13 Newly Overvalued Stocks this Week
Morningstar screened US-listed stocks under its coverage for newly overvalued names for the week ended May 22. It said 12 stocks moved to 2-star ratings and seven to 1-star. Examples: Apple (2 stars; 14% above $270 fair value), Lilly (2; 18% above $900), Intel (2; 33% above $90), Arm (1; 104% above $150), Bloom (1; 332% above $70).
How this was made
The 30-second read
Why it matters
This is a valuation/expectations reset signal: multiple tickers moved into overvalued tiers after recent price strength, implying higher risk of mean reversion and premium compression.
Market read
The actionable takeaway is relative-risk positioning: several high-profile names are flagged as newly overvalued after rallies, with several showing very large premiums.
What to watch
The article is a valuation screen, not a new fundamental catalyst; traders should pair it with upcoming earnings/guidance and any changes to Morningstar fair value assumptions.
Background
Morningstar screens US-listed stocks under coverage for newly overvalued names based on price vs its fair value estimate and uncertainty, then flags 1- and 2-star ratings.
Ticker impact
Apple’s Morningstar Rating moved to 2 stars from 3 after the stock climbed 2.86% and trades 14% above fair value.
Bias toward mean-reversion/underperformance versus fair-value benchmarks; rallies may face selling pressure.
The article explicitly flags overvaluation (price vs fair value) and a rating change to 2 stars, which typically aligns with reduced expected return.
Eli Lilly’s Morningstar Rating moved to 2 stars from 3 after a 5.68% gain and an 18% premium to fair value.
Near-term upside may be capped; expect higher volatility around valuation-sensitive moves.
The piece ties the rating change directly to price/fair-value premium and flags High uncertainty, which can amplify drawdowns.
Intel’s Morningstar Rating moved to 2 stars from 3 following a 10.18% weekly jump and a 33% premium to fair value.
Potential consolidation or retracement as valuation premium compresses.
The article quantifies the premium to fair value and notes no economic moat, which can worsen downside if growth expectations slip.
Intuitive Surgical’s Morningstar Rating moved to 2 stars from 3 after a 4.03% rise and a 16% premium to fair value.
Moderate risk of underperformance versus peers if premium persists without new catalysts.
The rating change is explicitly linked to price above fair value; uncertainty is High, supporting a cautious stance.
Honeywell’s Morningstar Rating moved to 2 stars from 3 after a 6.88% weekly gain and a 15% premium to fair value.
Slight bearish tilt for relative performance; expect mean reversion if broader market undervaluation narrows.
The article provides a clear price-vs-fair-value premium and a rating downgrade to overvalued territory.
Arm’s Morningstar Rating moved to 1 star from 2 after a 46.54% weekly surge, trading 104% above fair value.
High probability of sharp pullbacks/volatility as the extreme premium mean-reverts.
The article quantifies a very large premium (104%) and a downgrade to the most overvalued tier (1 star), which is typically trading-relevant.
Monster Beverage’s Morningstar Rating moved to 1 star from 2 after a slight weekly dip, with the stock still 36% above fair value.
Mild-to-moderate bearish bias; expect limited upside unless fair value rises.
The article states the rating moved into overvalued territory and price remains materially above fair value.
Tapestry’s Morningstar Rating moved to 1 star from 2 after a 7.09% weekly gain, trading 57% above fair value.
Potential underperformance versus market if the premium compresses.
The rating downgrade to 1 star and quantified premium to fair value are directly cited.
Market effects
Broad, cross-sector valuation downgrades (tech, semis, healthcare, consumer) suggest a general risk of premium compression rather than a single-industry shock.
US-focused list implies potential relative weakness in large-cap and growth names if valuation discipline tightens.
Limited direct global linkage; however, US valuation resets can spill over to ADRs and global growth sentiment.
Counterpoint
Overvaluation ratings can persist in strong fundamental uptrends; if fair value estimates rise, the “overvalued” label may quickly become stale.
Key entities
- metricMorningstar Rating
1-2 stars indicate overvalued; rating changes are driven by price vs fair value and uncertainty.
- indexUS Market Index
Market rose 1.08% over the past week and remains moderately undervalued on a fair-value basis.
