Wall Street Zen Downgrades Red Cat (NASDAQ:RCAT) to Strong Sell

Key Points

• Wall Street Zen downgraded Red Cat from “sell” to “strong sell,” adding a bearish note to the stock despite the broader analyst community still leaning positive.
• Red Cat’s latest earnings missed expectations, with EPS of -$0.22 versus an expected -$0.12 and revenue of $15.47 million below estimates, even though sales surged year over year.
• The stock traded at $7.64 and remains well below its moving averages; meanwhile, a director recently sold more than 165,000 shares, while institutional investors continue to hold a sizable stake.

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

Other analysts have also recently issued research reports about the stock. Clear Str raised shares of Red Cat to a "strong-buy" rating in a report on Wednesday, April 29th. LADENBURG THALM/SH SH raised shares of Red Cat to a "strong-buy" rating in a research report on Wednesday, May 6th. HC Wainwright assumed coverage on shares of Red Cat in a research report on Wednesday, May 27th. They issued a "buy" rating and a $20.00 price objective on the stock. Weiss Ratings restated a "sell (d-)" rating on shares of Red Cat in a report on Tuesday, April 21st. Finally, Roth Capital initiated coverage on shares of Red Cat in a research report on Monday, June 1st. They set a "buy" rating and a $25.00 price objective for the company. Two research analysts have rated the stock with a Strong Buy rating, four have issued a Buy rating and one has assigned a Sell rating to the company's stock. According to data from MarketBeat.com, Red Cat has a consensus rating of "Buy" and an average price target of $21.40.

Red Cat Price Performance

Shares of NASDAQ RCAT opened at $7.64 on Friday. The company has a market cap of $937.73 million, a price-to-earnings ratio of -10.91 and a beta of 1.29. The stock's 50-day moving average is $10.56 and its two-hundred day moving average is $12.13. Red Cat has a 1-year low of $5.77 and a 1-year high of $18.78.

Red Cat (NASDAQ:RCAT - Get Free Report) last announced its quarterly earnings data on Thursday, May 7th. The company reported ($0.22) earnings per share (EPS) for the quarter, missing the consensus estimate 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 was up 849.1% on a year-over-year basis. Equities research analysts anticipate that Red Cat will post -0.67 earnings per share for the current fiscal year.

Insider Transactions at Red Cat

In other Red Cat news, Director Paul Funk II sold 165,028 shares of the firm's stock in a transaction that occurred on Thursday, June 11th. The shares were sold at an average price of $11.50, for a total transaction of $1,897,822.00. The transaction was disclosed in a legal filing with the SEC, which is available at this hyperlink. 12.50% of the stock is owned by company insiders.

Institutional Inflows and Outflows

A number of hedge funds have recently modified their holdings of RCAT. Tudor Investment Corp ET AL grew its holdings in shares of Red Cat by 214.0% during the third quarter. Tudor Investment Corp ET AL now owns 1,277,523 shares of the company's stock worth $13,222,000 after purchasing an additional 870,612 shares during the last quarter. EVR Research LP acquired a new stake in shares of Red Cat during the fourth quarter worth about $1,705,000. Caitong International Asset Management Co. Ltd lifted its holdings in shares of Red Cat by 1,825.1% in the 4th quarter. Caitong International Asset Management Co. Ltd now owns 54,152 shares of the company's stock valued at $429,000 after purchasing an additional 51,339 shares during the last quarter. Vanguard Group Inc. lifted its holdings in shares of 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 last quarter. Finally, UBS Group AG lifted its holdings in shares of Red Cat by 37.7% in the 4th quarter. UBS Group AG now owns 580,099 shares of the company's stock valued at $4,600,000 after purchasing an additional 158,864 shares during the last quarter. 37.97% of the stock is owned by hedge funds and other institutional investors.

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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