10 Newly Overvalued Stocks this Week
Morningstar screened US-listed stocks under its coverage for newly overvalued names for the week ended July 2. Ten stocks moved to a 2-star (overvalued) rating and four to a 1-star rating. Largest new 2-star by market cap: NVS, LYG, CL, ED, BNTX. New 1-star: HON, ALL, GH, NXT. Includes fair-value estimates and premiums.
How this was made
The 30-second read
Why it matters
This is a multi-name valuation downgrade/overvaluation screen: it can influence valuation-driven flows and mean-reversion positioning, but it does not report new company-specific fundamental events (earnings, trials, guidance, deals).
Market read
Traders may use the quantified premiums and uncertainty levels to adjust valuation exposure, but the lack of new fundamental catalysts limits immediate trading urgency.
What to watch
The article provides premiums and uncertainty levels but not the drivers behind fair value changes; traders may need to verify whether underlying assumptions (rates, margins, pipeline, credit) shifted.
Background
Morningstar screens US-listed stocks under its coverage for newly overvalued names based on changes to its star rating (1–2 stars) versus intrinsic fair value estimates.
Ticker impact
Novartis’ Morningstar rating moved to 2 stars from 3, with the stock trading at a 14% premium to fair value ($140).
Modest near-term pressure possible if traders align with the overvaluation screen; no catalyst beyond the rating change.
The article provides a fresh rating change and quantified premium/fair value, but it is not tied to new fundamentals (earnings, guidance, trials).
Lloyds Banking Group’s rating moved to 2 stars from 3, with shares 13% above Morningstar’s $5.35 fair value.
Limited impact expected; could slightly dampen incremental dip-buying after the rating downgrade.
The text includes a new rating change and valuation premium, but no new bank-specific event is disclosed.
Colgate-Palmolive’s rating moved to 2 stars from 3, with the stock trading 8% above fair value ($88) and Uncertainty Rating Low.
Small-to-moderate negative bias possible, but likely outweighed by broader market factors.
The article quantifies the premium and uncertainty, yet provides no new operational or financial catalyst.
Consolidated Edison’s rating moved to 2 stars from 3, with shares 10% above fair value ($104) and Uncertainty Rating Low.
Likely modest effect; utilities may be less sensitive absent new rate/regulatory information.
Only valuation/rating metrics are provided; no new utility-specific catalyst is mentioned.
BioNTech’s rating moved to 2 stars from 3, with the stock trading at a 28% premium to fair value ($76) and Very High uncertainty.
Potential for volatility around valuation narratives, but direction uncertain due to high uncertainty.
The article supplies a fresh rating change plus premium/uncertainty; however, it is not a new clinical/regulatory datapoint.
Honeywell’s fair value estimate was cut to $164 from $208.24, and the stock trades at a 40% premium with a new 1-star rating.
Moderate downside bias possible if investors treat the fair-value cut as a signal; magnitude likely limited without new earnings/guidance.
The text includes a specific fair value reduction and rating change, but not the underlying fundamental driver.
Allstate’s rating moved to 1 star from 2, with shares trading 42% above fair value ($176) and Uncertainty Rating Medium.
Small negative tilt possible; likely not a standalone catalyst for large moves.
The article provides quantified premium and rating change, but no new underwriting/catastrophe/regulatory event.
Guardant Health’s rating moved to 1 star from 2, with the stock trading 87% above fair value ($90) after a 12.57% weekly gain.
Higher probability of pullback/volatility given the large premium, though timing is uncertain.
The premium (87%) and rating downgrade are concrete and fresh; still, no new trial/coverage catalyst is provided.
Market effects
Broad overvaluation screen across pharma, financials, consumer staples, utilities, biotech, industrials, insurers, diagnostics, and solar suggests valuation-sensitive rotation risk rather than sector-specific fundamentals.
US-listed coverage only; could modestly influence US value/quality factor positioning.
Limited—mostly US-market valuation framework; only NVS and BNTX have notable global footprint but no new global event is disclosed.
Counterpoint
Morningstar rating changes are valuation-model outputs; without new earnings/guidance or fundamental catalysts, price impact may be muted and quickly arbitraged away.
Key entities
- sourceMorningstar Stock Strategist / Morningstar Direct
Framework and data provider for star ratings and fair value estimates used in the screen.
- market_indicatorUS Market Index
Reported as moderately undervalued overall (7% discount to fair value estimate) as of July 2.
