Here are this week's downgrades to Strong Sell as determined by the POWR Ratings algorithm.
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DA Davidson initiated coverage of C3.ai with a Buy rating and $30 price target. C3.ai is "a truly scarce asset in a critical software arena," said the firm, which views the emergence of generative AI as a "killer app" for Artificial Intelligence. This gives C3.ai the opportunity to monetize its considerable investment and track record in the field of AI, according to the firm.
Guardant Health announced a strategic collaboration on the development, regulatory approval and commercialization of the Guardant360 CDx and Guardant360 TissueNext assays as companion diagnostics for taletrectinib in the United States and European Union. Taletrectinib is an investigational ROS1 inhibitor for the treatment of adult patients with advanced or metastatic ROS1-positive non-small cell lung cancer NSCLC. AnHeart received U.S. Food and Drug Administration Breakthrough Therapy Designation BTD for taletrectinib on August 1, for the treatment of adult patients with advanced or metastatic ROS1-positive NSCLC who are ROS1 tyrosine kinase inhibitor treatment naive or previously treated with crizotinib. The collaboration will focus on the use of the Guardant tests for comprehensive genomic profiling to identify patients with the specific tumor mutations that are targeted by taletrectinib.
Guardant Health issued the following statement regarding the favorable recommendation by U.S. District Court Magistrate Judge Christopher Burke that nearly all claims brought by Illumina (ILMN) against Guardant Health in a lawsuit filed on March 17, 2022, be dismissed: "We are pleased with Judge Burke's recommendation that nearly all of Illumina's claims be dismissed as filed. We continue to believe that Illumina has no basis for challenging the ownership of our patents and that this lawsuit is nothing more than an attempt to impede our mission to improve cancer care and save patients' lives."
Craig-Hallum raised the firm's price target on Western Digital (WDC) to $60 from $50 and keeps a Buy rating on the shares. The firm is "encouraged" that Western Digital is joining other NAND industry participants and reducing its flash wafer start supply. Craig-Hallum also suspects that market leader, Samsung (SSNLF), will also ultimately fall in line and reduce its flash output as well. The firm believes such actions are needed to return the NAND industry to a supply/demand equilibrium and expects these industry actions to significantly improve industry profitability from current levels over time, which should also ultimately lead to significant increases in stock prices.
Mizuho lowered the firm's price target on Western Digital to $35 from $38 and keeps a Neutral rating on the shares. The analyst reduced estimates to reflect the company's "soft" guidance.
Western Digital reports Q2 EPS (42c), consensus (12c). Reports Q2 revenue $3.11B, consensus $2.99B. "The Western Digital team delivered revenue at the high end of our guidance range, despite a challenging flash price environment and continued cloud inventory digestion," said David Goeckeler, Western Digital CEO. "We continue to take action to reset the business in response to the post-pandemic environment by optimizing our cost structure and strengthening our liquidity. These actions, including strategically reducing our capital expenditures across both flash and HDD and our operating expenses, as well as amending our financial covenants and securing recent financings, will give us the financial flexibility and optionality to weather this cycle, while also positioning us to continue executing our product roadmap and furthering our technical leadership over the long term."
Western Digital sees Q3 EPS ($1.70) to ($1.40), consensus (30c). Sees Q3 revenue $2.60B-$2.80B, consensus $3.01B.
Western Digital announced that funds managed by affiliates of Apollo Global Management (APO) led the purchase of $900 million of convertible preferred stock of Western Digital, along with Elliott Investment Management L.P. who also invested in the convertible offering. "The investment strengthens Western Digital's financial position and flexibility as the company continues its review of strategic alternatives aimed at further optimizing long-term value for its shareholders. The preferred stock has an initial conversion price of $47.75 per share of Western Digital's stock, subject to customary anti-dilution and other adjustments. The initial conversion price of $47.75 represents a 25% premium to the volume-weighted average closing price of the common stock over the 20-day period ending on January 30, 2023, and a 44% premium to the closing price on January 4, 2023, the last trading day prior to merger rumors involving Western Digital. The preferred stock will bear a cumulative and compounding dividend at a rate of 6.25% per annum over the initial liquidation preference of $1,000.00, until the seven-year anniversary of the closing, at which time the dividend shall increase to 7.25% per annum until the ten-year anniversary of the closing, at which time the dividend shall increase to 8.25% per annum," the company stated.
Goldman Sachs lowered the firm's price target on Sunrun to $37 from $40 and keeps a Buy rating on the shares as part of a broader research note previewing Q4 results in Solar stocks. The analyst prefers utility-scale names over companies with residential end market preference, but also sees significant margin recovery stories in focus.
Guardant Health announced that the U.S. Food and Drug Administration FDA has approved its Guardant360 CDx liquid biopsy test as a companion diagnostic to identify advanced or metastatic breast cancer patients with ESR1 mutations who may benefit from treatment with ORSERDU, elacestrant , a nonsteroidal selective estrogen receptor degrader to be commercialized by Stemline Therapeutics, a wholly-owned subsidiary of Menarini Group.
EQT Infrastructure and PSP Investments are pursuing Radius Global Infrastructure, which is expected to wrap its months-long sale talks by the end of February, said Dealreporter, according to contacts.
Barclays analyst Christine Cho downgraded Sunrun to Equal Weight from Overweight with a price target of $35, down from $44. With U.S. residential solar demand expected to slow in 2023, the company will face a changing and challenging environment, the analyst tells investors in a research note. The downgrade is part of the firm's positioning of residential installers for 2023.
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.