The tariffs unleashed by President Donald Trump have injected a high degree of uncertainty into the outlook across financial markets and the economy—and for many companies, their profits. This uncertainty has led to a number of companies withdrawing their earnings guidance for 2025. Within Morningstar, the impact can be seen in the large number of increases in stocks’ Uncertainty Ratings.
Alongside fair value estimates, Morningstar’s Uncertainty Ratings—which range from Low to Extreme—are critical for determining star ratings for stocks. Stocks with higher Uncertainty Ratings require a larger margin of safety to move between overvalued, fairly valued, and undervalued.
So far this year, Morningstar analysts have raised the Uncertainty Ratings on 74 stocks. On a full-year basis, the total for 2025 so far would lag behind several other recent years. However, these ratings changes are being made at an especially fast pace, on par with the pandemic year of 2020. Between April 2, when Trump made his tariff announcement, and May 7, Morningstar analysts raised the Uncertainty Ratings on 53 stocks, which compares with 50 during the same period in 2020, 16 in 2023, and three in 2021.
Uncertainty Hits Auto, Airline, and Semi Stocks
While tariffs could eventually filter through to much of the global economy, the near-term impact is more concentrated among sectors and industries that rely heavily on imports to the United States or are most sensitive to any pullbacks in consumer spending.
That has been reflected in the types of companies where Uncertainty Rating increases have been concentrated. Out of the 53 stocks, 10 were technology companies (mainly in the semiconductor industry) and 17 were in financial services, including 14 Japanese banks. “Even if the country-specific tariff rates scheduled to come into effect later this week are adjusted either before or after they come into effect, we think the uncertainty Asian banks and insurers face will remain significantly heightened compared with the period before Trump’s announcement,” wrote Morningstar senior equity analyst Michael Makdad on April 7.
Notably, 17 of the increases took stocks to a rating of Very High or Extreme. Drilling down to stocks that saw their Uncertainty Rating taken to Very High, the tariff impact becomes more clear: Three are auto manufacturers, four are airlines, and four are semiconductor stocks.
How Morningstar Uncertainty Ratings Work
The Uncertainty Rating plays a critical role in the calculations behind Morningstar star ratings, which indicate whether a stock is undervalued, fairly valued, or overvalued.
Morningstar equity analysts assign fair value estimates to the stocks they cover. This can be seen as the “base case” for what a stock is worth. However, the estimate represents only one potential outcome. Some companies have more stability and predictability in their cash flows than others, and they have a smaller dispersion of potential outcomes, and vice versa. Cash flows are a key variable in fair value estimates.
For an investor assessing whether a stock is cheap or expensive compared with its fair value estimate, adjusting for that range of uncertainty helps determine how much of a margin of safety is warranted around the estimate. A stock with a higher degree of uncertainty would warrant a higher margin of safety before buying, while a company with less uncertainty about future cash flows could be appealing with a smaller margin of safety.
Meanwhile, a star rating takes into account a stock’s current price, fair value estimate, and uncertainty. In this way, it is a risk-adjusted measure of a stock’s attractiveness.
Morningstar analysts assign companies one of five Uncertainty Ratings: Low, Medium, High, Very High, or Extreme. It’s based on factors like operating and financial leverage, regulatory risks, economic sensitivity, product concentration, pricing power, and exposure to environmental, social, and governance risks.
Tariffs and Uncertainty Ratings
Uncertainty Ratings are generally adjusted when meaningful changes affect a company’s outlook, such as external macroeconomic or regulatory shifts or internal developments.
When President Trump stunned investors with his aggressive tariff increases against dozens of countries, the stock market reeled. Analysts pointed to heightened uncertainty as a primary reason for the declines. Even a month after Trump put a 90-day pause on most tariff increases, it is still very much unclear what levels will ultimately be in place.
For certain stocks—and in some cases nearly entire industries, such as with auto manufacturers and airlines—the knock-on effect of tariffs has made it incredibly difficult to predict the near- and medium-term business outlook. “You started with your original dispersion of outcomes which did not consider the current tariffs. Then, after April 2, the range of outcomes got a lot wider, particularly on the downside, so uncertainty has increased,” explains Eric Compton, director of equity research, technology, at Morningstar. “There are direct effects—pricing could change materially due to tariffs—and indirect effects—overall economic outcomes also became less certain," he says.
Which Stocks Saw Tariff-Driven Uncertainty Rating Changes?
Here’s a closer look at a selection of stocks where Morningstar analysts cited tariffs in raising their Uncertainty Ratings, with excerpts from the analysts’ commentaries.
Advanced Micro Devices AMD
- Fair Value Estimate: $120.00
- Morningstar Rating: ★★★
- Economic Moat: Narrow
- Morningstar Uncertainty Rating: Very High
"We maintain our $120 fair value estimate for narrow-moat AMD but raise our Uncertainty Rating to Very High from High because of tariff and geopolitical concerns ... In AI GPUs, restrictions on shipments into China will be a headwind, but AMD’s non-China opportunities appear promising."
American Airlines AAMRQ
- Fair Value Estimate: $11.20
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
Delta Air Lines DAL
- Fair Value Estimate: $36.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
Southwest Airlines LUV
- Fair Value Estimate: $37.00
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
United Airlines Holdings UAL
- Fair Value Estimate: $42.00
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
“Shares of US airlines were buffeted in recent sessions by heightened investor concerns about tariffs potentially triggering a worldwide recession, or worse. Airline profits remain vulnerable to slack demand, and we have reviewed our uncertainty ratings for US airlines under coverage.
“Airline stocks tend to exhibit above-average volatility and sensitivity to stock market movements. Fundamentally, small changes in airlines’ operating performance can have large effects on their bottom line.
“Notwithstanding a 90-day delay in most of the tariffs announced on April 2 by President Donald Trump, the likelihood of economic dislocation and a recession is higher than before, though the timing is uncertain.
“We have increased the Morningstar Uncertainty Rating for Delta, United, American, and Southwest airlines from High to Very High to account for a wider spread of likely outcomes in the near to medium term. None of these airlines has an economic moat and each is highly vulnerable to macroeconomic shifts.”
Celanese CE
- Fair Value Estimate: $110.00
- Morningstar Rating: ★★★★★
- Economic Moat: Narrow
- Morningstar Uncertainty Rating: Very High
“We (raised) our Morningstar Uncertainty Rating to Very High from High. The rating change is driven by our view that chemicals producers can see a wider range of outcomes due to tariff-related uncertainty and Celanese’s high debt levels and more cyclical end markets.
“Regarding tariffs, we see little direct impact to Celanese. Management estimated the direct impact would be less than 1% of sales per year as Celanese generally produces most of its products sold in the US domestically and makes most of its products sold in China outside the US.
“However, we see a larger secondary impact to Celanese. With higher exposure to the automotive end market versus its peers, Celanese could be disproportionately affected by tariffs on autos and auto parts, leading to reduced volumes.”
Dentsply Sirona XRAY
- Fair Value Estimate: $20.50
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
“We are reducing our fair value estimate for no-moat Dentsply Sirona to $20.50 per share from $22 and raising our Uncertainty Rating to Very High from High against the backdrop of near-term macroeconomic uncertainty and the likely tariff-induced profit and margin headwinds. The tariff situation remains fluid and dynamic and uncertainty in the dental industry remains high.
“Our new valuation bakes in two updated assumptions... The uncertain near-term macro environment dragged down our real GDP forecast and pushed up our inflation forecast for the year. Add in US consumer confidence that continues to dip, and we believe patient traffic is likely to remain pressured.
“We trimmed our margin assumptions by a low-single-digit percentage as tariffs are likely to increase costs. Dentsply has a wide manufacturing footprint and faces significant exposure to tariffs; items in the CTS, EDS, and Wellspect segments are mostly imported from the EU and as of April 17 face 10% tariffs, and some orthodontic products are manufactured in Mexico and face 25% tariffs. And given that the US makes up over one third of Dentsply’s total revenue, we think it is likely that profits and margin will see some headwinds in the near term. We now estimate adjusted EPS to land around $1.80, the bottom end of the previous guided range.”
First Solar FSLR
- Fair Value Estimate: $168.00
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
“The tariffs are expected to affect manufacturers across our coverage list, including items such as solar panels and electrical equipment.
“For solar, the industry has made significant progress in reshoring manufacturing to the US following the Inflation Reduction Act, but imports of items such as solar panels remain, especially for the upstream portion of the value chain (solar cells).
“For electrical equipment, the industry is relatively more US-manufacturing-centric, with much non-US capacity residing in Canada and Mexico. Critically, Canada and Mexico have been exempt (for now) from country-specific tariffs through the United States-Mexico-Canada Agreement.”
Mercedes-Benz Group AG MBG
- Fair Value Estimate: EUR 90.00
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
“We reduce our fair value estimate to EUR 90 per share from EUR 106 and increase our Uncertainty Rating to Very High from High for no-moat Mercedes, to account for the effects of US tariffs and our longer-term outlook for lower volumes in China for the European automakers.
“We equally weight four tariff scenarios: the 25% tariff remains in place until end of 2025, until the end of 2026, from 2026 until the end of Trump’s current term, and indefinitely. This reduces the fair value estimate by around 10%. The resulting 2025 operating margin is aligned with the post-tariff margins announced by management.”
Qorvo QRVO
- Fair Value Estimate: $80.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
“We lower our fair value estimate for no-moat Qorvo to $80 from $85, while raising our Uncertainty Rating to Very High from High due to heightened tariff uncertainty. Shares still appear modestly undervalued as we think tariff risks to Qorvo might be overdone.
“We lower our average annual revenue growth rate through fiscal 2029 to 2% from 4% after considering another down year in fiscal 2026 and potential tariff headwinds. We’re less optimistic about midcycle growth in Qorvo’s connectivity and analog businesses.”
Stellantis STLAM
- Fair Value Estimate: EUR 14.00
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
“We have reduced Stellantis’ fair value estimate by 26% to EUR 14 and increased our Morningstar Uncertainty Rating to Very High from High. The effect of US import tariffs explains the approximate EUR 2 per share of the decrease in our fair value estimate.
“We weigh four tariff scenarios equally: the 25% tariff remains in place until the end of 2025, the end of 2026, from 2026 until the end of President Donald Trump’s current term, and indefinitely. The first and final scenarios result in a reduction in our fair value estimate by midsingle digits and high-teen percentages.
“Despite the downward revisions, Stellantis continues to trade at a deep discount. Given heightened uncertainty over the company’s leadership, its plan to regain share losses, and how it will adjust operations in response to tariffs, we believe the discount will remain over the near term.
“We expect a substantial decline in US vehicle sales in 2025. The potential halt in exports from Europe and Mexico to the US may reduce global capacity utilization or result in excess supply. Both will hit operating margins.”
STMicroelectronics STMPA
- Fair Value Estimate: EUR 28.00
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
“Like its US peer Texas Instruments, ST anticipates sequential revenue growth and we’re encouraged that both firms foresee minimal headwinds from tariffs thus far and few signs that bullish second-quarter guidance represents pull-ins ahead of future restrictions.
“ST’s automotive revenue was down 39% year over year and worse than management’s expectations but should be the bottom for the year. Not surprisingly, ST is cautious about car production, particularly in electric vehicles, but inventory replenishment may offset any tariff headwinds.
“We maintain our $32 fair value estimate for narrow-moat ST but raise our fair value Uncertainty Rating to Very High due to tariffs. We view shares as undervalued.”
Volkswagen Group VOW3
- Fair Value Estimate: EUR 172.00
- Morningstar Rating: ★★★★
- ]Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
“We have reduced our fair value estimate for Volkswagen to EUR 172 per share from EUR 264 and increased our Uncertainty Rating to Very High from High. VW’s share of local production in the US is only 24%, and there is no local production of higher-value Audi and Porsche brands.
“We equally weight four tariff scenarios: the 25% tariff remains in place until the end of 2025, until the end of 2026, from 2026 until the end of Donald Trump’s current term, and indefinitely. The first and final scenarios reduce the fair value estimate by midsingle digits and close to 30%, respectively.
“Despite the downward revisions, Volkswagen continues to trade at a deep discount. Given the heightened uncertainty around how it will adjust operations in response to tariffs and second-round effects on operations globally, we believe the discount will remain over the near term.”
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
