Sell these stocks now, proven algorithm says

Consumer internet company, targeted oncology 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. 

Mirati Therapeutics (MRTX) – a clinical-stage targeted oncology company focused on bringing forward therapies that address areas of high unmet medical need, including lung cancer, and advancing a pipeline of novel therapeutics targeting the genetic and immunological drivers of cancer

InMed Pharmaceuticals (INM) – a company involved in the research, development and manufacturing of rare cannabinoids, including clinical and preclinical programs targeting the treatment of diseases with high unmet medical needs

Sea Limited (SE) – a consumer internet company founded in Singapore that operates three core businesses across digital entertainment, e-commerce, as well as digital payments and financial services, known as Garena, Shopee and SeaMoney, respectively

Toast (TOST) – operator of a cloud-based digital technology platform of software as a service, or SaaS, products and financial technology solutions for restaurants

Shopify (SHOP) – a provider of internet infrastructure for commerce that offers tools to start, grow, market, and manage a retail business

Equinox Gold (EQX) – a Canadian mining company with seven operating gold mines that says it sees "a clear path to achieve more than one million ounces of annual gold production from a pipeline of development and expansion projects"

Confluent (CFLT) – a data streaming platform that is "pioneering a fundamentally new category of data infrastructure that sets data in motion"

Xometry (XMTR) – operator of an online marketplace connecting enterprise buyers with suppliers of manufacturing services

Radius Global Infrastructure (RADI) – an owner and acquirer of real property interests and contractual rights underlying essential digital infrastructure assets in 21 countries

Planet Labs PBC (PL) – a provider of satellite imagery and geospatial solutions that designs, builds, and operates what it touts as "the largest Earth observation fleet of imaging satellites"

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

Freyr Battery (FREY) – a developer of next-generation battery cell production capacity which has commenced building the first of its planned factories in Norway and announced potential development of industrial scale battery cell production in Finland and the U.S.

Verve Therapeutics (VERV) – a clinical-stage genetic medicines company "pioneering a new approach" to the care of cardiovascular disease

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

Enviva (EVA) – a producer of industrial wood pellets that owns and operates ten plants with a combined production capacity of approximately 6.2 million metric tons per year

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:

December 16 

Shares of several companies involved in geospatial intelligence that own or operate small satellite constellations, such as BlackSky Technology (BKSY), Planet Labs (PL), and Terran Orbital (LLAP), moved higher in Friday morning trading after Maxar Technologies (MAXR) agreed to be acquired by Advent International in an all-cash transaction that values Maxar at an enterprise value of approximately $6.4B or $53 per share in cash. In pre-market trading after the deal announcement, shares of Maxar more than doubled to trade near $51 per share, while BlackSky rose nearly 9% to $2 per share, Planet Labs was up 7.5% to $5.30 and Terran Orbital advanced 4% to $1.47.

Wells Fargo analyst Jeff Cantwell maintained an Overweight rating and $27 price target on Toast following a call with an industry experts who believes Toast has a "significant opportunity ahead" in a resilient restaurant space, highlighting the company’s technology as a way for restaurants to lower their employee headcounts while maintaining a positive guest experience. They called Toast the "best-in-class" solution, as Toast has the best understanding of how to serve the day-to-day operations of the restaurant industry.

RBC Capital analyst Bora Lee initiated coverage of Radius Global Infrastructure with a Sector Perform rating and $13 price target. While Lee believes the business is well-positioned for steady growth as it gains scale, the analyst remains conservative due to a full valuation following recent unconfirmed headlines, Lee tells investors in a research note.

December 15

Goldman Sachs analyst Andrea Tan initiated coverage of Verve Therapeutics with a Sell rating and $13 price target. The FDA’s recent investigational new drug hold, which requests additional data to evaluate the safety risk, presents a near-term overhang, Tan tells investors in a research note. In the long-term, the analyst sees significant risk to Verve’s commercial opportunity as her key opinion leader discussions "highlight hesitancy around a novel gene editing modality given the uncertain benefit/risk profile."

December 14

Planet Labs reports Q3 EPS (15c), consensus (17c). Reports Q3 revenue $49.7M, consensus $47.2M. "We delivered another quarter of great results, which we believe is a testament to the strong execution across the company and the mission-critical nature of our data. We saw great momentum in the government segment and announced multiple exciting new strategic partnerships in the commercial sector. Planet’s growth continues to be underpinned by global, secular tailwinds that are driving demand for our solutions. Our data helps enable customers and partners to address today’s most complex issues, ranging from climate risk and adaptation to geopolitical security," said Will Marshall, Planet’s Co-Founder, CEO and Chairperson.

Planet Labs raises FY23 revenue view to $188M-$192M from $182M-$190M, consensus $187.08M. Raises FY23 adjusted EBITDA view to ($60M)-($56M) from ($68M)-($60M).

Planet Labs also announced it is making geospatial data available through Amazon SageMaker (AMZN), a fully managed machine learning, or ML, service from Amazon Web Services, or AWS. Now, Planet data can be directly embedded into Amazon SageMaker, allowing data scientists and ML engineers to acquire and analyze global, daily satellite data. With this data, customers can train, test, and deploy ML models all within Amazon SageMaker.

Exane BNP Paribas analyst Nate Crossett initiated coverage of Radius Global Infrastructure with an Outperform rating and $17 price target.

Lake Street analyst Troy Jensen initiated coverage of Xometry (XMTR) with a Sell rating and $28 price target, describing the company as "an asset-light version of Proto Labs." Xometry brokers part production from a network of prequalified machine shops and similar to Proto Labs (PRLB), Xometry sells parts that are primarily produced via CNC, injection molding, sheet metal fabrication, and additive manufacturing technologies. However, whereas Proto Labs owns its equipment, Xometry is a part broker and matches buyers to sellers, noted Jensen, whose negative thesis on Xometry is based on a belief that the company primarily brokers parts for extremely low-volume end-part production but will struggle to enter mid, high-volume production markets. He believe consensus estimates throughout 2023 are too high and anticipate downward revisions to 2023 and 2024 forecasts, the analyst added.

Needham analyst Ami Fadia initiated coverage of Mirati Therapeutics with a Hold rating and no price target. Despite the recent pullback, Fadia struggles to see a path to near-term upside, the analyst tells investors in a research note. Last week’s ESMO update puts into question adagrasib’s likelihood of success in 1L NSCLC, particularly in TPS greater than or equal to 1%, the analyst adds.

December 13

Piper Sandler analyst Swapnil Malekar lowered the firm’s price target on Mirati Therapeutics to $68 from $87 but keeps an Overweight rating on the shares. Mirati Therapeutics priced Krazati at a slight premium vs Lumakras and justified the overage based on advantage seen in CNSmet patients and a better safety profile, but he remains cautious until this theory pans out in the real world given the brain-met language or the safety data from tablet formulation was not reflected in the label, the analyst tells investors in a research note.

Cathie Wood’s ARK Investment bought 49K shares of Verve Therapeutics

Confluent announced the appointment of Shaun Clowes as chief product officer, or CPO. As chief product officer, Clowes will lead the strategy and execution of all product-related activities within Confluent, including product innovation and the product roadmap. Clowes joins Confluent from Mulesoft, where he served as CPO, and before that, Atlassian where he served as the head of growth.

Citi analyst Ronald Josey initiated coverage of Xometry with a Buy rating and $55 price target. The analyst launched coverage of seven internet companies across his existing marketplaces space. His core thesis across the internet sector continues to revolve around growing engagement via newer products and services. Josey sees "multiple growth vectors" ahead across most every internet vertical but recognizes the macro uncertainty. He continues to favor those companies "that are leaders in their respective categories, are innovative, and deliver improving margins and profitability."

December 12

InMed Pharmaceuticals engages Marcum LLP as auditor after KPMG resigns. The company announced that its auditor, KPMG has resigned effective as of December 8, 2022, and that the Audit Committee of the Board of Directors of the company approved the engagement of Marcum LLP as its auditor, subject to Marcum’s completion of their client acceptance procedures.

InMed Pharmaceuticals announced the company has entered into a service contract with Brio Financial Group to provide senior financial leadership and bookkeeping services. Pursuant to the contract, Mr. Jonathan Tegge, a member of Brio, will assume the role of Interim Chief Financial Officer for InMed, effective December 12.

Mirati Therapeutics announced that the U.S. FDA has granted accelerated approval for KRAZATI, a targeted treatment option for adult patients with KRASG12C-mutated locally advanced or metastatic non-small cell lung cancer, as determined by an FDA-approved test, who have received at least one prior systemic therapy.

Mizuho analyst Dan Dolev lowered the firm’s price target on Fiserv (FISV) to $135 from $145 and keeps a Buy rating on the shares as part of the firm’s FinTech & Payments team providing its 2023 outlook for sub-sectors in the group against a backdrop of higher rates, high inflation, and a slowing macro. The group’s top picks include Fiserv, Toast (TOST), FIS (FIS) and Robinhood (HOOD), while they are cautious on Upstart (UPST), Coinbase (COIN) and Block (SQ).

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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