Benzinga | Jun 18, 2021 12:21PM EDT

BofA Downgrades Curiositystream After Share Rally

While Curiositystream Inc's (NASDAQ:CURI) shares have rallied since mid-May, the company's long-term prospects have not fundamentally changed, according to BofA Securities.

The Curiositystream Analyst: Devin Brisco downgraded the rating for Curiositystream from Buy to Underperform, while keeping the price target unchanged at $14.

The Curiositystream Thesis: The stock's preliminary addition into the Russell 3000 index is a positive and the company is poised to benefit from 90% of its full-year revenue guidance being "committed and contractual," Brisco said in the downgrade note.

He added there were risks and headwinds that could "limit share price appreciation in the near/medium term."

The analyst enumerated these:

* Limited visibility into quarterly revenue trends till year-end and beyond

* High investment in efforts to drive top-line growth

* Gross margins are likely to contract "as pre-licensing agreements become a larger portion of revenue mix"

* Curiositystream is an early-stage company, with EBITDA missing Street expectations in each of its last three quarters as a public company

* Tough COVID-19 comps are expected in the second quarter, which is "likely lead to higher DTC (direct to consumer) churn"

* Peers are "accelerating content investments and consolidating"

CURI Price Action: Shares of Curiositystream had declined by 12.03% to $13.02 at the time of publication Friday.

(Photo by Phillip Goldsberry on Unsplash)