Red Cat (NASDAQ:RCAT) Downgraded to Sell Rating by Wall Street Zen

Key Points

• Wall Street Zen downgraded Red Cat (NASDAQ:RCAT) from "hold" to "sell", while other brokers remain mixed — MarketBeat shows an average rating of "Moderate Buy" and an average price target of $20.67.
• Shares traded around $11.23 (down ~4.2%) after a quarter that beat revenue estimates but missed on EPS, with deeply negative margins and ROE and analysts forecasting about -$0.34 EPS for the year.
• Large institutions (State Street, Vanguard, Geode) have been adding positions and Red Cat won a contract to deliver 173 Black Widow sUAS systems to Japan’s Ministry of Defense, validating demand but leaving execution and profitability risks.

Red Cat (NASDAQ:RCAT - Get Free Report) was downgraded by equities research analysts at Wall Street Zen from a "hold" rating to a "sell" rating in a research report issued to clients and investors on Saturday.

Several other equities analysts have also recently weighed in on the stock. Northland Securities set a $22.00 price target on shares of Red Cat in a research note on Tuesday, January 20th. LADENBURG THALM/SH SH raised their price target on shares of Red Cat from $15.00 to $20.00 and gave the stock a "buy" rating in a research note on Tuesday, March 3rd. Clear Str raised shares of Red Cat to a "strong-buy" rating in a research note on Wednesday. Weiss Ratings reissued a "sell (d-)" rating on shares of Red Cat in a research note on Tuesday, April 21st. Finally, Needham & Company LLC raised their target price on shares of Red Cat from $16.00 to $20.00 and gave the company a "buy" rating in a research note on Thursday, March 19th. One analyst has rated the stock with a Strong Buy rating, two have assigned a Buy rating and one has given a Sell rating to the company's stock. According to data from MarketBeat.com, Red Cat currently has an average rating of "Moderate Buy" and an average price target of $20.67.

Red Cat Stock Down 4.2%

Shares of RCAT opened at $11.23 on Friday. The stock has a market capitalization of $1.36 billion, a P/E ratio of -14.97 and a beta of 1.21. Red Cat has a twelve month low of $5.12 and a twelve month high of $18.78. The company has a 50 day moving average of $13.53 and a 200-day moving average of $11.55.

Red Cat (NASDAQ:RCAT - Get Free Report) last issued its quarterly earnings results on Wednesday, March 18th. The company reported ($0.17) earnings per share for the quarter, missing the consensus estimate of ($0.14) by ($0.03). The business had revenue of $26.24 million for the quarter, compared to the consensus estimate of $24.50 million. Red Cat had a negative return on equity of 38.86% and a negative net margin of 176.96%. On average, sell-side analysts anticipate that Red Cat will post -0.34 earnings per share for the current fiscal year.

Institutional Inflows and Outflows

A number of large investors have recently made changes to their positions in the business. State Street Corp grew its holdings in Red Cat by 136.4% during the fourth quarter. State Street Corp now owns 6,612,153 shares of the company's stock worth $52,434,000 after buying an additional 3,815,310 shares in the last quarter. Vanguard Group Inc. grew its stake in Red Cat by 9.0% in the 4th quarter. Vanguard Group Inc. now owns 6,000,037 shares of the company's stock valued at $47,580,000 after purchasing an additional 493,660 shares during the period. Geode Capital Management LLC grew its stake in Red Cat by 13.4% in the 4th quarter. Geode Capital Management LLC now owns 2,520,524 shares of the company's stock valued at $19,991,000 after purchasing an additional 297,967 shares during the period. Brevan Howard Capital Management LP bought a new position in Red Cat in the 3rd quarter valued at $19,739,000. Finally, Davidson Kempner Capital Management LP bought a new position in Red Cat in the 3rd quarter valued at $17,286,000. 37.97% of the stock is owned by institutional investors.

Red Cat News Summary

Here are the key news stories impacting Red Cat this week:

• Positive Sentiment: Red Cat disclosed details of a competitive award to deliver 173 Black Widow™ sUAS systems to Japan’s Ministry of Defense (Japanese Army) for JFY26 — includes two aircraft per system, ground control stations, spare parts, training and planned local industrial involvement via partners HAMA K.K. and ITOCHU. This validates international defense demand and recurring support opportunities. Red Cat to Deliver 173 Black Widow Drone Systems Under Japan Ministry of Defense Contract
• Positive Sentiment: An analyst upgrade to "strong‑buy" from Clear Str LLC was reported (via Zacks / TickerReport), which can attract buyer interest and support sentiment among retail and momentum traders. Zacks - Upgrade
• Positive Sentiment: Institutional activity and analyst coverage show growing conviction: several large funds increased RCAT positions recently and two broker targets sit at $20 (median), implying upside from current levels if execution and margins improve. Quiver Quant - Institutional Moves & Targets
• Neutral Sentiment: Analyses revisiting RCAT’s valuation note strong top‑line momentum (172% y/y revenue growth tied to Black Widow and BlueOps) but emphasize volatile shares and the need to convert backlog to profitable, repeatable revenue. Useful for framing upside vs. execution risk. Yahoo Finance - Valuation After Drone Growth And Japanese Army Contract News
• Neutral Sentiment: Feature coverage on the broader robotics/defense ecosystem (MarketBeat piece referencing XTEND/AI OS and strategic partnerships) highlights sector tailwinds but is not direct company news — may influence longer‑term narrative rather than immediate price action. MarketBeat - Pre‑IPO AI Robotics Feature
• Negative Sentiment: Comparative coverage (TTEC vs RCAT) and analyst notes flag RCAT’s continued net losses, potential dilution and contract execution risk — concerns that investors often punish quickly if margins or cash flow fail to improve. Yahoo Finance - TTEC vs RCAT
• Negative Sentiment: Recent quarterly results (reported March) showed a revenue beat but an EPS miss and deeply negative margins/ROE — a reminder that top‑line wins need to translate into improved profitability to sustain higher valuations. TickerReport - Earnings Recap

Red Cat Company Profile

Red Cat Holdings, Inc NASDAQ: RCAT is a technology holding company that develops and delivers advanced robotics, autonomy, and sensing solutions for defense, national security, public safety and commercial customers. Headquartered in American Fork, Utah, the company brings together a portfolio of specialized operating businesses focused on unmanned aerial systems (UAS), mission management software, precision mapping sensors and engineering services.

Through its UAS segment, Red Cat designs and manufactures small to medium-sized fixed-wing and vertical-takeoff drones that support intelligence, surveillance and reconnaissance (ISR) missions.

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