Alight, AvidXchange drop as J.P. Morgan downgrades

Alight (NYSE:ALIT) and AvidXchange Holdings (NASDAQ:AVDX) dipped Tuesday pre-market after J.P. Morgan downgraded the stocks as part of a review of the investment bank's payments, processing and fintech coverage.

ALIT was trading 3.13% lower at $6.82, while AVDX fell 2.91% to $8.00.

"We downgrade Alight from Overweight to Neutral; the stock is cheap on an adjusted basis but less so on a GAAP basis, and given recent transformation plus CEO transition in flight, we prefer a sideline view thinking a re-rating may be harder to earn until a track record under new leadership is established," J.P. Morgan said in a research note.

ALIT gets a Strong Buy rating on average from the sell-side analysts, Hold from Seeking Alpha authors and Sell from the Quant Rating system.

"We downgrade AvidXchange from Overweight to Neutral; the stock sold off hard on 2Q earnings, directionally understandable as weakness in monetization and volume defied our positive thesis that AVDX's business model should be relatively resilient," the note said.

"AVDX's political ad business should boost near-term growth, but lower baseline core growth creates a tougher compare for FY25 and more pressure on new products like Payments Accelerator to have a strong start at a time when investor skepticism toward new products in the sector is high," added J.P. Morgan.

The rating aligns with the Quant rating of Hold, while the average rating from the Wall Street analysts as well as SA authors on the stock is Buy.