Ontrak (OTRK - Free Report) is a Zacks Rank #5 (Strong Sell) and today the stock finds itself as the Bear of the Day. Let's take a look at why a stock that recently beat earnings and has a great chart could have the lowest Rank.
Ontrak, Inc. is an AI and telehealth enabled, virtualized outpatient healthcare treatment company. The company's Predict-Recommend-Engage(TM) platform predicts people whose chronic disease will improve with behavior change, recommends effective care pathways. Ontrak, Inc., formerly known as Catasys Inc., is based in United States.
Normally a stock with a Zacks Rank #5 (Strong Sell) will have an earnings miss in the most recent quarter. That is not the case here with OTRK posting a beat, but that beat was preceeded by three straight misses.
THe most recent quarter saw the company post a los of 24 cents when a loss of 28 cents was expected. That four cent beat translates into a positive earnings surprise of 14%.
The Zacks Rank is focused on the movement of earnings estimates. I see the estiamtes for the current quarter falling 2 cents. That isn't enough to send the stock to the lowest Zacks Rank but it doesn't help.
The full year numbers have slipped from a loss of 80 cents to a loss of 87 cents.
Keep in mind the recent quarter was beat of 4 cents, so this could be a case of pulling some earnings forward.
OTRK is running a loss so there is no PE or forward PE to lean on. What I do see is a lot of growth, with 124% topline growth in the most recent quarter. A price to sales multiple of 23x is awfully high, but we know that growth investors are willing to pay big multiples for solid growth and this name has it.
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