Sell these stocks now, proven algorithm says

Biotechnology companies 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. 

• Apellis Pharmaceuticals (APLS) – a biopharmaceutical company that is exploring complement medicines for people living with rare, retinal, and neurological diseases and boasts the approval of "the first and only targeted C3 therapy"
• Recursion Pharmaceuticals (RXRX) – a clinical-stage biotechnology company that says it is "industrializing drug discovery by decoding biology"

Learn more about the POWR Ratings

Recent news on these stocks:

January 5

Citi analyst Yigal Nochomovitz tells investors that Apellis management gave an "unambiguous" answer to him when asked about Dr. Baumal’s access in pre-employment discussions that Baumal has "seen pretty much everything at this point," including the back and forth with the FDA, which he thinks "speaks volumes" about her belief in GA approval and decision to join the company as its CMO. Nochomovitz, who would recommend buying Apellis shares amid the dip today, reiterates a Buy rating, $86 price target and the stock’s position on Citi’s U.S. Focus List. Apellis shares are down $2.76, or nearly 6%, to $47.32 in afternoon trading.

Apellis Pharmaceuticals announced that leading retina specialist Caroline Baumal, M.D., has joined Apellis as chief medical officer. Dr. Baumal replaces Federico Grossi, M.D., Ph.D., who plans to remain at Apellis until February 28, 2023 to help with the transition and preparations for the potential launch of pegcetacoplan for geographic atrophy. Dr. Baumal serves as a professor of ophthalmology at New England Eye Center, Tufts Medical Center, specializing in diseases and surgery of the retina and vitreous.

January 3

Needham analyst Joseph Stringer names Vaxcyte (PCVX) as Needham Top Pick for 2023 and also adds it to the Needham Conviction list, replacing Apellis Pharmaceuticals (APLS). The analyst has also raised the firm’s price target on Vaxcyte to $58 from $52 and keeps a Buy rating on the shares. Stringer cites the company’s positive initial VAX-24 Phase 1/2 results released in October 2022, which he believes have significantly de-risked its VAX-24 Pneumococcal Conjugate Vaccine lead program. The analyst further contends that the significant pharma interest in the Pneumococcal Vaccine space – a $7B market dominated by Pfizer’s (PFE) Prevnar – and the "best-in-class" profile of VAX-24 has potential to make Vaxcyte a "compelling M&A target".

Wells Fargo analyst Derek Archila downgraded Apellis (APLS) to Equal Weight from Overweight with a price target of $58, down from $83. The analyst believes the risk/reward is more balanced in 2023 as he expects pegcetacoplan approval, but worries about launch risks in GA along with a potential pos label surprise from Iveric bio (ISEE). Empaveli Phase 2 in ALS is a free call option, he added.

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.

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