JPMorgan Chase has released its fourth-quarter U.S. consumer sector research report, identifying six structural and tactical short targets within the S&P 500 consumer sector. The analysis focuses on two divergent sub-sectors: the Consumer Discretionary sector (XLY.US), which has gained 5.06% year-to-date, and the Consumer Staples sector (XLP.US), which has declined 0.55% over the same period.
The six companies identified as short targets include Southwest Airlines (LUV.US), Rivian Automotive, Inc. (RIVN.US), Brown-Forman Class B (BF.B.US), Beyond Meat (BYND.US), Krispy Kreme (DNUT.US), and Shake Shack (SHAK.US).
Southwest Airlines has declined 3.7% year-to-date and carries JPMorgan's "Underweight" rating, with a Seeking Alpha quantitative rating of "Hold" (2.91). JPMorgan believes the company is in the early stages of a transformation led by Elliott Management. While demand trends appear positive, the firm considers the implied fourth-quarter guidance overly aggressive. The stock trades at the highest valuation within the analyst coverage universe, with an estimated 2026 P/E ratio of 13x.
Rivian Automotive, Inc. has posted a modest 0.3% decline year-to-date and also receives an "Underweight" rating with a quantitative score of 2.70. Analysts highlight potential demand headwinds as federal EV tax credits expire on September 30, 2025. Additionally, the "One Big Beautiful Bill Act" adjustments to Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) compliance penalties to zero eliminate a key revenue stream. Previously, other automakers paid Rivian premium prices (nearly 100% gross margin) for regulatory credits to avoid penalties, helping the company achieve positive quarterly gross margins. With penalties eliminated, this business model faces significant challenges. JPMorgan projects Rivian's 2025 revenue at $5.3 billion, with EBITDA losses of $2.0 billion and net free cash flow outflows of $2.8 billion.
Brown-Forman Class B has tumbled 26.7% year-to-date, earning an "Underweight" rating and quantitative score of 1.78. JPMorgan emphasizes that amid structural pressures on global alcohol consumption, the company's core Jack Daniel's bourbon whiskey brand continues losing market share, while the stock maintains an approximately 20% premium to peers without reasonable justification.
Beyond Meat has plummeted 42%, receiving an "Underweight" rating and quantitative score of 1.13. Analysts cite the company's continued loss of plant-based meat market share, ongoing losses, and deteriorating balance sheet.
Krispy Kreme has crashed 65.5%, with an "Underweight" rating and quantitative score of 1.11. The decline stems from a highly leveraged balance sheet hampering U.S. business recovery, insufficient visibility on EBITDA growth, and uncertainty surrounding the execution timeline for international asset restructuring.
Shake Shack has dropped 28.4%, earning an "Underweight" rating and quantitative score of 2.86. Analysts note that the company's premium pricing strategy limits expansion opportunities, requiring a balance between high-quality ingredient costs and customer base breadth and frequency. The company has revised down its Total Addressable Market (TAM) guidance to achieve better balance between premium pricing and future customer reach and frequency.