Reasons to be optimistic about the S&P 500's worst-performing stocks

Analysts see potential in the S&P 500's worst-performing stocks, despite significant declines. Fiserv, Trade Desk, Deckers Outdoor, and Lululemon Athletica are highlighted for possible recovery due to strategic changes and market conditions. Concerns about AI disruption affect FactSet and Gartner, but analysts argue these fears may be overstated. Overall, selective investment in these laggards could yield positive returns, as historical data suggests a rebound in subsequent years.

By Emily Bary The S&P 500's biggest losers have dropped by as much as 69% this year. But there may be diamonds in the rough. Some analysts see diamonds in the rough among the S&P 500's major laggards. On the list of S&P 500's biggest losers this year, many investors see broken businesses. But some analysts spy an opportunity to buy up cheap stocks that have fallen too far. With just under a month left to go in 2025, 12 members of the S&P 500 SPX have seen their stocks drop more than 40% this year. The weakest stock of the bunch, Fiserv (FISV), has declined nearly 70%. There are certainly reasons these shares have come under pressure. Some stocks, like FactSet Research Systems (FDS) and Gartner (IT), are viewed to be at risk of artificial-intelligence disruption. Chipotle Mexican Grill (CMG) and Lululemon Athletica (LULU) shares have taken dives as the companies try to keep up with changing consumer preferences. Trade Desk (TTD) faces heightened advertising-technology competition from Amazon.com (AMZN) and others. Read more: These stocks have been hit hard in 2025 but could surge by as much as 57% from here Looking back at the past five years, the 10 biggest annual losers have, on average, eked out positive gains in the following year - about 4.7% higher - according to Dow Jones Market Data, when excluding SVB Financial Group and Signature Bank, both of which were closed by regulators. Digging through the bargain bin requires a selective approach. Shares of Moderna (MRNA), for instance, fell 58% in 2024 to rank among the worst performers in the index, and they're down another 42% in 2025 on concerns about vaccine uptake and a regulatory push to lower prices. But shares of Intel (INTC) have bounced back in a big way, following up on their 60% 2024 loss with a doubling so far in 2025 that ranks among the S&P 500's top 10 performances. To help investors assess the outlooks for the 2025 list of major laggards, we outline reasons some analysts see the potential for a reversal of negative sentiment heading into the new year, as well as information about the portion of analysts tracked by FactSet who rate the stocks positively, and the upside to average price targets. Reasons for optimism Fiserv shares came crashing down to earth after management at the financial-services firm dramatically cut growth expectations for the year. But barring a major deterioration in the macroeconomic landscape, "it's very unlikely to get worse from here," Mizuho analyst Dan Dolev told MarketWatch. The stock is cheap, he said, trading at 7.5 times forward earnings, and Fiserv now has opportunity to "fight its way back into the hearts and minds" of sales partners who were turned off by pricing moves that the company has since walked back. The majority of analysts are still bullish on shares of Trade Desk, the ad-tech company whose shares have lost 66% this year. Investors have been worried about competition from Amazon and a major growth slowdown. But Guggenheim's Michael Morris noted that the company's leadership is optimistic that 2026 will be a better year, helped by management changes, new products and upbeat trends for the connected-television and audio advertising markets. Deckers Outdoor (DECK) and Lululemon Athletica are two hard-hit fashion-oriented stocks whose styles fell out of favor with consumers this year. Sales within Deckers' Hoka shoe brand declined in the latest quarter, but Raymond James analyst Rick Patel saw bright spots, including a sequential pickup in Hoka's direct-to-consumer sales and overall strong performance of the Deckers lineup internationally. Meanwhile, just five of 34 analysts tracked by FactSet are still bullish on Lululemon shares. But BTIG's Janine Stitcher, one of those few bulls, wrote following a meeting with the company's management team that "product execution misses were largely a function of talent gaps and should see meaningful improvement into spring as the impacts of new creative direction take hold." Other big losers include shares of Gartner and FactSet, which have fallen victim to concerns about AI disruption. But for Gartner, William Blair's Andrew Nicholas thinks the fears are overblown. Gartner's "research is highly differentiated relative to what one can reasonably expect to come from an LLM," or large language model, he said. And investors overstate how much of Gartner's business relates to written research, he argued, with the bulk actually coming from things like conferences and inbound inquiries. Nicholas is bullish on Gartner shares, but he has a more measured view of FactSet shares. Nonetheless, he noted that FactSet isn't standing still when it comes to AI, and he's "optimistic about the firm's opportunity to gain market share in wealth... and leverage AI" within its own offerings. See also: 17 dividend-stock bargains from a value manager with a stellar track record Molina Healthcare shares (MOH) have been weighed down by elevated medical costs, including in its Medicaid business. "While the trend pressure is expected to continue in the intermediate term, the company did provide a path to normalization and potential upside to estimates," Ann Hynes, one of the stock's few bulls, wrote after the last earnings report. Alexandria Real Estate Equities (ARE), a real-estate investment trust, acknowledged "slower demand across the life-science sector and increased supply for life-science real estate" in an October filing. And the company's operating occupancy has fallen for four quarters in a row, helping spark a lower-than-expected outlook for fiscal 2026. "While investor sentiment is very negatively skewed, we believe with this reset more than ever, one should be greedy when others are fearful," Mizuho's Vikram Malhotra wrote following the October update. In a market where consumers have been hunting for value, Chipotle has faced sales pressure. But TD Cowen's Andrew Charles thinks a turnaround could be in store next year, as the company works to improve "service standards" and leverages "menu innovation." He noted after the company's last earnings report that Chipotle's offerings carry "superior value perceptions" relative to those of fast-casual peers. See more: Here's why Chipotle is cutting its outlook - again Charter Communications shares (CHTR) have gotten so cheap that MoffettNathanson's Craig Moffett wrote in his post-earnings note to clients that they were trading at a 2x price-to-earnings ratio when looking at 2028 estimates. The cable company has been shedding internet subscribers as wireless operators push alternatives to traditional broadband. Moffett noted that the stock's "all-time-low valuation comes just as Charter's free cash flow is beginning to ramp." "Charter management may not be able to change the narrative, but they can take advantage of the dislocation" through buybacks. "If the public-equity markets won't buy Charter's shares, Charter's management will." And though Oppenheimer's Jay Olson has just a "perform" rating on Moderna shares, he titled a late November note: "Poised for a Turnaround." That would hinge on a return to growth, which management projects. "While 2025 remains a transition year, we see 2026 as a potential inflection point for the story, as we anticipate several key regulatory and clinical catalysts," Olson wrote. Those include RSV revaccination updates and approval for the company's flu vaccine. -Emily Bary This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 12-02-25 1851ET