Verastem, Inc. (VSTM) Stock: Why It’s Down

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Verastem, Inc. (VSTM) is trending down in the market today. The stock, one that is focused on the biotechnology sector, is currently priced at $1.25 after heading down -6.02% so far today. In terms of biotechnology companies, there are quite a few aspects that have the ability to cause declines in the market. News is one of the most common reasons for movement. Here are the recent headlines relating to VSTM:

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Oct-29-19 07:35PM Verastem (VSTM) Reports Q3 Loss, Misses Revenue Estimates
04:17PM Verastem Oncology Reports Third Quarter 2019 Financial Results and Recent Company Progress
Oct-23-19 07:00AM Verastem Oncology Announces COPIKTRA (Duvelisib) Presentations at the Lymphoma & Myeloma 2019 International Congress
Oct-17-19 07:00AM Verastem Oncology to Announce Third Quarter 2019 Financial Results and Corporate Update on October 29, 2019
Oct-09-19 11:18AM Biotech Stock Roundup: GILD’s Descovy Label Expansion Gets FDA Nod & Other Updates

Nonetheless, when making an investing decision, prospective investors should look into far more than news, this is especially the case in the generally speculative biotech space. Here’s what’s going on with Verastem, Inc..

Recent Movement Out of VSTM

Although a decline in a single session, like what we’re seeing from Verastem, Inc. might lead to fear in some investors, a single session decline alone should not be the basis of a decision to, or not to, buy a company’s stock. It is always smart to look at trends further out than a single session. As it relates to VSTM, below are the trends that we have seen:

  • Past 7 Days – In the last week, VSTM has seen a change in value that amounts to 10.62%.
  • Past 30 Days – The monthly ROI from Verastem, Inc. comes to 3.31%.
  • Quarterly – Throughout the past 3 months, the stock has produced a ROI that comes to -16.67%
  • Past Six Months – In the previous six months, we have seen a change that equates to -40.19% from the company.
  • YTD – Since the open of this year VSTM has produced a return of -62.80%.
  • Full Year – Lastly, over the past year, investors have seen performance that works out to -75.54% out of VSTM. Throughout this period, the stock has traded at a high of -80.25% and a low of 20.19%.

Rations That You Should Think About

Digging into various key ratios associated with a company can give prospective traders a view of how dangerous and/or potentially profitable a an investment option might be. Here are a few of the most important ratios to think about when looking at VSTM.

Short Ratio – The short ratio is a measure of short interest. The higher this short ratio, the more investors have a belief that the price of the stock is going to tumble. Across the sector, biotechnology stocks can carry a higher short ratio. On the other hand, we also see a lot of short squeezes in the sector. Nonetheless, when it comes to Verastem, Inc., it’s short ratio comes to 17.35.

Quick & Current Ratios – The quick and current ratios are ratios that dive into liquidity. Basically, they measure the company’s abilities to cover its debts as they mature based on current assets or quick assets. In the biotech space, companies rely on continued investor support, these ratios can seem bad. However, some good picks in the biotechnology industry come with strong current and quick ratios. When it comes to VSTM, the quick and current ratios total up to 6.20 and 6.20 respectively.  

Book To Share Value – The book to share value compares the value of assets currently owned by the company to the share price of the stock. In this case, the book to share value ratio is 0.67.

Cash To Share Value – The cash to share value comparison compares the amount of cash the company has on hand to the price of the company’s stock. Several clinical stage biotechnology companies have a hard time keeping cash on hand. So, when investing in the biotechnology industry, this is a very important ratio to look into. When it comes to VSTM, the cash to share value works out to 2.53.

Analyst Opinions Of Verastem, Inc.

Although it’s never a good idea to blindly follow the opinions of analysts, it is a smart idea to use their opinions when validating your own thoughts before making an investment decision in the biotech sector. Below are the most recent moves that we have seen from analysts when it comes to VSTM.

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Jun-20-19 Downgrade BTIG Research Buy → Neutral
May-10-19 Downgrade Raymond James Outperform → Mkt Perform
Jul-13-18 Initiated BTIG Research Buy $17
May-02-18 Initiated Seaport Global Securities Buy $14
Mar-08-18 Initiated B. Riley FBR, Inc. Buy $15

Is Big Money Interested In Verastem, Inc.

An interesting fact I’ve learned in my brief period alive, or somewhat alive is that smart money tends to follow big money. In general, investors that are trying to play it relatively safe will keep their eyes on investments made by institutional investors and insiders. With that said, is big money flowing as it relates to VSTM? Here’s what’s going on:

Institutions own 37.60% of the company. Institutional interest has moved by -0.16% over the past three months. When it comes to insiders, those who are close to the company currently own 0.60% percent of VSTM shares. Institutions have seen ownership changes of an accumulative 0.00% over the last three months.

Looking At Share Counts

Traders seem to have a heavy interest in the total numbers of shares both outstanding and available. As far as Verastem, Inc., currently there are 74.15M with a float of 69.07M. This means that out of the total of 74.15M shares of VSTM that are out there today, 69.07M are available to trade hands in the public realm.

I also find it important to follow the short percentage of the float. Think about it, if a large portion of the float available for trading is sold short, the overall feeling in the market is that the equity is going to fall. As far as it relates to VSTM, the percentage of the float that is currently being sold short sits at 21.33%. Most traders believe that a high short percent of the float would be any percentage over 40%. Through my work, I’ve seen that a short percent of the float over 26% is usually a risky play.

Financial Performance

At the moment, analysts are expecting that throughout the full year, earnings per diluted share will come in at $-1.58. In the current quarter, analysts see the company producing earnings in the amount of $-0.46. Over the last 5 years, VSTM has generated revenue in the amount of $0 with earnings coming in at 9.30%. On a quarter over quarter basis, earnings have seen movement of -90.50% and revenue has seen movement of -69.00%.

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