– By Alberto Abaterusso
Wall Street recommends buying shares of Ra Medical Systems Inc (RMED) and Baudax Bio Inc (NASDAQ:BXRX), which seems quite unexpected since these two stocks have performed poorly over the previous 52 weeks to March 9. With positive recommendations despite the stock falling in price, these two stocks have earned the nickname “falling knives”.
Investors buying falling knives try to catch them near their lows, as they aim to make impressive gains on their investments after an expected strong rebound in the share price. However, investors should be careful with this type of investment because trading falling knives involves remarkable risk. The sharp drop in the share price could be the signal for permanent emissions.
Ra Medical Systems Inc
Based in Carlsbad, California, Ra Medical Systems Inc is a commercial-stage medical developer of excimer lasers used by physicians to treat immune-mediated inflammatory vascular and dermatological diseases.
Shares of Ra Medical Systems Inc were trading at around $5.81 per share at the close on Tuesday after the share price fell 81.50% over the past 52 weeks.
The stock has a market capitalization of $18.73 million, a 52-week range of $4.25 to $36.50 and a 14-day relative strength index of 35, indicating that the stock is trading not so far from oversold levels.
GuruFocus assigned a rating of 3 out of 10 for the company’s financial strength rating. When it comes to company profitability, almost every ratio is performing poorly except for the three-year revenue growth rate of 3.5%, which is only slightly below the median of the industry by 5.2%.
The Piotroski F-Score of 2 out of 9 indicates a possibility of bankruptcy within the next two years, as the company’s financial situation is precarious.
On Wall Street, the stock has a Buy rating with a price target of $25 per share.
Baudax Bio Inc
Based in Malvern, Pennsylvania, Baudax Bio Inc is a biotechnology company that develops painkiller injections to treat moderate to severe physical discomfort for use in combination with nonsteroidal anti-inflammatory painkillers.
Shares of Baudax Bio Inc were trading at around $1.28 per unit at the close on Tuesday after falling 74% in the past 52 weeks.
The stock has a market cap of $89.78 million, a 52-week range of $0.97 to $5.57, and a 14-day relative strength index of 42, suggesting that the stock price stock is still far from oversold levels despite the fall.
GuruFocus assigned a rating of 2 out of 10 for the company’s financial strength rating and 1 out of 10 for its profitability rating.
A Piotroski F-Score of 3 out of 9 and an Altman Z-Score of -4.96 both indicate that there is a chance that the company will fail within the next two years.
On Wall Street, the stock has a median Buy rating with an average price target of $4.67 per share.
Disclosure: I have no position in any securities mentioned.
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This article first appeared on GuruFocus.