3 Low-Rated Stocks Analysts May Be Underestimating Ahead of Q3 Earnings

Key Points

• Three stocks, Southern Copper, Prudential Financial, and Illinois Tool Works, carry low consensus analyst ratings despite rising price targets and solid fundamentals.
• Analysts often keep bearish or neutral ratings while quietly raising price targets, signaling improving business conditions ahead of upcoming earnings reports.
• Each company has a distinct long-term catalyst, including copper demand, rising long-term yields, and data center-driven industrial demand, that could prompt future upgrades.

Analyst ratings are frequently used to identify stocks to buy or sell. However, it's important to understand the psychology behind analysts' ratings. Analysts rarely like to be early. That's where investors can find opportunities.

Analysts will frequently issue or reiterate a bearish (Reduce) or neutral (Hold) rating on a stock, even as they raise their price targets. That's a signal to investors that the underlying business looks good, but analysts are waiting to see more.

It's particularly important to pay attention to this psychology heading into earnings season. Earnings reports can provide the proof that leads to upgrades and raised price targets.

Heading into this earnings season, the MarketBeat's Lowest-Rated Stocks screener shows three stocks where this dynamic exists. Each company on this list has a long-term catalyst that should allow investors to look beyond the current analyst sentiment and take a long-term position in the respective stocks.

SCCO Stock Has Outrun Copper Prices, But the Long-Term Case Holds

Industrial metals, such as copper, are performing well. For example, as of Oct. 5, 2026, the spot price of copper is up about 31% in the last 12 months. However, it's been virtually flat since May 2026. That's the starting point for understanding the investment case for Southern Copper NYSE: SCCO.

The stock is up over 63% in the last 12 months and approximately 46% year-to-date. Investors have been front-loading SCCO in anticipation of higher copper prices brought on by a historic supply-demand imbalance.

The problem is that the imbalance isn't showing up in the underlying commodity price. That's a key reason why analysts are bearish on SCCO. Of the 15 analysts tracked by MarketBeat, seven give the stock a Sell rating. The consensus rating is Reduce, and the stock has a consensus price target of $146.84, which is over 28% below its price as of this writing.

But the important thing to remember about the metals sector is that inevitable doesn't mean imminent. The International Energy Agency (IEA) is still projecting a supply gap of roughly 25% by 2035 based on currently anticipated projects.

The skeptics can focus on the word "anticipated." But the reality is that even if some data center construction is delayed, there are still many structural reasons to believe copper demand will increase.

PRU Stock: Rising Price Targets Signal a Shift in Analyst Sentiment

Prudential Financial NYSE: PRU is a good example of a stock where the consensus ratings and the price targets are in conflict. The 16 analysts tracked by MarketBeat give PRU a consensus rating of Reduce, including five Sell ratings. The consensus price target of $109.31 is about 4% below the stock price as of this writing.

But many analysts are raising their price targets well above the consensus level. In most of those cases, a rating of Neutral is an upgrade from where they were. This tracks with a key trend in the insurance sector.

Higher long-term yields are a tailwind for life insurance and annuity providers. This began showing up in the company's Q2 2026 earnings report and is likely to show strong momentum when the company reports its Q3 earnings in early November.

Skeptics will point to a 10-year trend in which PRU has met resistance at a price around $120, which is about 5% above its price as of this writing. But long-term yields haven't been sustained at these levels in over 20 years.

Plus, over that time period, PRU has delivered a total return of over 118%. That includes its dividend, which has increased for 18 consecutive years and currently yields nearly 5% with an annual payout per share of $5.60.

ITW Stock: Data Center Demand Could Spark Upgrades After Q3 Earnings

Industrials have had a solid year, but that hasn't shown up in the performance of Illinois Tool Works NYSE: ITW. The stock has increased by 7.6% so far this year, but its gain over the past 12 months is just under 2%.

This is despite the company posting solid year-over-year beats on its top and bottom lines. Illinois Tool Works also raised its full-year guidance on the top and bottom lines. One reason is strong demand in welding and electronics brought on by data center construction.

Analysts remain unimpressed. Out of the 13 analysts tracked by MarketBeat, five give ITW a Sell rating. The consensus rating is Reduce, and the consensus price target of $282 as of this writing is only a gain of about 6.8%.

However, since the company's last earnings report, some analysts have moved their price targets sharply higher. That's the backdrop for the company's Q3 2026 earnings report, scheduled for the end of October. A strong print could reverse the negative sentiment on a stock that is still slightly undervalued at around 23x forward earnings.

Plus, Illinois Tool Works is a Dividend King that's increased its dividend for 55 consecutive years. That dividend currently yields about 2.6%.