flows to manufacturers.”

TreeHouse is trading near its new fair value estimate and has a Morningstar Rating of 3 stars.

Take a deeper dive into Inton’s outlook for TreeHouse.