On Tuesday, Dawson James changed its stance on Know Labs (NYSE:KNW), moving from a "Buy" to a "Neutral" rating. The investment firm has also withdrawn its 12-month price target for the company. The decision came after a reassessment of the company's potential success and financial models.
The firm's analyst stated that the adjustment in the rating reflects a new valuation model that projects out to the year 2030. This model incorporates a 30% probability of success for the company's projected revenues. This is in addition to a 30% risk rate that has been applied across various financial models including Free Cash Flow to the Firm (FCFF), discounted EPS (dEPS), and Sum-of-the-Parts (SOP). These models are then equally weighted, averaged, and rounded to the nearest whole number to arrive at a target valuation.
The downgrade indicates a shift in expectations regarding Know Labs' future performance. The firm's approach of applying a success probability factor suggests a cautious perspective on the company's revenue projections. The additional application of a risk rate to the company's financial assessments further emphasizes the firm's conservative outlook.
By removing the previous 12-month price target, Dawson James signals that it is taking a step back to observe Know Labs' progress without committing to a specific valuation expectation. This move could be interpreted as a wait-and-see approach in light of the uncertainties surrounding the company's financial forecasts.
The news of the downgrade could influence investor sentiment towards Know Labs, as market participants often take note of rating changes by investment firms. The removal of the price target may also contribute to a more guarded view of the company's stock in the near term.
InvestingPro Insights
In light of the recent rating change for Know Labs (NYSE:KNW) by Dawson James, it's worth examining some key metrics and insights provided by InvestingPro. The company's stock has experienced a significant return over the last week, with a 34.93% price total return, and an even more impressive 87.5% return over the last month. These figures are indicative of a strong short-term performance, aligning with the InvestingPro Tip that highlights a strong return over the last month. Additionally, the stock has achieved a 119.51% return over the last three months, which may interest investors looking for companies with strong momentum.
However, InvestingPro data shows that Know Labs is currently trading at a high Price / Book multiple of 59.86, which could be a point of concern for value-oriented investors. This is especially relevant considering the company's lack of profitability over the last twelve months, as reflected in the negative P/E Ratio of -1.41 and an adjusted P/E Ratio of -3.86 for the same period. The company also does not pay a dividend to shareholders, which may deter income-focused investors.
For those interested in further analysis and additional InvestingPro Tips, there are 5 more tips available which could provide deeper insights into Know Labs' financial health and stock potential. These tips can be accessed through InvestingPro's platform at https://www.investing.com/pro/KNW. To enhance your experience, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.