Shares of natural ingredients supplier Darling Ingredients (NYSE:DAR) fell nearly 11% Friday after analysts at JPMorgan Chase updated their opinion of the stock. The previous view from the firm was the shares were "overweight," which meant the analysts considered the stock to represent better value than average. The new view is that shares are "neutral," which means the analysts expect the stock to perform along with the average of all stocks in the S&P 500 index.
The update comes only two months after JPMorgan Chase reiterated its overweight rating on Darling Ingredients and set a $19 per share price target. As of 3:03 p.m. EDT, the stock had settled to a 9.2% loss.
Darling Ingredients has performed pretty well this year. Even with Friday's double-digit drop, shares are up 24% year to date. That beats the gain of the S&P 500 by about 10% in the same span. It has been earned, too. Total revenue, operating income, and EBITDA all increased in the first half of 2017 compared to the year-ago period. That comes with steadily falling debt and improving performance at the all-important Diamond Green Diesel joint venture.
So, do Wall Street ratings matter? Yes and no. While analyst opinions can have an effect on a company's stock price, individual investors with a long-term mindset don't need to worry about every vague "buy," "hold," and "sell" rating issued. The fact that JPMorgan Chase had a different view of Darling Ingredients stock as recently as two months ago demonstrates that much.
The new rating could provide a glimpse into what analysts are thinking for the upcoming release of third-quarter 2017 earnings from Darling Ingredients, but these rating changes happen so frequently it's important not to try to read too much into timing. The new opinion could also just be related to the stock's impressive gains in 2017. The double-digit drop is unfortunate, but relatively meaningless in the grand scheme of things.