Unity, Walgreens and UiPath Stocks Expect January Recovery News ad

As 2024 approaches, tax loss selling is being implemented to harvest tax losses for institutional and individual investors. This is the process of selling losing positions to offset capital losses and offset capital gains in other stocks in the portfolio. This increases selling pressure on underperforming stocks. Investors typically wait 30 days to avoid the laundering rule and redeem shares. This results in an influx of the same stocks in January, which supports their prices. Many traders are poised to start losing stocks in December due to a potential rebound in January. Here are three underperforming stocks that could see a rebound in January as investors buy them back.

Unity Software: a game engine for video development that shot itself

Unity Software Inc. New York Stock Exchange: You owns two dominant video game development engines in the computer and technology sectors. Unity is a powerful game engine that renders graphics in video games. They translate textures, 3D and 2D models, environments and lighting into realistic images on screen. Game engines simulate physics to create stylistic and realistic movements and interactions within a game. Unity is known for its ease of use, cross-platform, and flexibility. It is popular among independent video game developers, mobile game developers, and virtual reality (VR) and augmented reality (AR) projects.

Shot yourself in the foot with performance fees.

On January 1, 2024, Unity implemented a highly unpopular “pay-per-runtime” pricing model whereby game developers were charged based on the number of game installs. The policy was met with unprecedented backlash, leading to a sharp drop in revenue and the eventual resignation of CEO John Ricciiello. By the time Unity canceled its failed model, its stock and reputation had already been damaged. On September 12, 2024, newly appointed Unity CEO Matt Bromberg apologized and changed subscription prices and annual revenue thresholds, returning to a more traditional cycle.

Turn shadows

Unity Software reported third-quarter 2024 loss per share of 31 cents, beating the consensus estimate by 8 cents. Revenue fell 18% YoY to $446.52 million, well above consensus estimates of $427.34 million. Create Solutions revenue rose 5% YoY to $132 million. The segment generates revenue from Unity Pro and Enterprise subscriptions , licensing, Unity Asset store, cloud services and professional services. Unity Grow Solutions segment revenue fell 5% year over year to $298 million. The segment focuses on monetization, analytics and advertising revenue.

Unity shares are up 26.63% for the month, but are still trading down 32.21% as of December 6, 2024.

Walgreens Boots Alliance: Emergency Restructuring to Avoid Ritual Assistance

Global retail operator of pharmacies and pharmacies Walgreens Boots Alliance Inc. NASDAQ: WBA Stocks fell to levels not seen in 28 years. Its aggressive mergers and acquisitions (M&A) and investment activities backfired when macroeconomic headwinds intensified and led to a decline in store sales. The once-thriving giant has implemented emergency restructuring plans under chief executive Tim Wentworth. The company has identified 1,200 stores, or 14% of its total stores, that will go down in the next three years, including 500 in 2025. This will immediately lead to increased profits.

FQ4 indicates that an improvement in the situation is materializing

Walgreens reported fourth-quarter fiscal 2024 earnings per share of 39 cents, beating the consensus estimate by 4 cents. Revenue grew 6% YoY to $37.5 billion, well ahead of consensus estimates of $2.25 billion. U.S. retail pharmacy grew 6.5% YoY, generating $29.5 billion. International posted growth by 3.2% YoY to $6 billion. In the US healthcare segment, revenue increased by 7.1% to $2.1 billion, business sales primary care VillageMD grew 7.2% YoY, and Shields grew 27.8% YoY. The company cut costs by $1 billion, reduced capital expenditures by $700 million, and benefited by $600 million from working capital initiatives.

Walgreens provides optimistic forecast for fiscal year 2025

Walgreens issued fiscal 2025 EPS growth guidance of $1.40 to $1.80, versus consensus estimates of $1.70. Revenue for the full fiscal year is expected to be between $147 billion and $151 billion, versus the consensus estimate of $147.74 billion.

Walgreens shares are trading down 67.22% as of December 6, 2024.

UiPath: Longer Sales Cycles and the Emergence of Artificial Intelligence Agents

UiPath Inc. NEW YORK: THE WAY is a leading robotic process automation (RPA) software company. They provide artificial intelligence-based software robots, “bots,” to automate repetitive manual tasks. There were high hopes that UiPath would become a major benefactor of the artificial intelligence boom, but so far they have not materialized. The company said macroeconomic weakness is causing clients to scrutinize deals, leading to longer sales cycles.

UiPath Moves Ahead with AI-Powered Process Automation

UiPath knows a lot about mining, process improvement and automation. The next logical step is to develop artificial intelligence agents for autonomous mining, improving and automating processes and workflows.

The company has received positive reviews for its new Agenic Automation & Agent Builder. The December preview has already attracted 1,000 customer sign-ups, with some customers calling it a potential paradigm shift. Instead of telling your bot what to do, a human worker can give the AI ​​agent a task, such as: “Please write a detailed report that includes detailed analysis, recommended actions, and justification for action.” The agent will be able to execute it autonomously. This could be a significant growth driver as they will be able to sell the product to over 10,800 customers and a community of over three million members.

There is growth, but it is not accelerating

UiPath reported third-quarter fiscal 2025 earnings per share of 11 cents, beating the consensus estimate by 4 cents. Revenue grew 8.8% YoY to $354.65 million, beating consensus estimates of $347.64 million. ARR rose 17% YoY to $1.607 billion after adding $56 million in net new ARR.

UiPath issued operating guidance for fourth-quarter fiscal 2025 revenue of $422 million to $427 million, up from $423.85 million, with ARR ranging from $1.669 billion to $1.674 billion.

UiPath CEO Daniel Dines commented, “Our customers’ response to the agent-based automation vision and roadmap we announced at FORWARD has energized and strengthened our leadership position in the AI-powered automation market.”

Dines said, “We believe UiPath provides a differentiated approach to agent automation that will expand our market opportunity by enabling customers to automate more complex and variable workflows to drive enterprise-wide AI transformation.”

UiPath shares are trading down 40.8% as of December 6, 2024.

Before you consider Unity Software, you should hear this.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Unity Software wasn’t on the list.

While Unity Software currently has a Hold rating among analysts, the top-rated analysts think these five stocks are Strong Buys.

View five stocks here