Contrarian Alert: 5 Downgraded Stocks That May Reward Long-Term Investors

Key Points

• Domino’s Pizza, Lowe’s, Zscaler, ServiceNow and Tractor Supply have faced analyst price target cuts, but most still retain constructive Wall Street upside forecasts.
• Several of the companies continue to support their investment cases through cash flow, buybacks, dividends or durable demand drivers.
• Recent weakness may reflect reset expectations rather than a broken long-term thesis, especially for investors willing to look past near-term sentiment pressure.

Not every downgrade is a sell signal. Sometimes, a lower price target reflects reset expectations rather than a broken investment case. That distinction matters for Domino’s Pizza NASDAQ: DPZ and ServiceNow NYSE: NOW, two high-quality stocks that have fallen toward long-term lows even as Wall Street’s broader view remains constructive. For investors willing to look beyond the latest target cuts, both names may offer rare entry points backed by durable growth catalysts.

Domino’s Pizza: A Tasty Capital-Light Model, Cash Flow, and Buybacks

Domino’s Pizza shares are down sharply in 2026 amid sluggish consumer spending, increased competition, and health trends linked to GLP-1 inhibitors. The result for analyst sentiment is a sharp reduction in share price targets, with the low end pegged at $290, but little change in the actual sentiment rating. First on the list of Most Downgraded Stocks, DPZ is rated as a consensus Moderate Buy by 30 analysts; the Buy-side bias is above 50%, and the consensus price target forecasts over 30% upside from early July trading levels. The catalyst for the move may come late in the month, when DPZ issues its Q2 earnings report.

While consumer trends are impacting sales, the company’s unrivaled scale, technological advantages, and purchasing power enable growth and cash flow. Cash flow is critical to this investment due to aggressive buybacks. Shares were reduced by an average of 2.2% in Q1, a pace likely to be sustained in the coming years, potentially increasing in Q2, given the share price discount. Institutions, meanwhile, have been accumulating shares and underpin market support with price action at long-term lows.

Lowe’s Companies: Baseline Demand Provides Cash Flow

Lowe’s Companies NYSE: LOW is down on the combination of persistent housing market weakness, cautionary guidance, and the ensuing downshift in analysts' sentiment. However, despite ranking second as the Most Downgraded, the negativity is centered on price targets, and the market has overreacted. While low-end targets suggest some downside risk remains, as of early Q3, most revisions align with the consensus, which forecasts a modest double-digit upside. Pegged at $265, a move to the consensus puts this market within striking distance of its all-time highs, with capital returns in play.

Lowe’s not only pays a reliable, growing dividend but also opportunistically buys back shares. Opportunities for investors include the value, which is deep relative to forward estimates, the dividend, and the potential for buybacks. It will take time, but housing markets are expected to improve, drive cash flow for Lowe’s, and increase capacity to return capital. Until then, market dynamics suggest that baseline housing demand, home maintenance, and seasonal spending are sufficient to ensure dividend safety.

Zscaler: A Prudent Approach Provides Opportunity for Investors

Zscaler’s NASDAQ: ZS stock is down, and still down, because of the AI SaaS-pocalypse fear and a change in sales strategy. The change includes the departure of two key figures and the impact on guidance. Management felt it “prudent” to take a cautious view despite the strengths shown in its Q1 release by other leading cybersecurity firms. Their results and guidance (more so the guidance) triggered robust market upswings that have added triple digits to their prices.

Analyst trends indicate a bottom in this market, despite it ranking third on the list of Most Downgraded Stocks for Q2. June and July activity includes more than a dozen reiterated ratings and price targets, pegging ZS as a consensus Moderate Buy with 40% upside potential, reaffirming price targets that had been reduced ahead of the Q1 release. The likely outcome is that ZS shares recover quickly in subsequent quarters, as results reflect the company’s inherent strengths and outpace the low bar management set.

ServiceNow: SaaS-Pocalypse to Narrative Shift in 1 Quarter

ServiceNow’s stock price is at long-term lows due to the SaaS-pocalypse that AI was supposed to bring. The story today, however, is that AI underpins ServiceNow's strengths, with a shift in market dynamics expected. Late June and early July analyst activity reflects the shift in sentiment, with them expecting a meaningful business impact linked to AI in upcoming results. Drivers include the new package tiers that include consumption-based pricing.

Early channel checks indicate traction, prompting analysts to end the prevailing downtrend in sentiment. Even so, ServiceNow ranks fourth on the list of Most Downgraded stocks based on trailing 12-month activity. The consensus price target, which forecasts approximately 35% upside in early July, is down by roughly the same amount since last year.

Tractor Supply Company: Business Growth Slows, It Didn’t Die

Tractor Supply Company NASDAQ: TSCO suffers from tepid growth and (slightly) below-forecast results. The critical detail is that store count growth and comp sales sustain system-wide growth and cash flow, enabling the dividend and share buybacks. TSCO stock is relatively high-yielding as of mid-2026, paying an annualized yield of 3.17%, and it is expected to increase its payout at year-end. Buybacks are also substantial, having reduced the Q1 count by an average of 1.2% over the trailing 12 months.

Analyst trends are a headwind for price action, but again, this is a near-term problem. While all analysts are reducing their targets, the market overreacted and fell below the low end, creating a deep-value opportunity, with consensus forecasting more than 40% upside. Catalysts include the roll-out of fresh pet food capability across 700 stores. Pet Supplies is the single area of weakness this year, dragging on overall growth, and premium food is the trend.