Sign InFemasys Inc. Stock Drops 35.99% with Negative Earnings: Hold or Buy?
Summary
On October 3, 2023, Femasys Inc.'s stock price experienced a significant drop, indicating a potential bounce-back or further decline on October 4, with the stock categorized as a 'Hold' due to its high volatility, unprofitability, and lack of strong buy indications, although its higher DCF value suggests potential undervaluation and may make it a consideration as a 'Buy' for long-term investors with a high risk tolerance.
Overview
Femasys Inc. (ticker: FEMY) is traded on the NASDAQ exchange. As of the market close on October 03, 2023, Femy's stock price stands at 2.49 USD, showcasing a significant drop by 1.40 USD (-35.99%) from the prior day. The company's shares have ranged from a low of 2.35 USD to a high of 3.13 USD on that day, with the yearly figures stretching from 0.248 USD at the low end to 4.75 USD at the high end. On the volume perspective, the company observed significantly higher trading activity with 19.26 million shares against the average volume of 11.40 million shares. Meanwhile, the market capitalization is relatively small, standing at 39.61 million USD.
Fundamental Analysis
Looking into the fundamental aspects of Femasys Inc., the company has a negative earning per share (EPS) of -0.99 USD, with a price-to-earning (PE) ratio of -2.52. These values indicate Femasys has not been profitable recently and undermines optimism for near-term profit-based growth.
The discounted cash flow (DCF) value, an intrinsic measure of the company's value, stands at 3.92, which is higher than the current trading price. This suggests the stock might be undervalued at present. Earnings announcement is dated to be released on November 09, 2023, which could potentially bring new dynamics to the stock's performance.
Technical Analysis
The 50-day and 200-day moving averages for FEMY stands at 0.61 and 0.85 respectively, indicating a sizable upward trend in its value when compared to its current price. The stock's 14-day Relative Strength Index (RSI) stands at 69, which is just below the commonly used overbought threshold of 70. Its 3-month Moving Average Convergence Divergence (MACD) is 0.12, suggesting a bullish signal in the recent past.
However, the Average True Range (ATR) stands high at 21.13, pointing to a significant level of volatility in the share price. The stock does not have any defined support and faces resistance at 2.98 USD, which it needs to surpass for further potential growth.
Analyst Recommendations and News
Looking at the analyst recommendations, the overall consensus falls under the 'Buy' category but there are no strong convictions either for buying or selling the stock. A recent piece of news mentions a cooling trend in underlying prices, indicating possible inflationary pressures, which could impact the overall market and small-cap stocks like Femasys Inc.
Predictions for Next Trading Day and Upcoming Week
Considering the high volatility (ATR = 21.13), negative earnings and strong downtrend, one can expect a potential bounce-back or further decline on October 04, 2023, with high uncertainty. The stock may vary from hitting the stop-loss price (2.35) to battling the defined resistance level (2.98). In the week ahead, depending upon the broader market dynamics and company-specific factors, the price can see substantial swings.
Final Evaluation
Given the outlined fundamental and technical factors, the future seems uncertain for Femasys Inc. with more bias towards a neutral to negative stance. Therefore, at this stage, the stock can be categorized as a 'Hold' mainly due to its high volatility, unprofitability, and lack of strong buy indications. Nonetheless, the DCF value higher than the current price suggests potential undervaluation, hence investors with a high risk-tolerance could also consider it as a 'Buy' for the long term.
