We continue to like the fundamentals and the business of DRX, while still acknowledging its negative momentum, small size, and cyclicality. Smaller names are often easier to be misunderstood by the markets, or to see inefficiencies in pricing more often. DRX has one analyst covering it (with a 'buy' rating and a price target of $23). Note, the price target can be lowered, particularly as the stock moves lower, but the analysts' price target was consistently 200% higher than its actual price for almost three years throughout 2019-2021.
We do not like the negative momentum of DRX, but recent newsflow has been positive, its earnings trend has been excellent, it trades at a cheap valuation of 5X forward earnings, and although there have been some concerns (delay of revenue, customer concentration, etc.), management has been executing well and growth is expected to be high. While we might prefer waiting until price has found more support (rather than day-to-day declines), we feel that the negative momentum will reverse eventually. Technically, there is a 'gap' at $9.80, and we might expect that once this is filled, to potentially see some price support and more sideways action. In the meantime, not much can be done until waiting for the selling to abate.