Red Cat (NASDAQ:RCAT) Trading Down 4.9% - Time to Sell?

Key Points

• Red Cat shares fell 4.9% on Friday, trading as low as $7.54 and closing near $7.64 on lighter-than-average volume.
• Despite the pullback, analyst sentiment is still mostly bullish: the stock has a consensus rating of “Buy” and an average price target of $21.40, though Weiss Ratings maintained a sell rating.
• The company’s latest earnings missed expectations, with a larger-than-expected loss and revenue below forecasts, even though revenue surged year over year; an insider sale by Director Paul Funk II also added to investor attention.

Red Cat Holdings, Inc. (NASDAQ:RCAT - Get Free Report)'s share price was down 4.9% during trading on Friday . The stock traded as low as $7.54 and last traded at $7.64. Approximately 6,534,184 shares traded hands during trading, a decline of 54% from the average daily volume of 14,334,161 shares. The stock had previously closed at $8.03.

Wall Street Analysts Forecast Growth

A number of equities analysts have recently weighed in on RCAT shares. HC Wainwright assumed coverage on Red Cat in a research note on Wednesday, May 27th. They issued a "buy" rating and a $20.00 target price on the stock. Weiss Ratings reaffirmed a "sell (d-)" rating on shares of Red Cat in a research report on Friday, July 17th. UBS Group started coverage on Red Cat in a report on Wednesday, May 27th. They set a "buy" rating on the stock. LADENBURG THALM/SH SH raised Red Cat to a "strong-buy" rating in a research report on Wednesday, May 6th. Finally, Roth Capital assumed coverage on Red Cat in a research note on Monday, June 1st. They issued a "buy" rating and a $25.00 price objective for the company. Two equities research analysts have rated the stock with a Strong Buy rating, four have issued a Buy rating and one has issued a Sell rating to the company's stock. According to MarketBeat.com, the stock currently has an average rating of "Buy" and a consensus target price of $21.40.

Red Cat Stock Down 5.0%

The firm has a market cap of $936.51 million, a P/E ratio of -10.90 and a beta of 1.29. The firm's 50-day simple moving average is $10.38 and its 200 day simple moving average is $12.15.

Red Cat (NASDAQ:RCAT - Get Free Report) last released its earnings results on Thursday, May 7th. The company reported ($0.22) earnings per share for the quarter, missing analysts' consensus estimates of ($0.12) by ($0.10). Red Cat had a negative net margin of 138.36% and a negative return on equity of 35.86%. The company had revenue of $15.47 million during the quarter, compared to analysts' expectations of $17.63 million. The company's revenue for the quarter was up 849.1% compared to the same quarter last year. As a group, analysts forecast that Red Cat Holdings, Inc. will post -0.67 earnings per share for the current year.

Insider Buying and Selling

In other Red Cat news, Director Paul Funk II sold 165,028 shares of the stock in a transaction on Thursday, June 11th. The stock was sold at an average price of $11.50, for a total transaction of $1,897,822.00. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. Insiders own 12.50% of the company's stock.

Institutional Trading of Red Cat

Hedge funds have recently made changes to their positions in the company. Hennion & Walsh Asset Management Inc. bought a new position in shares of Red Cat during the 2nd quarter worth $421,000. Byrne Asset Management LLC raised its stake in Red Cat by 64.2% in the 2nd quarter. Byrne Asset Management LLC now owns 21,160 shares of the company's stock valued at $225,000 after acquiring an additional 8,270 shares during the period. CoreCap Advisors LLC lifted its holdings in Red Cat by 13.8% during the second quarter. CoreCap Advisors LLC now owns 9,039 shares of the company's stock valued at $96,000 after purchasing an additional 1,095 shares during the last quarter. Western Wealth Management LLC lifted its holdings in Red Cat by 4.5% during the first quarter. Western Wealth Management LLC now owns 36,722 shares of the company's stock valued at $481,000 after purchasing an additional 1,570 shares during the last quarter. Finally, Norris Financial Group LLC bought a new position in Red Cat during the first quarter worth about $194,000. 37.97% of the stock is currently owned by institutional investors.

About Red Cat

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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