7 Crashing Stocks You Might Want to Collect
The recent selloff is hitting some individual names far worse than others. But the pros think these seven crashing stocks are worth a second look.
You're plenty aware by now that the major indexes are either flirting with or are actually in correction territory – a drop of 10% or more from a peak. But if you take a closer look around, you'll find individual equities that are much worse off. Indeed, the market is host to hundreds of crashing stocks at the moment.
Interestingly, though, some of these falling knives might finally be ripe for catching.
Many stocks down on their luck right now aren't just getting caught in the stock market's near-correction – their woes are chalked up to actionable news items.
Moderna (MRNA), for instance, has lost just more than half its value over the past three months, retreating amid slowing vaccination rates. Intuitive Surgical (ISRG) recently announced Street-beating fourth-quarter results, sure, but investors appear to be put off by COVID taking a toll on the company's robotic surgical procedures.
But as the old Warren Buffett yarn says, "Be fearful when others are greedy, and greedy when others are fearful." Well, fear is here – especially in a select group of stocks – so it very well might be time to tap your inner greed.
Here are seven crashing stocks that boast sterling reviews from Wall Street's analyst community, according to data provided by Koyfin.
True, these hardly look like the best stocks the market has to offer right now. Every one of these names have lost at least half of their value in just the past three months. However, in some cases, analysts have remained bullish on the way down, believing lower prices are merely added value for new money. And in others, analysts have only recently turned optimistic as a result of suddenly much-improved valuations.
Data is as of Jan. 26. All stocks on this list were off by at least 50% over the trailing three-month period as of the Monday, Jan. 24, close. Average price targets and analyst ratings provided by Koyfin. Stocks listed in reverse order of implied upside of Wall Street price targets.
NeoGenomics
- Industry: Life sciences tools & services
- Market value: $2.7 billion
- Three-month return: -51.8%
- Average analyst rating: Strong Buy
- Average analyst 12-month price target: $47.64 (110% implied upside)
Founded in 2001, NeoGenomics (NEO, $22.70) is a laboratory operator focused on cancer testing. But this isn't just another testing facility like LabCorp (LH). NEO's international services are used by hospitals and researchers alike. In fact, NeoGenomics drills down into DNA, RNA and cellular analysis for the purposes of diagnosing illnesses.
However, the most exciting development concerning this healthcare stock right now is its current reinvestment in their own RaDaR minimal residual disease (MRD) test. This test can track up to 48 tumor variants simply from a sample of the patient's blood, and the company is preparing to launch the product for clinical use.
"RaDaR investments should drive stronger revenue growth," says Needham analyst Mike Matson (Buy), specifying that RaDaR could contribute 1% to 5% in average annual top-line growth over the next few years.
"The MRD [total addressable market, or TAM] is very large, and we believe NEO is well-positioned to capture share," Matson adds. "NEO estimates that the U.S. MRD TAM is more than $15 billion based on an estimated 1.3 million-plus new cancer patients across the top 10 solid tumors."
That's why, despite a crashing stock that's off more than 50% over the past three months, Wall Street is largely still bullish on the lab company. Of 12 analysts surveyed by Koyfin, three rate it a Strong Buy and another eight call it a Buy, with the lone dissenter a Hold – good enough for a Strong Buy consensus rating from Koyfin.
Recent losses have knocked NEO shares below $23 per share; however, a $47.64 consensus price target implies that analysts still believe the stock can jump some 110% over the next 12 months or so.
Upwork
- Industry: Professional services
- Market value: $3.1 billion
- Three-month return: -57.5%
- Average analyst rating: Strong Buy
- Average analyst 12-month price target: $53.90 (117% implied upside)
Upwork (UPWK, $24.79) is an online marketplace where freelancers and clients across numerous industries can connect.
Obviously, this business model was tailor-made for COVID-19. The company's revenues jumped 24% year-over-year to $373.6 million during 2020, and shares more than tripled over excitement for the work-from-home play.
Sales haven't slowed – the company's revenues for the first nine months of 2021 rocked nearly 40% higher to $336.9 million – but Upwork's losses have swelled, too. UPWK's net loss over the same period was 42% deeper, to $33.7 million.
The industrial stock has lost much of its COVID gains of late as investors have cooled on unprofitable companies; UPWK is off more than 57% over the past three months. Yet Wall Street remains pretty warm on shares, with 10 Koyfin-surveyed analysts doling out four Strong Buys, five Buys and one Hold.
And despite Upwork's status among Wall Street's most rapidly crashing stocks, a roughly $54 price target implies shares will easily more than double over the next year or so.
Needham analyst Bernie McTernan (Buy) calls Upwork "a COVID beneficiary with staying power." The company still will be affected by regular hiring seasonality, which means UPWK could suffer a slowdown after the January and February hiring seasons. But Upwork's Enterprise suite for employers is continuing to grow, at 200-plus clients as of June 2021; McTernan expects another 600-1,200 clients added over the next three years.
"Given its early days in executing on this opportunity we find the risk reward attractive, our base case assumes a 19% (compound average growth rate) through 2025, although in our bull case we forecast UPWK nearly reaches its $1 billion revenue target a year early," McTernan says.
Sprout Social
- Industry: Software
- Market value: $3.3 billion
- Three-month return: -52.2%
- Average analyst rating: Strong Buy
- Average analyst 12-month price target: $142.00 (129% implied upside)
Sprout Social (SPT, $61.99) offers tools and cloud software to help businesses, nonprofits, government and educational institutions manage social media. The company is relatively new to the public markets, but a look at its performance – it executed its initial public offering (IPO) in December 2019 at $17 per share and is still up 365% since then – implies a warm welcome from Wall Street.
The full picture isn't so straightforward.
SPT shares actually gained as much as 770% from its first day of trading through September 2021, fueled by solid business growth. Total 2020 revenues were up 29% year-over-year to $132.9 million; organic sales growth was even better at 36%.
But the stock has retreated by 60% since then, including a 52% decline over the past three months. That decline came shortly after a promising third-quarter report in November – one that saw revenues rise 39% year-over-year to beat expectations. Largely, SPT has been busy shedding a sky-high valuation that saw shares trade at nearly 50 times revenues as recently as September.
Despite Sprout's place among crashing stocks, Wall Street is only getting more bullish on shares. Among 10 analysts surveyed by Koyfin, three rate SPT a Strong Buy and six call it a Buy; just one is on the sidelines at Hold. And at current prices, the pros see around 130% of potential upside.
After the Nov. 2 earnings call, William Blair analyst Arjun Bhatia (Outperform, equivalent of Buy) said "Sprout remains a top long-term holding as we see many more growth opportunities in the coming years." Stifel's J. Parker Lane (Buy) added that "SPT has positioned itself for sustainable growth."
More recently, Needham's Scott Berg (Buy) wrote that "Sprout Social's long-term growth opportunity and improving sales fundamentals should support a premium valuation versus the historical peer-group range."
Celsius Holdings
- Industry: Beverages
- Market value: $3.3 billion
- Three-month return: -52.9%
- Average analyst rating: Strong Buy
- Average analyst 12-month price target: $110.21 (148% implied upside)
Celsius Holdings (CELH, $44.49) is a fitness beverage company that sells its wares under the Celsius brand. And it has become quite popular with the hedge-fund crowd; Insider Monkey data shows that 15 hedge funds held CELH shares during the first quarter, and that number swelled to 22 in Q3.
They haven't been rewarded for their faith.
Shares have lost more than half their value over the past three months, and their return is closer to -63% since early November. It's likely this at least in part stems from the Celsius's announcement that the SEC had subpoenaed the company for an undisclosed inquiry, the topic of which remains unknown.
Stifel analyst Mark Astrachan (Buy) remained bullish on shares after the disclosure, however. "While the recently disclosed SEC investigation is a watchpoint," he says, "we view U.S. sales, accounting for nearly all share value, as reasonable and reflective of end-demand."
It's hard to criticize the company's results of late. Sales for the first nine months of 2021 came to $210 million, up 121% from the year-ago period. That includes a 158% year-over-year pop in third-quarter sales, to $94.9 million, making this one of the growthiest consumer staples stocks you'll find.
Wall Street expects big things from the company for full-year 2021, to be reported in March. Koyfin-surveyed analysts predict $91.9 million in earnings for the company's fourth quarter. If so, that would bring full-year 2021 earnings to $301.9 million – 131% higher from 2020.
The growth story is enough to keep most of the pros optimistic. Five of eight analysts surveyed by Koyfin say CELH is a Buy, and one more chimes in with a Strong Buy rating. The remaining two are Holds, adding up to an overall Strong Buy consensus rating.
1Life Healthcare
- Industry: Healthcare providers & services
- Market value: $1.9 billion
- Three-month return: -52.1%
- Average analyst rating: Strong Buy
- Average analyst 12-month price target: $28.86 (187% implied upside)
With approximately 549,000 members and 8,000 enterprise clients, 1Life Healthcare (ONEM, $10.04) is a leading membership-based primary care platform active in 13 different U.S. marketplaces, primarily under the One Medical brand. Its offerings include same-day/next-day in-person medical visits, telehealth appointments, drop-in lab services and more for a $199 annual membership fee.
Like the other crashing stocks on this list, ONEM isn't lacking for growth. The first nine months of 2021 saw 1Life's top line swell by 52% to $362 million, including a 49% boost in Q3, to $151 million.
The only thing growing faster, unfortunately, is 1Life's losses. For the first nine months of 2021, its red ink deepened by 115% to $148 million, and third-quarter losses were almost seven times bigger year-over-year, to $73 million.
Those losses seemed a lot more tolerable when the stock market and sentiment were bubbly, but ONEM has come crashing down amid a keener focus on quality now that market volatility has set in. Shares have lost 52% over the past three months.
But Wall Street sees opportunity – nearly 190% of it over the next 12 months, in fact. Sixteen analysts surveyed by Koyfin are overwhelmingly bullish, at five Strong Buys and eight Buys versus three Holds and no Sells or Strong Sells.
"We continue to view One Medical as a solid growth investment," William Blair analyst Ryan Daniels said following the company's Street-beating third-quarter earnings report. "The primary-care model is set for material disruption over the coming years."
"Management also noted that the Iora Health integration is progressing ahead of pace," adds Daniels, referring to 1Life's acquisition of the primary-care business catering to Medicare patients, which closed in September. "We continue to see strong long-term value to the combined offering – especially as One Medical can transition member lives from commercial insurance to at-risk Medicare Advantage (MA) lives (at a much higher annual revenue stream for the company) over time."
Remitly Global
- Industry: IT services
- Market value: $2.0 billion
- Three-month return: -62.9%
- Average analyst rating: Strong Buy
- Average analyst 12-month price target: $39.86 (209% implied upside)
Remitly Global (RELY, $12.92), which provides digital financial services for immigrants and their families, is another recent IPO that has only been trading publicly since September 2021. But unlike Sprout, which saw significant uptake following its offering, RELY has been on the decline for almost all of its publicly traded life.
Remitly has only had one earnings release since coming public, in November, and it was similar to what many of the other crashing stocks on this list revealed. Growth is healthy – third-quarter revenues surged 69% to $121.2 million – but net losses also widened, to $13 million from just $2.4 million a year earlier.
That report effectively triggered what has been a 63% downturn in the tech stock, and shares are off roughly 70% from their IPO price of $43.
Part of the underperformance can be chalked up to a selloff in payments services broadly. But management also believes the selloff "relates to noise around competitive dynamics surrounding concerns about pricing pressure and a perceived 'race to the bottom' and the role of cryptocurrency in remittances." Remitly management tells William Blair, however, that customers "value trust/brand over simply choosing the cheapest possible alternative."
That said, Remitly is still competitive on price. "Remitly's tech-forward services are generally more affordable and more transparent relative to legacy peers," says William Blair analyst Robert Napoli (Outperform).
And while cryptocurrency might present something of a threat to RELY's business, the company also sees crypto as a way to expand.
"Remitly inked a partnership with Novi to provide its cash pickup network for remittances sent via the Pax Dollar stablecoin," Napoli says. "Novi is a digital wallet from Meta (FB) that will enable blockchain-based money transfers. We understand that Remitly will earn a fee per transaction, and will benefit from low customer acquisition costs, which suggests attractive economics."
Despite the downturn in RELY shares, Wall Street's analysts still see hope for Remitly's business – and perhaps view current prices as a far more attractive entry point. The eight analysts covering Remitly who were surveyed by Koyfin are split on shares, with four calling them a Buy … and the other four calling them a Strong Buy.
Adaptive Biotechnologies
- Industry: Life sciences tools & services
- Market value: $2.2 billion
- Three-month return: -51.7%
- Average analyst rating: Strong Buy
- Average analyst 12-month price target: $52.00 (248% implied upside)
Adaptive Biotechnologies (ADPT, $14.95) is another recent IPO, going public in June 2019 – just a few months before the company's unique technologies were put to work fighting the COVID-19 pandemic. The commercial-stage company has an immune medicine platform that enables the diagnosis and treatment of various diseases, and its technologies can assist in confirming past COVID-19 infection.
ADPT doesn't have the unanimous bull camp that Remitly has, boasting four Buys and one Strong Buy against two Holds. But the pros have kept a lofty $52 price target on shares despite the stock's halving over the past three months, implying a whopping 250% or so in potential upside over the next year.
Brian Weinstein at William Blair (Outperform) is a believer.
"We have written over and over that Adaptive is the ultimate 'Dream the Dream' stock, and we understand that means it may not be for everyone," he says. "But if the team is even modestly successful with its ambitious plans, there remains significant value that should accrue to shareholders."
Those plans include upcoming T-detect tests for Lyme disease, COVID and more.
That has led to breakneck growth, with sales rocketing 94% higher during the first nine months of 2021. But here again, scale hasn't yet led to profitability, with Adaptive's red ink growing by 44% to $146 million.
Like these other crashing stocks, ADPT's high-growth but unprofitable business looked much better in the second half of 2020 and early 2021 than it has of late. Shares have actually been in a downslope since February 2021, though losses have accelerated more recently.
But, at least according to a bullish consensus and a sky-high 12-month price target, this reeling stock hasn't yet lost the confidence of Wall Street's pros.
