The stock market started the week with a strong move higher following a dip that was led by weakness in many former, high-flyers like Tesla (TSLA). From its February high to the recent low, the S&P 500 dropped 5%, while TSLA declined 25%.

These types of market conditions are good times to tune up our portfolios and make necessary adjustments. The POWR Ratings can help you identify the best stocks and avoid the worst ones. Now is the time to evaluate your portfolio and re-balance as necessary. Rebalancing in terms of risk as well as industry diversification is essential to your long-term success.

 
Below, we provide a look at three recently downgraded stocks: Cyclerion Therapeutics (CYCN), Sea Limited (SE), Bellus Health (BLU).
 
Cyclerion Therapeutics (CYCN)

CYCN is a biopharma company that uses sGC pharmacology to create treatments. CYCN treatments are designed to help those with orphan and other serious diseases. Examples of CYCN products include Praliciquat, Olinciguat, and IW-6463. The problem with CYCN is its products cannot get past the clinical stage of the pipeline.

CYCN has D grades in the Quality, Value, and Stability components of the POWR Ratings. If you are curious as to how CYCN fares in the remaining POWR Ratings components such as Sentiment, Momentum, and Growth, you can find out by clicking here.

Of the 487 publicly traded companies in the Biotech sector, CYCN is ranked 451. You can learn more about the Biotech sector by clicking here.

CYCN has a six-month price return of -38%. The stock’s one-year price return is -14.87%. There is no reason to invest in CYCN until it can surmount its disappointing track record of midstage failures and ultimately bring its products to market.

Sea Limited (SE)

SE has received considerable fanfare in recent months, largely because it provides services and products that are in demand. Most of these services and games are provided to Asian businesses and consumers, largely because SE is based in Singapore. SE is a tech superstar that specializes in information technology (IT) and video games. Though SE has had a spectacular couple of years, the stock appears to be overvalued. SE is currently trading just under $250, a mere $35 away from its 52-week high.

SE has D grades in the Growth, Quality, and Stability components of the POWR Ratings. If you would like to know how SE fares in the Momentum, Sentiment, and Value components, you can find out by clicking here. Of the 68 publicly traded companies in the Internet sector, SE is ranked a lowly 61st. Investors who would like to learn more about stocks in the Internet space can do so by clicking here.

The top analysts are bearish on SE, setting an average price target of $195.72, indicating the stock has the potential to slide nearly 17%. The fact that SE’s fate is largely dependent on a single mobile game certainly does not bode well for the company.

Bellus Health (BLU)

BLU is a worldwide health business that develops and commercializes products to improve human health and address unmet needs in the medical industry. BLU has D grades in the Quality and Stability components of the POWR Ratings. If you would like to learn how BLU fares in the remainder of the POWR Ratings components, click here to find out.

Of the 487 publicly traded companies in the Biotech space, BLU is ranked 440th. You can find out more about this industry by clicking here.

BLU had a disappointing -59% price return in 2020. The stock’s one-year return is -57%. BLU fell off a cliff about six months ago, dropping nearly 70% in a single day after announcing a trial of its BLU-5937 product to treat chronic coughing did not meet expectations. Though this drug had better results than a placebo, it might not make it to the market.

In short, there is no reason to invest in BLU until one of its drugs makes it through clinical trials and reaches the market.

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SE shares were trading at $256.98 per share on Wednesday morning, up $6.98 (+2.79%). Year-to-date, SE has gained 29.10%, versus a 3.43% rise in the benchmark S&P 500 index during the same period.