4 Downgraded Stocks to Stay Away From in July
This year, the stock market recorded the worst first half in more than five decades due to investor concerns over a potential economic slowdown. The Federal Reserve’s aggressive monetary policy tightening to tame the multi-decade high inflation has primarily made investors and analysts worried about the economy’s ability to grow or remain stable.
In addition, the 2-year Treasury yield has recently surpassed the 10-year yield, indicating that the economy is on the verge of entering a recessionary period.
According to the Bureau of Labor Statistics, Nonfarm payrolls in June increased by 372,000, topping the 250,000 Dow Jones estimate, which means Fed officials will likely go ahead with aggressive interest rate hikes over the coming months.
Moreover, according to statements from two policymakers, the Fed is well on its way to another sharp interest rate hike this month and perhaps in September as well.
Given this backdrop, Wall Street analysts have recently downgraded fundamentally weak stocks DiaMedica Therapeutics Inc. (DMAC), CytomX Therapeutics, Inc. (CTMX), Meta Financial Group, Inc. (CASH), and Live Oak Bancshares, Inc. (LOB). So, these stocks are best avoided now.
DiaMedica Therapeutics Inc. (DMAC)
DMAC is a clinical-stage biopharmaceutical company developing neurological and kidney disease treatments. The company’s lead drug candidate is DM199, a recombinant human tissue kallikrein-1 protein in the Phase 2 REDUX trial for treating patients with moderate or severe chronic kidney disease caused by Type I or Type II diabetes.
On July 7, Oppenheimer downgraded DMAC from Outperform to Perform.
For the fiscal first quarter that ended March 31, 2022, DMAC’s net loss came in at $3.56 million, compared to $3.62 million in the prior-year period. The company’s loss per share came in at $0.13, compared to $0.19 in the year-ago period.
Also, its total assets came in at $42.21 million for the period ended March 31, 2022, compared to $45.55 million for the period ended December 31, 2021.
Analysts expect ATHA’s EPS to decline 5.6% for the quarter ending September 30, 2022, and 13.8% in fiscal 2022. Moreover, analysts expect its EPS to remain negative in the current and next year. The stock has lost 47.3% over the past month to close the last trading session at $1.26.
DMAC’s poor prospects are apparent in its POWR Ratings also. The stock has an overall rating of D, equating to a Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a D grade for, Momentum and Quality. Click here to see the additional POWR ratings for DMAC (Growth, Value, Stability, and Sentiment). It is ranked #209 out of 427 stocks in the F-rated Biotech industry.
CytomX Therapeutics, Inc. (CTMX)
CTMX operates as an oncology-focused biopharmaceutical company in the United States. The company develops antibody therapeutics based on its Probody technology platform for cancer treatment.
The company’s product candidates include CX-2009, an antibody-drug conjugating against CD166, which is in Phase II clinical trials for breast cancer treatment. Jefferies downgraded CTMX from Buy to Hold on July 7.
CTMX’s revenues increased 7.3% year-over-year to $17.14 million for the fiscal first quarter that ended March 31, 2022. However, its net loss came in at $23.89 million, representing a 53.6% year-over-year increase. Also, its loss per share came in at $0.37, up 42.3% year-over-year.
For fiscal 2023, analysts expect CTMX’s EPS and revenue to decrease 5.7% and 0.5% year-over-year, respectively. Moreover, analysts expect its EPS to remain negative in the current and next year. The stock has lost 34.9% over the past month to close the last trading session at $1.23.
CTMX’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of D, equating to a Sell in our proprietary rating system. In addition, the stock has an F grade for Momentum and a D grade for Stability and Sentiment.
Meta Financial Group, Inc. (CASH)
CASH operates as the holding company for MetaBank that offers various banking products and services in the United States. It operates through