Sell these stocks now, proven algorithm says

Food and animal safety company, healthcare REIT 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. 

• Neogen (NEOG) – a company that develops and markets solutions dedicated to food and animal safety along with a variety of animal healthcare products
• Healthcare Realty Trust (HR) – a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States
• BRP Group (BRP) – an independent insurance distribution firm delivering tailored insurance and risk management insights and solutions
• Piedmont Lithium (PLL) – a developer of lithium resources whose projects include its Carolina Lithium and Tennessee Lithium projects in the United States and partnerships in Quebec with Sayona Mining and in Ghana with Atlantic Lithium
• Establishment Labs (ESTA) – a medical technology company with a focus on women’s health and wellness, principally in breast aesthetics and reconstruction
• Paysafe (PSFE) – operator of a specialized payments platform geared toward mobile-initiated transactions, real-time analytics and the convergence between brick-and-mortar and online payments
• Inhibrx (INBX) – a clinical-stage biopharmaceutical company dedicated to the development of therapeutics for oncology and rare diseases

Learn more about the POWR Ratings

Recent news on these stocks: 

March 10

Susquehanna said the new Paysafe new CEO had said they would grow again, and they are. The simplified go-to-market strategy he had put in place seems to be working, expressed in improved Merchant acquiring growth and the stabilization in the Digital Wallet business. Susquehanna maintains its Neutral rating and $24 price target on Paysafe shares.

March 9

Piedmont Lithium announced it is aware of a recent report published by Blue Orca Capital, which contains allegations in relation to Atlantic Lithium Limited’s lithium project in Ghana. The company said, "Piedmont notes that Atlantic has denied the allegations contained in the Short Report and outrightly refutes the allegations of impropriety made by the Short Report. Atlantic’s response to the Short Report has now been released and is available on the AIM market of the London Stock Exchange. Piedmont notes that Atlantic’s recent application for a Mining License for its lithium project in Ghana excludes the two licenses purchased as part of its acquisition of Joy Transporters Ltd referred to in the Short Report, which do not form part of Atlantic’s defined resources for its Ghana lithium project. Piedmont has the right to purchase 50% of Atlantic’s production of spodumene concentrate from its Ghana lithium project, at market prices on a life-of-mine basis, and to earn a 50% interest in the Ghanaian projects. Piedmont currently contemplates utilizing spodumene concentrate from this offtake agreement as partial feed for its proposed Tennessee Lithium hydroxide plant. However, if for any reason Piedmont does not exercise its right to this offtake supply, the Company is confident that alternative sources of spodumene concentrate would be available to feed the Tennessee facility, as current and future spodumene producers seek to feed the growing U.S. electric vehicle market and qualify for the benefits available under the Inflation Reduction Act of 2022. Piedmont also notes that the publisher of the Short Report discloses that it has a short interest in Piedmont’s shares and therefore stands to realize significant gains from a decline in Piedmont’s share price. Atlantic and Piedmont will seek legal advice to address the claims made by the Report."

Paysafe reports Q4 adjusted EPS 54c, consensus 10c. Reports Q4 revenue $383.6M, consensus $376.11M. Paysafe sees Q1 revenue $375M-$380M, consensus $376.88M. Sees Q1 adjusted EBITDA $105M-$108M. Paysafe sees FY23 revenue $1.58B-$1.6B, consensus $1.58B. Sees FY23 adjusted EBITDA $452M-$462M.

March 8

Piedmont Lithium promises that its newly announced Tennessee conversion facility will produce battery grade lithium "under a sweetheart supply deal from a Ghana lithium mine" and "claims that revenues and profits will flow from Tennessee in 2025, but we believe that is a fantasy," Blue Orca said in a short report published on its website. The firm said: "Ultimately, the premise of Piedmont’s valuation is the Company’s claim that it will soon leverage spodumene from Ghana to become a fully integrated lithium hydroxide producer. We think not… We believe that Atlantic’s mining licenses will not be ratified because of corruption. Atlantic still needs Ghana’s Parliament to approve and ratify its mining licenses and permits in order to build the lithium mine." Reference Link

Macquarie initiated coverage of Piedmont Lithium with an Outperform rating and $140 price target. Piedmont is set to join the ranks of spodumene producers in 2023 through its 25% interest in Sayona Quebec, the analyst tells investors in a research note. The firm says the company’s spodumene offtake agreement with Sayona should generate strong cash flow, enabling it to fund its diversified growth outlook. Piedmont will generate close to $1B in cash flow over the next four years through the offtake agreement, which leaves the company well positioned to fund its multi-asset growth plans, including building 60ktpa of lithium hydroxide capacity in the U.S., contends Macquarie.

March 6

Inhibrx reports Q4 EPS (95c), consensus (79c). Reports Q4 revenue $274,000, consensus $790,000. As of December 31, 2022, Inhibrx had cash and cash equivalents of $273.9M, compared to $131.3M as of December 31, 2021.

Credit Suisse downgraded Healthcare Realty Trust to Neutral from Outperform with a price target of $20, down from $23. The analyst believes further merger synergies "may be slower to come." The firm is no "less enthusiastic" about Healthcare Realty’s future growth. The loss of the Healthcare Trust leasing team has it worried about the company’s ability to drive up occupancy in the portfolio, and it continues to worry about the impact of rising inflation on operating expenses.

March 3

William Blair downgraded BRP Group to Market Perform from Outperform without a price target. While BRP "appears to be building a high-quality middle-market broker," a lack of progress in key operating metrics has lowered near-term conviction in the stock, the analyst tells investors in a research note. The firm says the company’s recent results indicate little near-term margin improvement, below-average cash flow conversion, and increasing demands on cash. Blair looks for more progress, particularly on cash flow generation, to be more constructive on the stock.

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.