Why Red Cat Stock Popped Today
Key Points
H.C. Wainwright analyst Amit Dayal initiated coverage of Red Cat stock with a buy rating this morning.
Dayal thinks the drone stock could double in a year.
Red Cat Holdings (NASDAQ: RCAT) stock jumped out of the bag for a 7.9% gain through 11:30 a.m. ET this morning.
You can thank the friendly analysts at H.C. Wainwright for that.
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H.C. Wainwright purrs over Red Cat
H.C. Wainwright analyst Amit Dayal initiated coverage of Red Cat stock with a buy rating and a $20 price target on the $10 stock this morning, as StreetInsider.com reports -- essentially predicting he expects the drone stock to double over the next 12 months.
Why does Dayal love Red Cat? Basically, because he thinks Red Cat is turning into a one-stop shop for all things American-drones.
Red Cat offers drones for each of the air, land, and sea domains, notes Dayal, manufactured through a series of subsidiaries that include Teal Drones, FlightWave Aerospace, Blue Ops, Apium Swarm Robotics, and, most recently, Quaze Technologies, which has given Red Cat the ability to wirelessly recharge its drones. The company's products are all American-made, insulating the company from risk created when the Federal Communications Commission banned import of foreign drones and critical drone parts last year.
How good is this news for Red Cat?
That FCC rule doesn't give Red Cat a drone monopoly -- indeed, it faces fierce competition from a slew of drone providers in the U.S. But it does help. Whether it will help enough to turn Red Cat profitable is what I'm more curious to see.
While Red Cat's sales are surging, the company has never earned a profit. Worse, no analysts polled by S&P Global Market Intelligence currently see any chance of Red Cat turning profitable as far out as anyone is making estimates (and in Red Cat's case, that's 2028).
It's hard to see the stock doubling with prospects like these.
Should you buy stock in Red Cat right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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