In this article, we will discuss the 10 Worst Performing Stocks to Buy on the Dip.
Capital markets demonstrated increased volatility starting in August 2024 and continuing in September 2024. That being said, strong rallies followed numerous negative performance days. Therefore, these movements have helped keep the stocks moving in an overall positive direction. Market experts believe this is a great time to invest in equities. For those having money in cash, the current juncture provides an opportunity to put capital to work in the longer-term assets.
Wall Street experts believe that the markets are concerned about the signs of economic softness. The experts continue to assess how quickly the US Fed will respond to it through the adjustments in the interest rate policy. With the US Fed starting to cut the key policy rates, global money managers continue to figure out whether it is too late, or will the actions support the broader economy and continued corporate earnings growth. The economic environment has now been changed, with inflation falling and the job market appearing to be modestly weaker. The market experts believe that equity market leadership saw a drastic shift, with tech stocks seeing a modest, third-quarter retreat after leading the market’s surge since late 2022.
Q3 Market Rotation and Market Drivers Moving Forward
As per the US Bank, a subsidiary of the U.S. Bancorp, there was a major Q3 shift that took place in the S&P 500. The bank highlighted that the once-dominant technology sectors (IT and communication services), which outpaced other sectors in 2023 and in H1 2024, gave up some gains. As a result of an easing interest rate environment, the investors decided to shift their focus. The US Bank went on to highlight that the biggest Q3 beneficiaries were real estate and utility stocks.
Moving forward, inflation, labor market trends, business spending patterns, corporate earnings, and stock valuations are likely to dominate the broader US equity market. The US Bank mentioned that Q2 2024 earnings saw an increase of over 10% as compared to Q2 2023 earnings. Despite the challenges related to a slowing economy, the earnings expectations have not been changed. Notably, the markets continue to expect continued earnings growth through the remainder of 2024 and 2025. As per the earnings insight report by FactSet (dated September 20, 2024), for Q3 2024, the estimated (YoY) earnings growth rate for the S&P 500 stood at 4.6%. While analysts are expecting YoY earnings growth of 10.0% for CY 2024, they expect ~15.2% for CY 2025.
Amidst Volatility, Markets Will Experience Swift Recovery
The initial seven months of 2024 saw the broader market move forward, with only modest interruption or volatility. After a tough August start, the stocks recovered quickly, and the broader markets again ended the month in positive territory, only to start September on a volatile note. Most of the volatility stemmed from the expectations of a series of Fed rate cuts. This can be considered as the big driver for the broader market, mainly when the economic focus pivots to labor market conditions instead of inflation threats.
Amidst the broad-based volatility, market experts opine that large stocks were able to retain their advantage.
In July, there was an outperformance by the small stocks as the Russell 2000 Small-Cap Index gained over ~10%, compared to a ~1% gain for the large-cap S&P 500. This was mainly because of the prospects of Fed rate cuts, which led to the short-term shift into smaller stocks. However, the rotation to smaller-cap stocks was again sidetracked in August, with the S&P 500 again outperforming mid-cap and small-cap stocks. Over the past month, the Russell 2000 Index saw an increase of ~0.3%, while the S&P 500 Index went up by over ~2%. This demonstrates that, amidst volatility and macro-level changes, well-established stocks should be favored as they provide reasonably good entry points.
With this in mind, let us look at the 10 Worst Performing Stocks to Buy on the Dip.
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Our methodology
To list the 10 Worst Performing Stocks to Buy on the Dip, we used a Finviz screener and online rankings to filter out the stocks that have fallen significantly on a YTD basis. Finally, we ranked the stocks according to their potential upside, as of September 27. We have also included the number of hedge fund holders for each stock, as of Q2 2024, which we sourced from our database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10) Rivian Automotive, Inc. (NASDAQ:RIVN)
Average Upside Potential: 46.55%
% Fall on a YTD Basis: ~45%
Number of Hedge Fund Holdings: 37
Rivian Automotive, Inc. (NASDAQ:RIVN) designs, develops, manufactures, and sells electric vehicles and accessories.
The company’s stock has seen a decline of ~45% on a YTD basis as a result of several challenges. There are concerns regarding Rivian Automotive, Inc. (NASDAQ:RIVN)’s ability to generate positive free cash flow over the upcoming few years. The continuous cash burn and elevated expenses of the company continue to weigh on the investors’ sentiments. Moreover, the EV market, mainly for the lower price segments, remains intensely competitive. The investors believe that the company’s spending on technology associated with AV/ADAS is expected to be higher than expected, which can further impact Rivian Automotive, Inc. (NASDAQ:RIVN)’s valuation. Recently, the company also faced supplier shortages, impacting the production of its second-generation vehicles.
On the other hand, the market experts opine that Rivian Automotive, Inc. (NASDAQ:RIVN)’s stock is at a critical juncture, and provides a strong value opportunity. They believe that the company continues to focus on advancements in production, with strategic partnerships expected to lead the growth trajectory moving forward. The market is extremely optimistic about its JV with Volkswagen. This JV is expected to result in significant cost savings, operating efficiencies, and future revenues, which should aid its stock price in the upcoming quarters.
Rivian Automotive, Inc. (NASDAQ:RIVN) continues to ramp up production for its second-generation R1 vehicles and has been developing the R2 platform. Its focus is also on vertical integration and cost reductions with the help of material and supplier cost savings. Moving forward, Rivian Automotive, Inc. (NASDAQ:RIVN) should see a progression in gross profit via improved variable cost, fixed cost leverage, and a rise in revenue per delivery unit.
Piper Sandler reissued an “Overweight” rating on the shares of Rivian Automotive, Inc. (NASDAQ:RIVN), setting a price target of $21.00 on 26th June. Meridian Funds, managed by ArrowMark Partners, released its second quarter 2024 investor letter. Here is what the fund said:
“Rivian Automotive, Inc. (NASDAQ:RIVN) is a US-based electric vehicle manufacturer focused on the design, development, and production of electric adventure vehicles, pickup trucks, and commercial delivery vans. We own Rivian because we believe the company is a future leader in the growing electric vehicle market with a strong brand, compelling products, and a vertically integrated business model. During the quarter, Rivian’s stock price was driven by its progress on cost reduction initiatives and management’s stated confidence in achieving positive gross margins by the end of 2024. The recent announcement of a joint venture with Volkswagen, involving up to $5 billion in investment, also significantly boosted Rivian’s financing outlook and validated its technology. We trimmed our position in Rivian given the strong performance in the quarter.”
9) Moderna, Inc. (NASDAQ:MRNA)
Average Upside Potential: 50.16%
% Fall on a YTD Basis: ~43%
Number of Hedge Fund Holdings: 39
Moderna, Inc. (NASDAQ:MRNA) is a biotechnology company, which is engaged in discovering, developing, and commercializing messenger RNA therapeutics and vaccines for the treatment of infectious diseases, immuno-oncology, rare diseases, autoimmune, and cardiovascular diseases.
In the recent past, the stock price of the company was significantly impacted due to challenges and setbacks. Recently, Moderna, Inc. (NASDAQ:MRNA)’s stock was pressured by the news that the company plans to reduce its Research and Development (R&D) budget by ~20% over the upcoming 3 years. This was because of the low sales projections and poor vaccine sales. Moderna, Inc. (NASDAQ:MRNA) plans to discontinue 5 research and development programs in a bid to slash $1.1 billion from its annual R&D budget by 2027. Apart from providing a light sales guidance for 2025, the company, on an operational basis, is now targeting 2028 to achieve a break-even.
Moderna, Inc. (NASDAQ:MRNA)’s stock price was hammered as a result of the short-term headwinds. These include COVID-19 vaccination rates, which are likely to continue to decline, and RSV taking some time to ramp. Out of the 10 new products expected by 2027, Moderna, Inc. (NASDAQ:MRNA) is expecting to file for approval of 3 this year. These include the new Covid/flu vaccine, the company’s next-gen Covid vaccine, and the RSV vaccine in high-risk adults who are aged between 18 to 59.
That being said, Wall Street believes that Moderna, Inc. (NASDAQ:MRNA)’s stock is well-placed to take off. The street is optimistic about the roll-out of its RSV vaccine, mRESVIA, in the US. Also, the company received a positive opinion from the European Medicine Agency. The company’s remaining product pipeline also exhibited progress, with positive Phase III results for the flu and COVID-19 combo vaccine. Its performance is expected to be aided by the recent alliances announced with BARDA and Mitsubishi Tanabe Pharma.
While Moderna, Inc. (NASDAQ: MRNA) expects a sales increase of 40% – 50% in Q3 2024, it targets to end 2024 with ~$9 billion in cash and return to growth in 2025. The company remains confident in the contribution from the EU market to its sales in 2025 and 2026. Moderna, Inc. (NASDAQ:MRNA) continues to respond to the dynamic vaccine market with the help of new product roll-outs and partnerships.
As per Wall Street analysts, the shares of the company have an average target price of $104.53.
8) Snowflake Inc. (NYSE:SNOW)
Average Upside Potential: 51.12%
% Fall on a YTD Basis: ~40.5%
Number of Hedge Fund Holdings: 69
Snowflake Inc. (NYSE:SNOW) offers a cloud-based data platform for various organizations in the US and internationally.
Over the past few months, the stock price of Snowflake Inc. (NYSE:SNOW) has witnessed a significant decline as a result of the challenges the company has been facing. The market experts believe that the acquisition of new business continues to be less vigorous. Also, a data breach, that took place in May 2024, had a significant negative impact on some of the company’s partnerships. Moreover, increased competitive pressures can also impact its long-term growth prospects.
The significant decline in Snowflake Inc. (NYSE:SNOW)’s stock price reflects broader industry challenges and investor sentiment, as the company continues to face challenges related to the shifting economic landscape. The market players might have concerns related to the translation of new features and Al investments to the consumption revenue.
However, Wall Street analysts remain optimistic about the growth prospects of Snowflake Inc. (NYSE:SNOW) because of favorable demand conditions for the DBMS software. The company’s base of customers’ workloads will mature, and together with significant switching costs, this might result in less volatile consumption revenue trends. Snowflake Inc. (NYSE:SNOW) should be aided by the sectoral tailwinds. The demand stems from the workloads pivoting to cloud environments. As a result, the company will be able to accumulate a larger share of the overall database management system market.
Snowflake Inc. (NYSE:SNOW)’s focus on driving consumption via sales force compensation should have a positive impact in 2026. Its competitive edge in analytics, data engineering, and Al should drive topline growth moving forward. The company appears to be well-placed to support enterprises leveraging data to build newer-generation Al applications.
As per Wall Street, the shares of Snowflake Inc. (NYSE:SNOW) have an average price target of $169.25. Insider Monkey’s Q2 2024 data revealed that the company was in the portfolio of 69 hedge funds, out of 912 hedge tracked by Insider Monkey.
Baron Funds, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:
“Snowflake Inc. (NYSE:SNOW) is a leading cloud data platform that is predominantly used for data analytics. The stock declined 16.4% as investors evaluated the impact of a recently announced CEO transition, an investment cycle driven by spend on AI, a cybersecurity incident, and a rapidly changing competitive environment. With GenAI capturing a larger portion of the public discourse, Snowflake’s positioning in the future data stack is under scrutiny by both investors and customers. We believe Sridhar Ramaswamy, the newly appointed CEO, can help the business more efficiently transition toward an AI-first world. While Databricks and other key competitors are presenting strong results, we believe Snowflake’s brand, existing customer base, and accelerating product innovation should allow it to continue to capture share in a relatively large and strategic market. Management continues to describe strong demand trends for its core data analytics, which is also demonstrated by the relatively healthy expansion rates among existing customers while new go-to-market initiatives can help grow the customer base further. Longer term, we remain excited about the Snowflake’s strategic opportunity as the data platform for its customers.”
7) Celsius Holdings, Inc. (NASDAQ:CELH)
Average Upside Potential: 53.70%
% Fall on a YTD Basis: ~44%
Number of Hedge Fund Holdings: 27
Celsius Holdings, Inc. (NASDAQ:CELH) is engaged in developing, processing, marketing, distributing, and selling functional energy drinks and liquid supplements.
The stock price of Celsius Holdings, Inc. (NASDAQ:CELH) saw significant selling pressure on the YTD basis as a result of the competitive beverage sector and a shift in consumer trends. The company has been subject to a challenging environment because of an expected increase in promotional discounting and a slowdown in the US retail trends. Collectively, these factors might impact the company’s topline numbers for 2024 and 2025, resulting in a cautious outlook. Moreover, the company continues to challenges related to the financial adjustments as a result of inventory reductions by PepsiCo. This might weigh over the sales and EBITDA for the upcoming quarters.
On the other hand, Wall Street experts opine that the current juncture of Celsius Holdings, Inc. (NASDAQ:CELH)’s stock offers a strong value-buy opportunity. They believe that Celsius Holdings, Inc. (NASDAQ:CELH) should be able to maintain its position as the category growth leader and expand its shelf presence. The company’s strong partnership with PepsiCo and a strategy to execute growth-driving programs should continue to act as tailwinds, which might get reflected in the stock price moving forward.
Celsius Holdings, Inc. (NASDAQ:CELH) plans to invest in growth and monitor raw material costs, and it is aiming for gross margins in the high 40s – 50s range in H2 2024. The company has also announced new flavours and market expansions, which include the UK, Ireland, Australia, New Zealand, and France. Celsius Holdings, Inc. (NASDAQ:CELH) targets to stabilize and grow the market share via strategic investments and promotions.
As per Wall Street, the shares of Celsius Holdings, Inc. (NASDAQ:CELH) have an average price target of $49.31. As per Insider Monkey’s 2Q 2024, 27 hedge funds (out of 912 tracked by Insider Monkey) held stakes in the company.
Fred Alger Management, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:
“Celsius Holdings, Inc. (NASDAQ:CELH) engages in the development, marketing, sale, and distribution of functional drinks and liquid supplements. It also offers post-workout functional energy drinks and protein bars. During the quarter, shares detracted from performance after the company reported fiscal first quarter revenues below analyst estimates. The revenue shortfall was attributed to ongoing inventory management challenges with PepsiCo, which decelerated year-over-year revenue growth from over 100% to approximately 37%. Despite the near-term growth slowdown, we believe Celsius remains well positioned to potentially capture market share within the large energy and soft drink industry over the long-term.”
6) Rambus Inc. (NASDAQ:RMBS)
Average Upside Potential: 55.51%
% Fall on a YTD Basis: ~35%
Number of Hedge Fund Holdings: 21
Rambus Inc. (NASDAQ:RMBS) offers semiconductor products in the US, South Korea, Singapore, and internationally.
The stock of Rambus Inc. (NASDAQ:RMBS) saw a significant decline of ~35% on the YTD basis as a result of shifting dynamics of the semiconductor industry. Also, the company’s shares were impacted due to lower spending on traditional servers, which is being replaced by AI spending. Rambus Inc. (NASDAQ:RMBS) has been facing several challenges. The transition from DDR4 to DDR5 will need careful production ramps. Also, amidst increasing competition, the company has to navigate some price erosion. The rollout of new products has a risk of slower-than-anticipated adoption and qualification processes. This might impact its short-term revenue growth.
On the other hand, Wall Street experts believe that the stock of Rambus Inc. (NASDAQ:RMBS) is well-placed to take off amidst the optimism around the company’s long-term prospects in the data center and AI markets. Since Rambus Inc. (NASDAQ:RMBS) continues to make strategic investments in new products and technologies for data centers and client devices, the market expects that the company is well-placed in the data center and AI markets with its new DDR5 server PMICs and Client Clock driver chip.
Rambus Inc. (NASDAQ:RMBS) expects that Q3 2024 should bring in continued product revenue growth. The company continues to leverage its leadership in DDR5 technology to fuel growth in the data center and AI sectors and has maintained its focus on RCD generations, artificial intelligence, power, performance, and security in data centers and client spaces.
Rosenblatt Securities reaffirmed a “Buy” rating on the shares of Rambus Inc. (NASDAQ:RMBS), setting a $85.00 price target on 10th September.
Chartwell Investment Partners, LLC, an affiliate of Carillon Tower Advisers, Inc., released the first quarter 2024 investor letter. Here is what the fund said:
“Rambus Inc. (NASDAQ:RMBS) shares lagged as the company disappointed investors with weak guidance for the first quarter of 2024, due to lower product revenues for the semiconductors it makes. Spending on traditional servers has been lower, replaced by AI spending, which is having a negative impact on Rambus.”
5) Mobileye Global Inc. (NASDAQ:MBLY)
Average Upside Potential: 57.12%
% Fall on a YTD Basis: ~65%
Number of Hedge Fund Holdings: 28
Mobileye Global Inc. (NASDAQ:MBLY) is engaged in developing and deploying advanced driver assistance systems (ADAS) and autonomous driving technologies and solutions worldwide.
Several factors have impacted the stock price of Mobileye Global Inc. (NASDAQ:MBLY), with investors’ confidence getting hampered due to the weaker-than-expected outlook for H2 2024 and 3 consecutive reductions in the financial guidance. Investors have become cautious, as the broader technology sector continues to face headwinds, resulting in the revaluation of growth prospects amidst heightened volatility and economic uncertainty. There are concerns regarding Mobileye Global Inc. (NASDAQ:MBLY)’s revenue and profit forecasts as a result of volatile demand for the company’s driver-assistance chips in China. Also, volatility in China impacted the SuperVision projections for 2024. The company has also highlighted the lower adoption rates for lower-level ADAS, attributable to factors like inventory residuals.
That being said, Wall Street analysts and market experts continue to remain optimistic about the company’s future growth prospects. They believe that the growth momentum in EyeQ and SuperVision volumes should continue and that the collaboration with Zeekr on next-generation vehicles should help Mobileye Global Inc. (NASDAQ:MBLY) in its growth journey. Despite the near-term volume challenges in China, the company is optimistic regarding the long-term prospects in the region. Also, the expected recovery of market share with the help of localization efforts and lower-cost solutions should aid Mobileye Global Inc. (NASDAQ:MBLY).
The company continues to prepare for major design wins in SuperVision and Chauffeur by year-end 2024 and targets to be a market leader in these areas. The ramp-up for entry-level ADAS offerings should start in H2 2026 and early 2027.
Analysts at Evercore ISI reiterated an “Outperform” rating, giving a price target of $35.00 on the shares of Mobileye Global Inc. (NASDAQ:MBLY) on 26th August. Out of 912 hedge funds tracked by Insider Monkey at the end of Q2 2024, 28 hedge funds reported owning stakes in the company.
Baron Funds, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“We also modestly increased our positions in The Trade Desk and Mobileye Global Inc. (NASDAQ:MBLY). The assisted and autonomous driving solution provider, Mobileye, experienced significant stock price volatility as a result of reporting weak quarterly results on the back of an inventory build-up, which led the company to reduce near-term shipments materially, resetting expectations for 2024. Despite the near-term cyclical correction, we don’t believe the issues are structural, and we are more focused on the continued adoption of Mobileye’s advanced programs such as Supervision, which would increasingly become the key growth driver for the business.”
4) StoneCo Ltd. (NASDAQ:STNE)
Average Upside Potential: 62.00%
% Fall on a YTD Basis: ~35%
Number of Hedge Fund Holdings: 35
StoneCo Ltd. (NASDAQ:STNE) offers financial technology and software solutions to merchants and integrated partners to conduct electronic commerce in Brazil.
On the YTD basis, the company’s stock saw a significant decline as a result of concerns regarding market saturation in the Brazilian payments industry. With the expected slowdown in Total Payment Volume (TPV) growth, it seems that the investors are concerned about the growth prospects of StoneCo Ltd. (NASDAQ:STNE). Also, expected price compression and a decline in operating leverage have impacted the company’s stock price in the recent past. StoneCo Ltd. (NASDAQ:STNE) has been facing challenges in the MSMB Card TPV amidst a competitive environment.
On the other hand, market experts believe that StoneCo Ltd. (NASDAQ:STNE)’s stock is poised for recovery as a result of an increase in its client base in the payments sector. In Q2 2024, the company saw substantial growth in the banking client base and client deposits. It continues to invest in sales to capture the SMB market. Moving forward, its business prospects are expected to be aided by the focus on cross-selling and improving software business initiatives, which should ultimately be reflected in the stock price.
While StoneCo Ltd. (NASDAQ:STNE) continues to see the potential for market consolidation and targets to maximize value from its assets, it remains optimistic about the credit portfolio’s performance and anticipates non-linear growth in disbursements. With the central bank’s roadmap for PIX NFC and the benefits of open banking, StoneCo Ltd. (NASDAQ:STNE) should continue its growth trajectory by broadening its credit offerings.
UBS Group upped its target price on shares of StoneCo Ltd. (NASDAQ:STNE) from $17.00 to $18.00, giving a “Buy” rating on 29th August.
Investment management company Ave Maria recently released its fourth quarter 2023 investor letter. Here is what the fund said:
“StoneCo Ltd. (NASDAQ:STNE) provides solutions that enable merchants and integrated partners to conduct electronic commerce seamlessly across in-store, online, and mobile channels in Brazil. StoneCo has faced near-term operational challenges because of the pandemic and high levels of inflation in Brazil. The company appears to be moving past these challenges and it appears that the successful integration of the newly acquired software business with its payments business will drive substantial shareholder value longer term.”
3) Symbotic Inc. (NASDAQ:SYM)
Average Upside Potential: 64.58%
% Fall on a YTD Basis: ~48%
Number of Hedge Fund Holdings: 29
Symbotic Inc. (NASDAQ:SYM) is an automation technology company, which is engaged in developing technologies to improve operating efficiencies in modern warehouses.
Symbotic Inc. (NASDAQ:SYM)’s stock saw a decline of ~48% on the YTD basis as a result of the industry-wide challenges it is exposed to. Moreover, the company continues to face margin pressures as a result of short-term revenue slowdowns because of construction delays and increased labor costs. Also, the company saw a reduction in cash balance because of funding GreenBox and other unrelated expenses. The investors believe that the longer construction schedules and higher implementation costs are some of the reasons for the increased expenses.
On the other hand, market experts opine that Symbotic Inc. (NASDAQ:SYM)’s stock is well-placed for a revival as a result of the plans to internalize some operations to improve margins. The company focuses on in-sourcing its Engineering Procurement Construction (EPC) process in a bid to slash costs and enhance its system integration control. Symbotic Inc. (NASDAQ:SYM) remains optimistic about reaccelerating revenue growth in Q1 2025.
The company has locked in steel prices and is expecting a positive future impact on margins. The market experts are significantly optimistic about Symbotic Inc. (NASDAQ:SYM)’s technology, which not only reduces labor and inventory costs but also supports an unlimited number of customer SKUs. This enhances efficiency and flexibility.
Analysts at Cantor Fitzgerald reaffirmed an “Overweight” rating on the shares of Symbotic Inc. (NASDAQ:SYM), setting a price target of $60.00 on 30th July. As per Insider Monkey’s Q2 2024 data, the company was in the portfolios of 29 hedge funds.
2) Sasol Limited (NYSE:SSL)
Average Upside Potential: 67.63%
% Fall on a YTD Basis: ~32%
Number of Hedge Fund Holdings: 11
Sasol Limited (NYSE:SSL) operates as a chemical and energy company in South Africa and internationally.
Sasol Limited (NYSE:SSL)’s stock witnessed a significant decline in the recent past as a result of a challenging macro environment, stemming from lower oil prices and weaker demand. These measures have impacted its cash generation and profitability. The downstream units in the Chems Americas segment have been witnessing demand below expectations. Also, the gas depletion in Southern Africa continues to pose a supply challenge for Sasol Limited (NYSE:SSL). The company’s stock was pressured because of logistic challenges, which impacted the Synfuels product mix.
On the other hand, market experts and Wall Street believe that Sasol Limited (NYSE:SSL)’s stock is well-positioned for a revival as a result of increased production and sales volumes. While the focus is on operational efficiency, cost and capital management, and portfolio optimization, Sasol Limited (NYSE:SSL) highlighted that its initiatives to improve mining productivity, operational stability, and asset utilization remain in place.
The company achieved ZAR16 billion in EBITDA enhancements from the Sasol 2.0 transformation program and continues to target an additional ZAR2-4 billion in FY 2025. Sasol Limited (NYSE:SSL) continues to explore renewable energy projects and LNG supply options. Over the medium term, the company has kept its focus on maintaining performance while scaling transformation opportunities. Its stock price growth should be aided by its long-term goals, which include optimizing and transforming the portfolio with a clear focus on sustainability.
As per Insider Monkey’s Q2 2024 data of 912 hedge funds, 11 hedge funds reported owning stakes in Sasol Limited (NYSE:SSL).
1) Immunovant, Inc. (NASDAQ:IMVT)
Average Upside Potential: 73.09%
% Fall on a YTD Basis: ~32%
Number of Hedge Fund Holdings: 41
Immunovant, Inc. (NASDAQ:IMVT) is a clinical-stage biopharmaceutical company, which is engaged in developing monoclonal antibodies for the treatment of autoimmune diseases. The company remains focused on autoimmune disorders targeting the FcRn mechanism of action.
In the recent past, Immunovant, Inc. (NASDAQ:IMVT)’s stock price was significantly impacted as a result of several concerns. One concern that impacted the investors’ confidence the most was the competitor argenx SE’s failure in pemphigus vulgaris. This has raised questions about the addressable opportunity for the FcRn class. These factors, together with the relatively significant cash burn, have impacted the company’s stock price.
On the other hand, Wall Street believes that Immunovant, Inc. (NASDAQ:IMVT) is well-placed for long-term growth as a result of its strategic growth plans. The company shifted its focus to IMVT-1402 as its lead drug candidate. The market experts believe that this is a strategic growth decision because of the drug’s potential to be best-in-class. IMVT-1402, which is an anti-FcRn candidate, should start 4-5 potentially registrational trials in the upcoming fiscal year.
Recently, Immunovant, Inc. (NASDAQ:IMVT) reported positive outcomes from its Phase 2a trial of batoclimab for the treatment of Graves’ Disease (GD). Notably, the market players are optimistic about the company’s development plans for Graves’ disease, which is a large commercial unmet need.
HC Wainwright reissued a “Buy” rating on the shares of Immunovant, Inc. (NASDAQ:IMVT), issuing a price objective of $51.00 on 10th September.
As per Insider Monkey’s Q2 2024 data, 41 hedge funds were long Immunovant, Inc. (NASDAQ:IMVT). Baron Funds, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“Somewhat offsetting the above was adverse stock selection in biotechnology and health care supplies coupled with cash exposure amid favorable market conditions. Weakness in biotechnology was mainly due to disappointing performance from Rocket Pharmaceuticals, Inc. and Immunovant, Inc. (NASDAQ:IMVT), whose shares fell double digits in the period. Immunovant is focused on autoimmune disorders targeting the FcRn mechanism of action. A host of concerns weighed on Immunovant’s stock price, the most critical of which was competitor argenx SE’s failure in pemphigus vulgaris, which has raised questions about the addressable opportunity for the FcRn class. Overall, we continue to believe FcRn will command billions in revenue and that Immunovant has one of the two competitive offerings in the space. We are most optimistic about Immunovant’s development plans in Graves’ disease, a large commercial unmet need in which they currently have no competition.”
While we acknowledge the potential of IMVT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than IMVT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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