5 Stocks With the Largest Fair Value Estimate Cuts After Q3 Earnings

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While third-quarter earnings were largely positive for the 871 US-listed stocks covered by Morningstar analysts, some companies saw their fair value estimates slashed.

Among the stocks on Morningstar’s list, the average change in fair value estimate was a 1.28% increase, below the 10-year average increase of 1.41% per earnings season. Of those 871 stocks, about 4% saw their estimates cut by a meaningful amount of 10% or more.

Stocks With the Largest Fair Value Estimate Cuts

• SolarEdge Technologies SEDG: $18 per share from $33
• Bayer BAYRY: $10.60 per share from $18.50
• Arcadium Lithium ALTM: $5.85 per share from $10.00
• Sirius XM SIRI: $30 per share from $50
• Qorvo QRVO: $85 per share from $128

A large cut or increase in a fair value estimate may signal to investors that a company’s fortunes are changing. However, it’s important to consider how a stock trades compared with that estimate. SolarEdge and Qorvo, which have Morningstar Ratings of 4 stars, and Bayer, which has a 5-star rating, are trading below their estimates, meaning our analysts think they’re attractively priced for long-term investors. This holds even after their big valuation cuts.

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

SolarEdge Technologies

• Fair Value Estimate: $18.00
• Fair Value Decrease: 45%
• Economic Moat: None
• Morningstar Uncertainty Rating: Very High

SolarEdge had two fair value cuts in the quarter. The most recent—to $18 from $25—came after the company reported weak third-quarter earnings. “A downturn in European demand for rooftop solar and self-inflicted wounds have plagued SolarEdge’s recent results,” says Morningstar equity analyst Brett Castelli. “Quarterly revenue was down 64% year on year as the company continues to under-ship demand to correct excess inventories in Europe. A $640 million inventory write-down was larger than we expected, and was driven by obsolete inventory in the United States and Europe.”

Earlier in the quarter, SolarEdge saw its fair value cut to $25 from $33 due to weak demand in Europe. “Europe is SolarEdge’s largest market,” Castelli explains. “The current weak demand environment is likely to result in increased competition on price and delay profitability improvement, in our view. We are reducing our 2025 and 2026 revenue estimates by approximately 25% and 20%, respectively.”

SolarEdge is trading at a 40% discount to its new fair value estimate and has a Morningstar Rating of 4 stars.

Take a deeper dive into Castelli’s outlook for SolarEdge Technologies.

Bayer

• Fair Value Estimate: $10.60
• Fair Value Decrease: 43%
• Economic Moat: Narrow
• Morningstar Uncertainty Rating: High

Bayer had the second-largest fair value cut, going to $10.60 from $18.50. “Bayer’s third-quarter earnings were lower than our expectations, with foreign exchange headwinds in crop sciences and consumer health significantly affecting the top-line reported results,” says Morningstar senior equity analyst Jay Lee. “Although parts of the pharmaceuticals business are attractive to us, and we recognize the near-term margin improvement driven by the company’s cost-cutting programs, our model now incorporates a more pessimistic long-term view of growth and profit margins, which are the main drivers for our lower fair values.”

Bayer is trading at a 52% discount to its new fair value estimate and has a Morningstar Rating of 5 stars.

Investors can find more of Lee’s take on Bayer here.

Arcadium Lithium

• Fair Value Estimate: $5.85
• Fair Value Decrease: 42%
• Economic Moat: Narrow
• Morningstar Uncertainty Rating: Medium

Arcadium saw its fair value estimate slashed to $5.85 from $10.00, following the announcement that the firm will be acquired by Rio Tinto. “Arcadium Lithium and Rio Tinto announced a $6.7 billion deal for Rio to acquire Arcadium at $5.85 per share in an all-cash transaction,” explains Morningstar equity strategist Seth Goldstein. “We think the deal is likely to close within Rio management’s timeline of mid-2025. We’re also updating our Morningstar Uncertainty Rating to Medium from Very High to reflect a narrower range of outcomes given our view the deal is likely to close as planned. This price values Arcadium significantly below our fair value estimate. Accordingly, we’re updating our Morningstar Capital Allocation Rating to Poor from Standard, as we think Arcadium management negotiated a value-destructive deal for shareholders.”

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

Read Goldstein’s full take on Arcadium Lithium here.

Sirius XM Holdings

• Fair Value Estimate: $30.00
• Fair Value Decrease: 40%
• Economic Moat: None
• Morningstar Uncertainty Rating: Very High

Sirius XM saw its fair value cut to $30 per share from $50 to reflect a “changed competitive environment,” according to Morningstar senior equity analyst Matthew Dolgin. The company also no longer has a moat. “For Sirius XM, the change in moat rating reflects the higher level of competition we think the firm faces from music streaming providers like Spotify,” says Dolgin. “Sirius XM’s in-vehicle experience can be mimicked by streaming providers that do not need the satellite technology or customized radios. A shrinking subscriber base and the different business models of the music streaming providers have negated the cost advantage that we once assigned to Sirius XM.”

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

Dolgin has more about Sirius XM Holdings stock here.

Qorvo

• Fair Value Estimate: $85.00
• Fair Value Decrease: 34%
• Economic Moat: None
• Morningstar Uncertainty Rating: High

Qorvo saw its fair value estimate reduced to $85 per share from $128 due to a “gloomy outlook for the December quarter and the start of calendar 2025,” writes Morningstar equity strategist Brian Colello. “Qorvo appears to have surprisingly lost some radio frequency chip content within Samsung’s upcoming phones and is suffering from a mix shift in Android-based smartphones worldwide toward entry-level, rather than mid-tier, devices where Qorvo has less RF content. Qorvo’s business with Apple’s latest iPhone 16 launch also doesn’t appear stellar at the moment.”

Qorvo is trading at a 20% discount to its new fair value estimate and has a Morningstar Rating of 4 stars.

The rest of Colello’s take on Qorvo can be found here.