DNOW Should I Buy
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DNOW Inc is not a good buy for a beginner investor with a long-term strategy and $50,000-$100,000 available for investment. The stock is currently in a bearish trend, has significant legal and financial challenges, and lacks positive catalysts to support a recovery in the near term.
The stock is in a bearish trend with the MACD histogram at -0.117 and negatively contracting. RSI is at 24.186, indicating no clear signal but leaning toward oversold territory. Moving averages are bearish (SMA_200 > SMA_20 > SMA_5). Key support level is at 11.286, with resistance at 12.355. The stock is trading below its pivot level of 11.821.
Analysts maintain a Buy rating, with a lowered price target of $16, citing transitory ERP issues. Long-term growth potential exists due to cost synergies and cross-selling opportunities in energy and industrial equipment markets.
Significant legal challenges, including class action lawsuits and securities fraud investigations, are eroding investor confidence. Financial performance in Q4 2025 was poor, with a net income drop of -770.83% YoY and EPS down -568.18% YoY. Hedge funds are selling heavily, with a 4965.22% increase in selling activity. The stock has a 60% chance of declining further in the next week and month.
In Q4 2025, revenue increased by 67.95% YoY to $959 million. However, net income dropped to -$161 million, a decline of -770.83% YoY. EPS fell to -1.03, down -568.18% YoY, and gross margin dropped to 5.21, down -77.63% YoY. The financials indicate significant profitability challenges despite revenue growth.
Analysts maintain a Buy rating but have lowered the price target from $18 to $16 due to ERP issues. Another analyst initiated coverage with a Buy rating and a $19 price target, citing long-term growth potential. However, these ratings are overshadowed by the company's current challenges.
