Top Stock Gainers and Losers of August 2023

Editor’s Note: This article was partially generated by Wordsmith, an automated smart-text platform, using data from the Morningstar US Large-Mid Index and Morningstar Direct. The article has been reviewed by Morningstar editors.

Top Stock Gainers in August 2023

Apellis Pharmaceuticals APLS rose 63.9% in the month but was still down 18.4% for the year. Shares are 55.5% below their last high on June 14.

Although it reported losses for its second quarter, the biopharmaceutical firm shared positive data regarding a study into Syfovre, a drug used to treat geographic atrophy or vision loss. Apellis says the study showed “a reduction in nonsubfoveal GA lesion growth of up to 45%” after two years.

Arista Networks ANET climbed 25.9%, lifting shares 60.9% in the year to date. The technology firm’s stock ended the month with a Morningstar Rating of 2 stars, trading at a 30% premium to its fair value estimate of $150.

The company, which develops network equipment, raised its full-year outlook when it reported strong second-quarter results. Sales increased 39% from the same period the previous year and 8% from the first quarter to $1.46 billion, which Morningstar analyst William Kerwin attributes to strong user spending. “Arista’s push into enterprise customers is progressing, but cloud spending continues to be the driver of results,” he adds.

Erie Indemnity ERIE rallied 25.6%, bringing it up 13.9% in the year to date. For its second quarter, the insurance company generated an income of $117.9 million, up nearly 150% year over year. In a conference call, chief executive officer Timothy NeCastro said an increase in severe weather events such as hail, wind, and tornados drove up claim counts for catastrophes by 70% year over year, with inflated insurance costs helping the firm’s growth.

Texas Pacific Land TPL climbed 25.3% but was still down 19.1% for the year. Shares are 31.2% below their last high on Nov. 11, 2022.

During the second quarter, the energy company generated $307 million in revenue. In a conference call, chief executive officer Ty Glover said the firm set new “records for quarterly oil and gas royalty production, source water revenues, and produced water revenues,” even reporting its easements and surface-related income revenue performance since 2019.

Eli Lilly LLY surged 22.2%, leaving it up 52.7% for the year. The pharmaceutical company’s stock ended the month with a Morningstar Rating of 2 stars, trading at a 51% premium to its fair value estimate of $368.

The firm posted second-quarter results that came above expectations from Morningstar healthcare sector director Damien Conover. Sales grew 22% operationally due to the launch of new products and a lack of major patent losses. “We expect this growth rate will accelerate as more new drugs launch and Mounjaro gains the new indication in weight loss later in the year,” Conover writes.

Global Payments GPN surged 14.9%, having risen 28.2% from the start of the year. The financial services company’s stock ended the month with a Morningstar Rating of 5 stars, trading at a 29% discount to its fair value estimate of $179.

In its second quarter, the firm displayed growth and strong improvement in margins, with revenue up 7% year over year, or 15% excluding recent disposition. Global Payment’s issuer segment grew 5% while its acquiring segment rose 9%. “This level of growth was roughly in line with the last quarter and with our long-term expectations, suggesting the business is on a steady trend,” Morningstar senior equity analyst Brett Horn writes.

Top Stock Losers in August 2023

SolarEdge Technologies SEDG plunged 32.7% in August, having fallen 42.6% from the start of the year. Shares are 53% below their last high on Feb. 15. The company’s stock ended the month with a Morningstar Rating of 4 stars, trading at a 25% discount to its fair value estimate of $216.

Morningstar equity analyst Brett Castelli explains that the solar company’s estimates are generally below sell-side consensus for the coming years. “Current market expectations for SolarEdge imply a slowdown in revenue growth, but also seem to believe a degradation in margin levels to be more in line with commoditized peers,” he adds.

Insulet PODD tumbled 30.7%, leaving the stock down 34.9% for the year. Shares are 42.9% below their last high on May 5, 2023. The company’s stock ended the month with a Morningstar Rating of 4 stars, trading at an 18% discount to its fair value estimate of $234.

The firm reported solid results for its second quarter, driven by the adoption of Omnipod 5, its new tubeless insulin-delivering pump. However, Morningstar senior equity analyst Debbie S. Wang recognizes that “the second half of 2023 will offer more challenging comparisons” from competing pumps from Tandem Diabetes Care TNDM and Medtronic MDT.

ZoomInfo Technologies ZI slid 29.5% and declined 40.2% year to date. Shares are 63% below their last high on Oct. 6, 2022.

The software company’s second-quarter revenue saw a 16% year-over-year increase to $308.6 million, but it still fell short of the consensus estimate of $310.9 million. ZoomInfo also trimmed its full-year outlook for revenue, now in the range of $1.225 billion to $1.235 billion, compared with the previous projection of $1.275 billion to $1.285 billion.

Block SQ slid 28.4%, leaving it down 8.3% for the year. Shares are 35.9% below their last high on Feb. 2. The financial services company’s stock ended the month with a Morningstar Rating of 4 stars, trading at a 41% discount to its fair value estimate of $98.

The firm reported solid second-quarter results that Morningstar’s Horn believes show it’s “tracking in the right direction,” but its payments platform square saw growth decline sequentially despite a 12% year-over-year increase in both revenue and payment volume.

“While Block continues to enjoy strong growth, we have been increasingly impatient to see this growth translated into better profitability and would be more encouraged by traction on the bottom line as opposed to the top line at this point,” Horn writes. “We remain confident in the company’s growth prospects but see the long-term economics of the business as more uncertain.”

ResMed RMD fell 28% and declined 22.8% year to date. Shares are 34.5% below their last high on April 28. The Australia-based medical device company’s stock ended the month with a Morningstar Rating of 5 stars, trading at a 38% discount to its fair value estimate of $258.

Although the firm reported strong sales for its fiscal fourth-quarter earnings, Morningstar Australasia equity analyst Shane Ponraj writes that underlying profit margins came “slightly weaker” than expected. “In addition, the firm is still selling through higher-cost inventory, with the full benefits of normalizing freight and component costs yet to flow through,” he adds.

Roblox RBLX fell 27.9%, but shares are flat from the start of the year, having fallen only 0.6%. Shares are 40.7% below their last high on Oct. 26, 2022. The firm’s stock ended the month with a Morningstar Rating of 5 stars, trading at a 53% discount to its fair value estimate of $60.

The video game company’s second-quarter results “featured strong revenue growth along with expanding operating losses due to elevated spending,” but Morningstar senior equity analyst Neil Macker suspects that shares plummeted upon the release because “investors expected larger cost cuts.” “Developer exchange fees fell to 21.2% of bookings from 22.4% a year ago, and management projects this expense will continue to expand more slowly than revenue,” he adds.

Compiled by Caryl Anne Francia.