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Sell these stocks now, proven algorithm says
The Fly

Sell these stocks now, proven algorithm says

Digital infrastructure firm, surgical robotics company headline this week’s list of "F" rated Strong Sells

Here are this week’s downgrades to Strong Sell as determined by the POWR Ratings algorithm.

  • Procept BioRobotics (PRCT) – a surgical robotics company that develops, manufactures and sells the AquaBeam surgical robotic system for use in minimally invasive urologic surgery with an initial focus on treating benign prostatic hyperplasia, or BPH
  • DigitalBridge (DBRG) – a digital infrastructure firm that manages a portfolio of assets including cell towers, data centers, fiber, small cells, and edge infrastructure
  • Confluent (CFLT) – a data streaming platform that is "pioneering a fundamentally new category of data infrastructure that sets data in motion"
  • Farfetch Limited (FTCH) – operator of a platform for the luxury fashion industry that includes an e-commerce marketplace for luxury brands, boutiques and department stores as well as New Guards Group, a platform for the development of global fashion brands
  • Kymera Therapeutics (KYMR) – a clinical stage biopharmaceutical company focused on novel small molecule therapeutics that selectively degrade disease-causing proteins
  • Carnival Corporation (CCL) – the world’s largest cruise company with a portfolio of nine cruise lines and operations in North America, Australia, Europe and Asia
  • Royal Caribbean Group (RCL) – a cruise company with a global fleet of 64 ships that owns and operates its flagship brand as well as Celebrity Cruises and Silversea Cruises
  • Intellia Therapeutics (NTLA) – a clinical-stage genome editing company developing novel, potentially curative therapeutics leveraging CRISPR-based technologies
  • NexGen Energy (NXE) – a corporation focused on the development of the Rook I uranium project located in Saskatchewan, Canada into production
  • Stem (STEM) – a provider of AI-driven clean energy solutions and services
  • XPeng (XPEV) – a Chinese electric vehicle company that designs, develops, manufactures, and markets Smart EVs
  • Enovix (ENVX) – a company engaged in the design and manufacture of next generation silicon-anode lithium-ion batteries
  • Wayfair (W) – operator of its namesake e-commerce site and a family of brands that offer home goods and furnishings
  • Marqeta (MQ) – operates what it calls "the world’s first open API modern card issuing platform"

Learn more about the POWR Ratings

Recent news on these stocks:

November 10

Enovix announced the appointment of Ajay Marathe as COO reporting to CEO Harold Rust. Marathe’s 38-year career includes stints as COO, CIO and foreign-subsidiary CEO of major technology companies including Western Digital Corporation, Lumileds LLC and Advanced Micro Devices, where he served for 23 years first as Thailand Plant Manager responsible for assembly and test of six million units per week, and then VP of Operations of the 2,500-employee Computation Products group, and then VP of Operations for all Asian assembly and test, and finally CEO of the AMD India LLC startup created to serve the entire country. Enovix CEO, Harold Rust said, "We wanted to find a senior semiconductor executive who thinks ‘millions not thousands’ and scored with Ajay, a known Silicon Valley industry figure."

November 9

Marqeta reported Q3 EPS (10c), consensus (9c), and Q3 revenue $191.6M, consensus $180.9M. "This recent quarter serves as a great example of our continued success and the tremendous market opportunity in front of Marqeta. We signed innovative new customers in both the United States and Europe, we expanded our platform with the launch of new banking capabilities to complement our leadership in modern card issuing, and increased the global utility of our platform with our European data residency program," said Jason Gardner, Founder and CEO of Marqeta. The company guided for Q4 revenue to be up 29%-31% and sees Q4 adjusted EBITDA margin at negative 6% to negative 5%.

November 8

Raymond James analyst Timur Ivannikov initiated coverage of Kymera Therapeutics with a Market Perform rating and no price target. While Sanofi’s opt-in decision appears predicated on Kymera demonstrating IRAK4 degradation and corresponding impact on biomarkers, KT-474 could be "suboptimal" in atopic dermatitis, Ivannikov tells investors in a research note. The analyst says early data in hidradenitis suppartiva could be inconclusive and may not provide the broader platform validation needed to get more constructive on the shares.

November 7

RBC Capital analyst Steven Shemesh lowered the firm’s price target on Wayfair to $35 from $62 and keeps a Sector Perform rating on the shares after its Q3 results. The analyst states that while he is encouraged that management is prioritizing cost-cutting and profitability, he also believes that the stock price momentum will be difficult to come by until the macro environment improves. Shemesh is cutting his enterprise value to expected FY24 sales multiple assumption to 0.45 from 0.6-times based on "peer group contraction and an increasingly grim furniture outlook".

Truist analyst Naved Khan lowered the firm’s price target on Wayfair to $50 from $60 but keeps a Buy rating on the shares. The company’s Q3 results were "better than feared", but the headwinds from macro environment and the shift in consumer wallet share will continue to pressure Wayfair’s near-term growth, the analyst tells investors in a research note. Khan adds however that he remains positive on Wayfair’s "aggressive" focus on driving meaningful cost savings, which is likely to result in improving margins and positive EBITDA exiting 2023.

Raymond James analyst Ric Prentiss lowered the firm’s price target on DigitalBridge to $34 from $38 and keeps a Strong Buy rating on the shares. While Prentiss says the macro environment is impacting the Digital Investment Management business, he continues to believe the company’s focus on non-cyclical, cash generating Digital Infrastructure assets can continue to attract capital, and the ability to build greenfield creates a much wider opportunity set in terms of deploying it, the analyst tells investors in a research note.

B. Riley analyst Kalpit Patel lowered the firm’s price target on Kymera Therapeutics to $35 from $50 and keeps a Neutral rating on the shares. The analyst says Pfizer’s recent IRAK4 inhibitor failure weighs on his outlook for IRAK4 as a target.

Cowen analyst Colby Synesael lowered the firm’s price target on DigitalBridge to $27 from $33 and keeps an Outperform rating on the shares. The analyst continues to view them as an attractive and unique way to play the Digital Infrastructure theme as he believes it is positioned to benefit from long-term secular tailwinds.

Enovix announced that T.J. Rodgers has been appointed Executive Chairman, effective immediately. Rodgers holds 21.4 million shares of Enovix and was a buyer in May when the stock dropped into the $8.85 range. Rodgers said, "Our board has by design several successful operating executives, who are committed to spend whatever time is required at Enovix to ensure the Company’s operational success. Our team has and will continue to put in significant extra effort until that task is completed, which it is not." Rodgers continued, "Investors might well ask ‘With all that expert help, why did ENVX stock just drop 42%, to $10.74 in the last week, after an unexpectedly poor quarterly report?’ The answer is that we lowered our 2023 revenue projection in a confusing manner that erroneously implied that there were bigger problems with our technology. Our revenue projections were lowered because our Fab-1 manufacturing ramp was delayed in our first year of production. This is an unacceptable execution problem which I will discuss. However, as I look back on the decisions the company made, I would make the same calls again."

About "Sell these stocks now"

Each week, The Fly will announce the newest downgrades to Strong Sell in StockNews.com’s POWR Ratings algorithmic model.

This Fly exclusive recap identifies stocks with over a $1B market capitalization that have been downgraded this week to the Strong Sell, or "F," rating in the service’s proprietary model that analyzes 118 different factors, each of which contribute a little to the stock’s predicted likelihood of underperformance. A bell curve distribution of StockNews.com’s ratings shows that only the top 5% of the over 5,000 stocks rated by the system are assigned a "Strong Buy," or "A," rating while the bottom 5% are assigned a Strong Sell. The F-rated stocks would have tumbled an average of 18.98% a year since 1999, according to StockNews.com.

Keywords: Wall Street, sell, stocks to avoid, POWR Ratings, algorithmic trading

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