Wall Street issued positive recommendation ratings for Autolus Therapeutics plc (NASDAQ:AUTL) and Jianpu Technology Inc (NYSE:JT) even though their stocks plunged over the past year through Tuesday, Jan. 7, losing more than 59%.
Several investors who show interest in this type of stock, commonly called "falling knives," believe that they can make a considerable return after prices have bounced back.
A share price tumble could alternatively signal the beginning of major underlying financial issues, which can cause serious damage to the portfolio of an investor if the business goes bankrupt. This is a risk that investors can lower if they focus on falling knives with a moderate to low financial burden.
Shares of Autolus Therapeutics plc closed at a price of $13.00 per unit on Jan. 7 for a market capitalization of $584.3 million. The stock price fell 62% over the past 52 weeks through Jan. 7. Wall street analysts recommend a buy rating with an average target price of $31.75, reflecting a 144% upside.
The closing price on Tuesday was below the 200- and 50-day simple moving average lines, but still slightly above the 100-day SMA line. The 52-week range was $9.50 to $35.32.
The price-book ratio is 2.17 versus the industry median of 3.61 and the price-sales ratio is 177.95 versus the industry median of 10.53.
The 14-day relative strength index of 46 suggests the stock is still far from oversold levels.
The British biopharmaceutical developer of T cell therapies for cancer treatment has a debt--equity ratio of 0.1, which is very low and in line with the industry median. Further, an Altman Z-Score of 6.61 indicates that Autolus is safe from bankruptcy risk.
Shares of Jianpu Technology Inc closed at a price of $1.50 per unit on Tuesday for a market capitalization of $253.49 million. The stock price decreased 70% over the past 52 weeks through Jan. 7. Analysts from Wall Street recommend to hold shares of Jianpu and have set an average target price of 37.8 Chinese Yuan (approximately $5.45), which reflects a 263% upside.
The closing price on Tuesday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $1.36 to $7.97.
The price-book ratio is 1.46 versus the industry median of 0.95 and the price-sales ratio is 0.84 compared to the industry median of 2.12.
The 14-day relative strength index of 43 suggests the stock is not oversold yet, although the share price suffered a sharp deterioration.
The Beijing, China-based online credit services platform operator has a very low debt-equity ratio of 0.13, which is below the industry median of 1.3. The Altman Z-score of 2.48 suggests that the company is the grey zone but is not at risk of bankruptcy.
Disclosure: I have no positions in any securities mentioned.
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This article first appeared on GuruFocus.