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.
This week's downgrades to Strong Sell as determined by the POWR Ratings algorithm:
Learn more about the POWR Ratings
The Fly's recent reporting on these stocks includes:
On June 2, Goldman Sachs analyst Brett Feldman downgraded Starry to Neutral from Buy with an unchanged price target of $9, representing negative 9% total return potential. The analyst cited valuation for the downgrade following the recent outperformance, saying the stock is now trading above high growth consumer-focused subscription peers on a multiple to growth basis. He sees limited opportunity over the near-term for multiple expansion. In addition, Starry will need to access additional capital by Q1 of 2023 in order to fund its business, which could further limit multiple expansion, Feldman told investors.
Later that day, Oppenheimer analyst Timothy Horan initiated coverage of Starry with a Perform rating and $10 price target. While he sees Starry's service advantage enabled by its "revolutionary" fixed wireless technology and unique vertical "stack," the company requires more funding/partnerships and needs to raise about $160M, he believes.
On June 1, Piper Sandler analyst Christopher Donat told investors that recent trends for app downloads for Block's Cash App are strong, rising over 50% year-over-year. The analyst thinks the integration of Credit Karma Tax this tax season "might be a helpful factor." App download growth has favorable implications for Block to build on the 46M Cash App active monthly users in March, Donat contends. The analyst also sees good, albeit slower, growth for PayPal (PYPL) in the United States and with its Venmo offering. He expects person-to-person transactions to be a competitive advantage for low-cost customer acquisition for Block and PayPal. However, away from person-to-person, the analyst sees signs of weakness in app downloads in buy now pay later and crypto, which he says has negative implications for these business lines within both companies. Donat reiterated a Neutral rating on Block and Overweight rating on PayPal.
On May 31, KE Holdings reported better-than-expected Q1 adjusted EPS and revenue. Stanley Yongdong Peng, Chairman of the Board and CEO of Beike, commented, "In the Q1, facing significant uncertainties arising from the outbreaks of COVID-19 variants in some cities and a soft macroeconomic outlook, we continued to strive forward with a determined focus on serving our customers, caring for our service providers and an optimistic mindset to further grow our presence in the broader housing related services." The company also issued a Q2 revenue view that represents a decrease of approximately 56.6%-58.6% from the same quarter of 2021. "This forecast considers the potential impact of the recent real estate related policies and measures, the emergence of COVID-19 in certain regions and the corresponding restrictive measures which remains uncertain and may continue to adversely affect the Company's operations, and the company's current and preliminary view on the business situation and market condition, all of which are subject to change," Beike stated.
The same day, KeyBanc analyst Josh Beck lowered the firm's price target on Bill.com to $175 from $225 and kept an Overweight rating on the shares following investor meetings with the company's CFO and others on the management team. The analyst recommends investors build positions in Bill.com on the rates/recession induced pull-back as he sees the opportunity to own an elite tech franchise that operates in a market that is less than 5% penetrated. He also cites what he sees as its clear market leadership and network effects, meaningful execution driven synergies, highly capable management team, and a strong balance of growth and profitability.
Starry
+0.28 (+2.72%)
Block
-2.59 (-2.96%)
MicroStrategy
-13.66 (-5.60%)
Confluent
-0.79 (-3.47%)
GDS Holdings
-0.875 (-3.05%)
KE Holdings
-0.365 (-2.48%)
Global-e Online
-0.93 (-4.50%)
Futu Holdings
-1.03 (-2.69%)
Bill
-0.33 (-0.26%)
Energy Fuels
-0.195 (-2.90%)