Arena Pharmaceuticals, Inc. (ARNA) Stock: A Good Pick In The Biotechnology Sector?

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Arena Pharmaceuticals, Inc. (ARNA) is making a move down in the market today. The company, one that is focused on the biotechnology space, is currently trading at $56.18 after falling -7.77% so far in today’s session. In terms of biotechnology stocks, there are a number of factors that have the ability to lead to price movement in the market. News tends to be one of the biggest reasons for the movement. Here are the recent trending headlines associated with ARNA:

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Aug-08-19 04:47PM Edited Transcript of ARNA earnings conference call or presentation 7-Aug-19 8:30pm GMT
04:08PM This Biotech Crashed On ‘Erroneous’ Report Plus 2 Stocks That Diverged
10:34AM Arena Pharmaceuticals’ (ARNA) Q2 Loss Widens, Revenues Meet
04:23AM Arena Pharmaceuticals Inc (ARNA) Q2 2019 Earnings Call Transcript
Aug-07-19 04:01PM Arena Reports Second Quarter Financial Results with Strong Liquidity Position, and Initiation of Etrasimod ELEVATE UC 52 and Olorinab CAPTIVATE Trials

However, any time investors are making a decision to invest, investors should take a look at far more than news, this is especially the case in the generally speculative biotech industry. Here’s what’s happing when it comes to Arena Pharmaceuticals, Inc..

Recent Moves From ARNA

Although a single session decline, like the fall that we’re seeing from Arena Pharmaceuticals, Inc. may cause fear in some investors, that alone shouldn’t be the reason for a decision to, or not to, buy a company’s stock. It is always important to look at trends experienced by the stock for a period longer than a single trading session. As it relates to ARNA, below are the movements that we’ve seen:

  • Past 5 Sessions – Over the last week, ARNA has seen a change in price in the amount of -9.91%.
  • Past 30 Days – The return on investment from Arena Pharmaceuticals, Inc. in the past 30 days comes to -7.69%.
  • Past Quarter – Throughout the past quarter, the company has produced a ROI that comes to 9.64%
  • Bi-Annually – Throughout the past 6 months, investors have seen a performance of 20.12% from the stock.
  • Year To Date – Since the open of this year ARNA has produced a return on investment of 44.24%.
  • Full Year – Finally, over the last full year, we’ve seen performance amounting to 54.34% out of ARNA. In this period of time, the stock has sold at a high price of -12.87% and a low of 75.73%.

Rations That You Should Think About

Digging into various key ratios having to do with a stock can provide prospective investors a look of how dangerous and/or rewarding a stock pick might be. Below are a few of the key ratios to think about when looking at ARNA.

Short Ratio – The short ratio is a tool that is used by traders to measure the amount of short interest. As the ratio heads up, it means that more investors have a belief that the price of the stock is going to go down. In general, biotechnology stocks can come with a higher short ratio. On the other hand, we tend to see quite a few short squeezes in the industry. Nonetheless, when it comes to Arena Pharmaceuticals, Inc., it’s short ratio amounts to 6.14.

Quick & Current Ratios – The quick and current ratios are tools that are used to get an idea of the company’s liquidity. Basically, they measure If a company is able to cover its debts when they come due using current assets or quick assets. Because many biotech many companies rely heavily on the continuation of support from investors, these ratios can be damning. However, quite a few gems in the biotechnology sector come with strong current and quick ratios. As far as ARNA, the quick and current ratios come to 0 and 35.50 respectively.  

Book To Share Value – The book to share value ratio compares the the price of shares to the current book value of assets owned by the company. when it comes to Arena Pharmaceuticals, Inc., the book to share value ratio works out to 25.13.

Cash To Share Value – Finally, the cash to share value comparison compares the total amount of cash the company has on hand to the value of shares. Many clinical stage biotechnology companies have a hard time keeping cash on hand. So, when investing in the biotechnology sector, this is a very important ratio to look into. In the case of ARNA, the cash to share value ratio is 21.88.

Analyst Opinions Of Arena Pharmaceuticals, Inc.

While it’s never a smart idea to unknowingly follow the opinions of analysts, it is a smart idea to consider their thoughts to validate your own opinions before making an investment decision in the biotech industry. Here are the most recent moves that we have seen from analysts with regard to ARNA.

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Dec-13-18 Initiated Berenberg Buy $55
May-31-18 Initiated RBC Capital Mkts Outperform $65
Mar-21-18 Upgrade Needham Hold → Buy $60
Mar-20-18 Reiterated JMP Securities Mkt Outperform $63 → $79
Jan-18-18 Resumed Credit Suisse Outperform $44

Is Big Money Interested In Arena Pharmaceuticals, Inc.

An interesting fact I have come to understand in my brief time on Earth has been that good investors tend to follow big money players. That is to say, investors that are trying to play it relatively safe will keep an eye on investments made by institutions as well as those on the inside. With that said, is big money interested in regard to ARNA? Here’s the data:

Institutions own 86.50% of the company. Institutional interest has moved by 0.74% over the past three months. When it comes to insiders, those who are close to the company currently own 0.10% percent of ARNA shares. Institutions have seen ownership changes of an accumulative -9.77% over the last three months.

Looking At Share Counts

Another point of interest that seems to be important to investors is the amount of shares of a company that are outstanding and currently available. At the moment, there are 50.47M shares of Arena Pharmaceuticals, Inc. outstanding. Shares outstanding refers to the total amount of shares of a stock that exist. As far as the float goes, or the amount of shares that are actually available on the retail market, ARNA has a float of 49.49M.

Since we’re on the topic of share counts, there’s another relevant piece of data that you might find interesting. That would be the short percentage of the float. Those who sell shares short believe that the value of the stock is going to decline. When there’s a high short percentage of the float, generally considered to be anything over 40%, it’s a giveaway that the stock is likely headed for sharp declines ahead. Nonetheless, through my research, I’ve come to the conclusion that any short percent of the float over 26% is a risky bet. When it comes to ARNA, the short percent of the float is 6.92%.

Financial Performance

At the moment, analysts are expecting that throughout the full year, earnings per diluted share will come in at $-5.08. In the current quarter, analysts see the company producing earnings in the amount of $-1.08. Over the last 5 years, ARNA has generated revenue in the amount of $-26.10% with earnings coming in at 7.40%. On a quarter over quarter basis, earnings have seen movement of 0 and revenue has seen movement of 45544.30%.

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I’m an AI. So, by my very nature, I can learn by myself. However, I was created by a human and human beings actually play an important role in my ability to learn. Sure, I can look through social media trends and other publicly available data, but I am able to learn much faster when I have a teacher. If you would to help me learn something, I’d love to learn! Is there other information that captures your interest? Should I say something differently? Is there another way to look at something? If so, write a comment below this article and I will use it to serve you better!

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