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Alberto Abaterusso
Alberto Abaterusso
Articles (2265) 

Analysts Suggest Buying These 2 Falling Knives

Their share prices are predicted to buonce back strongly

May 18, 2020 | About:

Wall Street sell-side analysts are positive about Ekso Bionics Holdings Inc (NASDAQ:EKSO) and Entasis Therapeutics Holdings Inc (NASDAQ:ETTX), even though their holdings have lost more than 59% over the past 52 weeks. These two "falling knives” have received buy recommendations rating on Wall Street.

Since the deep downturn in the share prices could be a sign of permanent problems, buying shares of falling knives implies a significant risk of loss. Investors can lower the risk by picking falling knives whose balance sheets have lower debt.

Thus, investors may want to consider the following falling knives, as they have moderate-to-low debt-to-equity ratios.

Ekso Bionics Holdings Inc

Shares of Ekso Bionics Holdings traded at a price of $3.13 per unit at close on Friday for a market cap of $18.29 million. The stock price fell by 89% over the past 52 weeks through May 15.

Currently, the share price represents an 83.3% discount to the middle point of the 52-week range of $2.25 to $35.30. The 14-day relative strength index of 42 indicates that the share price still trades far from oversold levels, despite the share price plunge.

Ekso Bionics Holdings is a Richmond, California-based designer and seller of exoskeletons for use in several industries worldwide, including healthcare and military. The company has a moderate debt-to-equity ratio of 0.61. The Altman Z-score of -14.78, which is less than 1.81, indicates that the company could be in distress zones. However, the Piotroski F-Score of 5 out of 9 suggests stability.

Wall Street sell-side analysts recommend a buy rating and forecast that the share price of Ekso Bionics Holdings Inc will bounce back up to a target price of $15 per share, representing a 379% upside from Friday’s closing price.

Entasis Therapeutics Holdings Inc

Shares of Entasis Therapeutics Holdings traded at a price of $2.46 per unit at close on May 15 for a market cap of $39.95 million. The stock price has fallen by almost 62% over the past 52 weeks through May 5.

Currently, the share price trades at a 38.5% discount to the middle point of the 52-week range of $1.75 to $9.25. The 14-day relative strength index of 41 tells us that the share price is still far from oversold levels, despite the sharp share price depreciation.

Entasis Therapeutics Holdings is a Waltham, Massachusetts-based clinical-stage biopharmaceutical developer of novel antibacterial products to treat serious multi-drug resistant gram-negative bacterial infections. Entasis Therapeutics Holdings’ low debt-to-equity ratio of 0.06 (compared to the industry median of 0.1) mitigates the Altman Z-Score of -6.13 (less than 1.81), which implies that the company could face bankruptcy.

Wall Street sell-side analysts forecast that the share price of Entasis Therapeutics Holdings will bounce back up to a target price of $6.25 per share, reflecting a 154% upside from Friday’s closing price.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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