BEKE and WOLF Get Analyst Upgrades - Time to Buy?

: BEKE | KE Holdings Inc. ADR News, Ratings, and Charts

BEKE – Amid record rate hikes, recession fears are spreading like wildfire. Despite the rampant volatility, analysts have upgraded KE Holdings (BEKE) and Wolfspeed (WOLF). However, given their weak fundamentals, should you invest in them now? Keep reading….

The Fed’s aggressive rate hikes to tame the sky-high inflation have wreaked havoc across the market, and another 75 basis points hike is expected to be on the way this July. The IMF expects U.S. GDP to grow 2.9% in 2022, less than its 3.7% estimated earlier. Moreover, Goldman Sachs economists have projected unemployment rates to hit 3.7% by 2023.

Market volatility is rife, with benchmark indices expected to plummet further in 2022. The CBOE Volatility Index has gained 71.5% year to date, and investors must exercise caution before investing.

KE Holdings Inc. (BEKE) and Wolfspeed, Inc. (WOLF) were recently upgraded by analysts. However, we think it could be wise to avoid these stocks now, given their weak fundamentals.

KE Holdings Inc. (BEKE)

Headquartered in Beijing, the People’s Republic of China, BEKE and its subsidiaries operate an integrated online and offline platform for housing transactions and services in the People’s Republic of China. The company has three segments: Existing Home Transaction Services; New Home Transaction Services; and Emerging and Other Services. 

On June 23, 2022, HSBC analyst Max Liang upgraded BEKE from Hold to Buy with a price target of $20.80 from $13.70.

BEKE’s total net revenues came in at RMB12.55 billion ($1.98 billion) for the first quarter ended March 31, 2022, down 39.4% year-over-year. Its gross profit came in at RMB2.22 billion ($350.16 million), down 53.9% year-over-year.

Also, its net loss came in at RMB619.63 million ($97.74 million), compared to a net income of RMB1.06 billion ($157.96 million) in the previous period.

BEKE’s forward non-GAAP P/E of 415.25x is higher than the industry average of 29.95x. Its trailing-twelve-month P/CF of 72.76x is 400.1% higher than the industry average of 14.55x.

Analysts expect BEKE’s revenue to decline 20.7% year-over-year to $9.60 billion in 2022. Its EPS is estimated to fall 86.2% year-over-year to $0.04 in 2022. Over the past year, the stock has lost 63.1% to close the last trading session at $17.76.

BEKE’s POWR Ratings reflect its poor prospects. It has an overall F rating, equating to a Strong Sell in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has an F grade for Growth and a D grade for Value, Stability, and Quality. Click here to access the additional POWR Ratings for BEKE (Momentum and Sentiment). BEKE is ranked #40 out of 43 stocks in the D-rated Real Estate Services industry.

Wolfspeed, Inc. (WOLF)

WOLF provides silicon carbide and gallium nitride (GaN) materials, power devices, and radio frequency (RF) devices based on comprehensive bandgap semiconductor materials and silicon. The company serves customers in North America, Asia, and Europe.

On June 24, 2022, WOLF was upgraded by analysts at The Goldman Sachs Group to a Buy.

For the third quarter ended March 27, 2022, WOLF’s net revenue increased 36.9% year-over-year to $188 million. However, its operating loss came in at $62.30 million, compared to a loss of $61.40 million in the prior-year period. In addition, its total operating expenses came in at $126.30 million, up 19.8% year-over-year.

WOLF’s forward EV/S of 10.97x is 306.1% higher than the industry average of 2.70x. Its forward P/S of 11.01x compares with the industry average of 2.71x.

Analysts expect WOLF’s EPS to decrease 33.6% per annum for the next five years. Its EPS is estimated to remain negative in 2022. Over the past year, the stock has lost 36.2% to close the last trading session at $64.76.

WOLF’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D grade equating to Sell in our POWR Ratings system. It has an F grade for Quality and a D for Value, Stability, and Sentiment.

We also have graded WOLF for Growth and Momentum. Click here to access all the WOLF ratings. WOLF is ranked #92 out of 96 stocks in the Semiconductor & Wireless Chip industry.

BEKE shares were trading at $17.80 per share on Thursday afternoon, up $0.04 (+0.23%). Year-to-date, BEKE has declined -11.53%, versus a -19.38% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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