San Francisco Federal Reserve Bank President Mary Daly believes another 75 basis-point interest rate hike might be needed in July to curb reckless inflation. A “soft landing” wouldn’t be easy for the Fed if that happens. According to Bob Schwartz, senior economist at Oxford Economics, retreating bond yields indicate an economic slowdown.
Moreover, Goldman Sachs has reported that a recession is twice as likely as earlier estimated. The market volatility is evident from the CBOE Volatility Index’s 63.8% year-to-date increase.
Given this backdrop, our proprietary rating system has recently downgraded fundamentally weak stocks MicroStrategy Incorporated (MSTR), NeoGenomics, Inc. (NEO), SolarEdge Technologies, Inc. (SEDG), and Block, Inc. (SQ) from Sell to Strong Sell.
MicroStrategy Incorporated (MSTR)
MSTR provides enterprise analytics software and services worldwide. It offers MicroStrategy and MicroStrategy Support. In addition, the company provides MicroStrategy Consulting and MicroStrategy Education.
MSTR’s total revenues decreased 2.9% year-over-year to $119.28 million for the first quarter ended March 31, 2022. Its product license revenues came in at $16.51 million, down 22.4% year-over-year. Also, its net loss increased 18.8% year-over-year to $130.75 million, while its loss per share increased marginally year-over-year to $11.58.
MSTR’s revenue is expected to decrease marginally year-over-year to $506.12 million in 2022. Its EPS is estimated to decline 136.2% year-over-year to negative $10.78 in 2022. The stock has lost 62.3% year-to-date to close the last trading session at $205.44.
MSTR’s POWR Ratings reflect its poor prospects. It has an overall rating of F, which indicates a Strong Sell. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an F grade for Sentiment and Quality and a D for Momentum and Stability. Click here to access the additional POWR Ratings for MSTR (Growth and Value). MSTR is ranked #142 out of 157 stocks in the F-rated Software - Application industry.
NeoGenomics, Inc. (NEO)
NEO operates a network of cancer-focused testing laboratories in the United States, Europe, and Asia. It operates through Clinical Services and Pharma Services segments. The company offers testing services to hospitals, reference labs, pathologists, oncologists, clinicians, pharmaceutical firms, and researchers.
NEO’s pharma services revenue decreased 3.5% year-over-year to $18.38 million for the first quarter ended March 31, 2022. Its gross profit came in at $38.23 million, down 8% year-over-year. Moreover, its net loss increased 123.4% year-over-year to $49.41 million, while its net loss per share increased 110.5% year-over-year to $0.40.
Analysts expect NEO’s EPS to decline 192.6% to a negative $0.79 in 2022. Its EPS is estimated to remain negative in 2023. The stock has lost 71.6% year-to-date to close the last trading session at $9.69.
NEO's overall F rating equates to a Strong Sell in our POWR Ratings system. It has an F grade for Growth and a D for Value and Momentum.
We’ve also rated it for Stability, Sentiment, and Quality. Click here to access all the NEO ratings. NEO is ranked #49 out of 53 stocks in the D-rated Medical - Diagnostics/Research industry.
SolarEdge Technologies, Inc. (SEDG)
Headquartered in Herzliya, Israel, SEDG and its subsidiaries design, develop, and sell direct, optimized inverter systems for solar photovoltaic installations worldwide. It operates through five segments- Solar; Energy Storage; e-Mobility; Critical Power; and Automation Machines.
For the first quarter ended March 31, 2022, SEDG’s revenues increased 61.6% year-over-year to $655.08 million. However, its total operating expenses came in at $128.09 million, up 33.5% year-over-year. Also, its net cash used in operating activities came in at $162.99 million, compared to net cash provided by operating activities of $24.08 million in the previous period.
SEDG missed EPS estimates in two of the trailing four quarters. Also, the stock has lost 15.2% over the past three months to close the last trading session at $286.34.
SEDG’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. In addition, the stock has a D grade for Value, Stability, and Quality.
We also have graded SEDG for Growth, Momentum, and Sentiment. Click here to access all of SEDG’s ratings. SEDG is ranked #13 out of 19 stocks in the F-rated Solar industry.
Block, Inc. (SQ)
SQ and its subsidiaries create tools that enable sellers to accept card payments and provide reporting, analytics, and next-day settlement. The company’s foundational teams, such as Counsel, Finance, and People, guide the corporate level.
SQ’s total net revenue decreased 21.7% year-over-year to $3.96 billion for the first quarter ended March 31, 2022. Its net loss came in at $204.20 million, compared to a net income of $39.01 million in the prior-year period. Its loss per share came in at $0.38, compared to an EPS of $0.08 in the year-ago period.
SQ’s EPS is expected to decline 48.5% to $0.88 in 2022. The stock has lost 56% year-to-date to close the last trading session at $71.00.
SQ has an overall grade of F, which indicates a Strong Sell. Also, the stock has an F grade for Stability and a D for Growth and Sentiment.
Click here to access the additional POWR Ratings for SQ (Value, Momentum, and Quality). SQ is ranked #102 out of 106 stocks in the D-rated Financial Services (Enterprise) industry.
MSTR shares rose $3.55 (+1.73%) in premarket trading Monday. Year-to-date, MSTR has declined -62.27%, versus a -17.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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