Sell these stocks now, proven algorithm says

Connected fitness platform operator, world’s largest movie exhibition 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. 

• Peloton (PTON) – operator of a connected fitness platform that it says "seamlessly combines innovative hardware, distinctive software, and exclusive content"
• Cameco (CCJ) – provider of the uranium fuel with controlling ownership of what it says are "the world’s largest high-grade reserves and low-cost operations"
• AMC Entertainment (AMC) – the largest movie exhibition company in the world with approximately 950 theatres and 10,500 screens
• Snap (SNAP) – a software and hardware developer that operates the Snapchat platform and believes that "reinventing the camera represents our greatest opportunity to improve the way people live and communicate"
• Take-Two Interactive (TTWO) – a developer, publisher, and marketer of video games, principally through Rockstar Games, 2K, Private Division and Zynga
• Beam Therapeutics (BEAM) – a biotechnology company with a proprietary base editing technology for precision genetic medicines that seeks to provide "life-long cures to patients suffering from serious diseases"
• Rocket Pharmaceuticals (RCKT) – a late-stage biotechnology company whose first clinical program using adeno-associated virus, or AAV, based gene therapy is for Danon Disease, a pediatric heart failure condition
• Braze (BRZE) – operator of a customer engagement platform that powers interactions between consumers and brands
• Eve Holding (EVEX) – a company developing electric vertical take-off and landing, or "eVTOL," aircraft that says it is backed by Embraer’s (ERJ) "more than 50-year history of aerospace expertise" and "dedicated to accelerating the Urban Air Mobility ecosystem"
• Diamond Offshore (DO) – a provider of contract drilling services to "solve complex deepwater challenges"
• GitLab (GTLB) – provider of The DevOps platform, which it calls "a single application that brings together development, operations, IT, security, and business teams to deliver desired business outcomes"
• NuScale Power (SMR) – a developer of small modular reactor, or SMR, nuclear technology that markets the NuScale Power Module pressurized water reactor and VOYGR series power plants
• Sun Communities (SUI) – a real estate investment trust, or "REIT," that owns and operates, or has an interest in, manufactured housing and recreational vehicle communities and marinas
• C3.ai (AI) – an enterprise Artificial Intelligence, or AI, software provider for accelerating digital transformation
• Ginkgo Bioworks (DNA) – a company building a platform to enable biotechnology applications across markets that include food and agriculture, industrial chemicals and pharmaceuticals
• Toast (TOST) – operator of a cloud-based digital technology platform of software as a service, or SaaS, products and financial technology solutions for restaurants

Learn more about the POWR Ratings

Recent news on these stocks: 

March 31

GitLab files to sell 1.64M shares of Class A common stock for holders

In the latest edition of "Bet On It" The Fly looks at news and activity in the sports betting and iGaming space. To see the rest of the story [read more] on thefly.com.

Truist lowered the firm’s price target on Sun Communities to $163 from $166 to reflect the higher than expected operating expenses but keeps a Buy rating on the shares. While insurance premiums are up substantially, the utilities cost will be a slight tailwind from Q4 of this year, as projected by EIA, the analyst tells investors in

Canaccord raised the firm’s price target on Braze to $38 from $33 and keeps a Buy rating on the shares. The analyst said Q4 results as mixed, at best, as leading KPIs, in our view, suggest continued deterioration of end-market activity and demand. Shares are trading at a valuation which is a bit expensive relative to current operating metrics but not out of bounds for a share gainer in the space, so we remain comfortable with our continued rating on the shares.

BTIG raised the firm’s price target on Braze to $40 from $34 and keeps a Buy rating on the shares. The company reported a "strong" Q4 earnings beat while issuing guidance that looks "conservative" given the macro backdrop and that is not related to internal issues or competitive dynamics, the analyst tells investors in a research note. The firm adds that it "remains confident" in the differentiation of the Braze platform and increasing demand for individualized targeting.

March 30

Braze reports Q4 EPS (35c), consensus (19c). Reports Q4 revenue $98.7M, consensus $95.7M. "In the past year, we continued to strengthen our position as a market leader by finding the opportunities in change, expanding our customer base by 29% and our revenue by nearly 50%," said Bill Magnuson, cofounder and CEO of Braze. "Customer engagement is a universal business imperative, and Braze innovations such as Cloud Data Ingestion, native support for WhatsApp, and AI enhancements to our Predictive Suite enable our customers to evolve their strategies and expand to new use cases."

Braze "announced that it has entered into a definitive agreement to acquire North Star, its exclusive reseller in Australia and New Zealand. The transaction is expected to close in the second quarter of FY24. North Star has been a Braze reseller since 2016, providing sales, onboarding, and customer success operations in the ANZ market for customers such as Canva and KFC Australia. The transaction will provide Braze with a direct market presence in the region, along with local market expertise from the North Star team."

Braze sees FY24 EPS (59c) to (55c), consensus (57c). Sees FY24 revenue $433M-$438M, consensus $442.1M. Braze sees Q1 EPS (19c) to (18c), consensus (17c). Sees Q1 revenue $98.5M-$99.5M, consensus $100.5M.

March 29

SMBC Nikko initiated coverage of GitLab with a Neutral rating and $37 price target.

The situation is still uncertain, but recent headlines and political activity increase the debate around the possibility of a potential ban or block of some nature of TikTok in the U.S., Morgan Stanley tells investors. TikTok being blocked from use in the U.S. would impact 95M Americans using the product an average of about 90 minutes per day, putting 53B hours of digital media consumption time "up for grabs," the analyst estimates. While the firm expects many forms of media to benefit in the case of such a hypothetical ban, Meta’s (META) Reels, YouTube (GOOGL) Shorts and Snap‘s (SNAP) Spotlight are likely best positioned in such a scenario and each platform’s potential earnings upside would be driven by time captured combined with their varying monetization rates, the analyst tells investors.

"Game On" is The Fly’s weekly recap of the stories powering up or beating down video game stocks. [tweeted: "@FoxBusiness has confirmed @amazon has long considered a possible purchase of @AMCTheatres and for various reasons hasn’t pulled the trigger. Its interest now remains though more as buying a distressed asset. There is NO deal on the table, I am told, and may never be"

Raymond James notes that AMC Entertainment (AMC) shares were higher amid speculation that Amazon (AMZN) could explore a potential takeout of the movie theater operator. Given that AMC is currently EPR Properties’ (EPR) second largest tenant, "obviously" it would be "a big windfall" for EPR if AMC were to be acquired. The firm believes the market is currently giving EPR little value for its entire theater portfolio and it sees "meaningful upside" from current levels if "Amazon were to dive into the theater business with a purchase of AMC (either now or when AMC has burned through more cash/is more distressed)." Raymond James has a Strong Buy rating on EPR Properties shares.

A blog posted on "The Intersect" authored by Joe Bel Bruno claims that Amazon (AMZN) founder Jeff Bezos "has dispatched his investment advisors and top entertainment chiefs to explore acquisition plans" for AMC Entertainment (AMC). The blog, which cites "multiple senior sources familiar with the discussions" for its claims, said discussions inside Amazon are "fluid, and there is no certainty that the retail giant will even make an offer." One insider reportedly told The Intersect that "Bezos may just bide his time should AMC’s stock continue to erode, or even pounce on AMC assets if the company buckles into bankruptcy," the report adds. In afternoon trading, the shares of volatile AMC Entertainment are up 63c, or 14%, to $5.18.

March 27

Guggenheim raised the firm’s price target on Snap to $12 from $9 and keeps a Neutral rating on the shares after updating the firm’s model to better reflect its view of 2023 core trends and the company’s cost controls. The firm’s recent advertising industry discussions suggest overall advertising demand stability relative to Q4 trends, with "modest differences" between platforms and verticals, the analyst tells investors.

Space Systems Command’s Battle Management Command, Control and Communications Program Executive Office said late Friday it will award a $900M indefinite delivery/indefinite quantity contract to 18 contractors to provide data software services that directly support warfighter needs. "All Contractors were chosen on a best-value basis, with a heavy emphasis on their commercial software solution and current accreditation or plan/ability to obtain accreditation," the agency said in a statement. Among the contractors selected were Palantir (PLTR), C3.ai (AI), BAE Systems (BAESY) and Oracle (ORCL). Reference Link

Cameco announced that Canada Revenue Agency has issued revised reassessments for the 2007 through 2013 tax years that will result in the company being refunded a total of approximately $300M, consisting of $89M in cash and $211M in letters of credit, which we previously remitted to the Government of Canada based on prior reassessments CRA had issued in our long-standing tax dispute. Timing of the refund is yet to be determined.

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.