Here’s Why Citi Downgraded iRhythm (IRTC) Despite 14.9% Revenue Growth Farooq Sun, November 8, 2026 at 3:25 PM EST 4 min read IRTC -30.44% ^GSPC +0.31% ^IXIC +1.09% ^DJI -0.46% Trade IRTC on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
We just published a list of the 10 High-Profile Stocks Just Dumped by Top Analysts and iRhythm Holdings (NASDAQ:IRTC) ranked 10th on this list.
Wall Street had one of its roughest sessions of the year this week. The Nasdaq Composite fell 5.52% on November 5, its deepest one-day drop in 19 months, Reuters reported that day. The index closed more than 10% below its October 6 record, which confirmed a technical correction.
The S&P 500 slid 4.36% and the Dow Jones Industrial Average lost 3.44%, wiping about $3 trillion off the value of S&P 500 companies.
The Philadelphia SE Semiconductor index plunged more than 12%, and trading volume reached 26.9 billion shares, well above the 20-session average of 17.7 billion. Chipmakers and other AI-linked stocks took the brunt of the damage.
The trigger was politics. Democrats won control of Congress in Tuesday's elections, including in states where opposition to new data centers has grown. Investors worried that tougher rules could slow the buildout of AI infrastructure, according to the Reuters report.
Melissa Brown, global head of investment decision research at SimCorp, said any slowdown would raise concerns because AI growth has leaned on rapid construction of supporting infrastructure. Jed Ellerbroek, a portfolio manager at Argent Capital Management, said, "This feels like the capitulation phase for the data center capex beneficiary stocks," though he thinks the size of the moves is outsized.
The drop followed a strong run. The S&P 500 had posted its biggest one-day gain in three months the day before, and it is still up 7.4% for the year. We recently rounded up ten stocks you are selling and insiders are buying.
Friday's jobs report did little to calm nerves. Employers added 165,000 jobs in October, more than twice what economists expected, and the unemployment rate edged down to 4.1%, Reuters reported on November 6.
Traders raised their bets on a Federal Reserve rate hike in response. Markets priced about a 78% chance of a quarter-point increase at the central bank's December 8-9 meeting, up from about 67% on Thursday, and they now expect a final hike in April rather than June. For a look at the other side of the analyst picture, see our ranking of affordable stocks Wall Street analysts like.
Cleveland Fed President Beth Hammack and Richmond Fed chief Thomas Barkin had already hinted at possible future rate hikes, Reuters reported on November 5. Fed Chairman Kevin Warsh said last month that policymakers would watch the accumulation of data to decide whether more tightening is needed. Fitch Ratings analyst Olu Sonola said "the economy remains on firm footing" despite recent AI-related concerns, while Raymond James analysts wrote that they expect the Fed to raise rates by 25 basis points in December.
iRhythm has a market cap of $2.97 billion and an average upside potential of 75% based on analysts' average price target, and had 42 hedge fund holders in Q2 2026.
Citi cut iRhythm to Neutral from Buy on November 6, following the company's third-quarter report, and lowered its price target to $124 from $157. The bank pointed to the company's raised 2026 revenue outlook, which includes about $16 million from the VitalConnect acquisition. Citi noted that the outlook implies fourth-quarter organic revenue growth of 10%, which it called "a steep quarter-over-quarter decline."
The quarter itself showed strong demand. Revenue rose 14.9% from a year earlier, and iRhythm credited "sustained volume demand across our customer base." Gross margin also improved this quarter, helped by a one-time tariff refund benefit.
Profit was messier. The company reported a wider GAAP net loss than a year earlier after booking $49.8 million in litigation settlement charges, net of expected insurance recoveries, while adjusted net income swung to a profit from an adjusted loss.
iRhythm closed the VitalConnect acquisition on October 5, after the quarter ended. The deal adds an FDA-cleared mobile cardiac telemetry offering and broadens the company's cardiac monitoring portfolio. The updated 2026 revenue guidance includes the expected VitalConnect contribution from the closing date through year-end.
While we acknowledge the risk and potential of IRTC as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than IRTC that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.
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