Sign InTempest Therapeutics' Volatility Sparks Interest but Raises Caution Amid Positive Developments
Summary
Tempest Therapeutics, Inc. (TPST) has experienced high volatility but has garnered attention due to recent positive news on successful study results; however, the stock's negative earnings and high risk suggest a hold for now, with the next trading day likely to be volatile and future movement dependent on overall market sentiment and upcoming company-specific developments. (date of analysis: October 12, 2023)
Fundamental Analysis
Tempest Therapeutics, Inc. (TPST) is a biotech company, currently experiencing high volatility due to the nature of the industry, finds itself on several top trending stock lists due to recent company developments.
Positive recent news indicates successful early to mid-stage study results for TPST-1120 in combination with standard-of-care therapies to treat liver cancer. This news sparked a significant rise in the company's share price, with gains accruing as high as 4,000% at one point. However, following such a massive stock hike, a correction was expected which resulted in a significant drop of 44.34%, marking the last close at $3.98 on October 12, 2023.
Moreover, the company has a relatively low market cap of $53.03 million which can be considered as a risk factor since minor changes in the market can drastically affect the stock price due to low liquidity level.
From an earnings perspective, Tempest has a negative earnings per share (EPS) of -2 and a negative PE ratio of -1.99, which generally suggests that the company is not profitable. The discounted cash flow (DCF) of 6.68 suggests the stock may currently be undervalued, implying a potential upward price trajectory in the future.
The consensus among analysts appears to be a "Buy", per the distribution of analyst recommendations which indicates a single "buy" recommendation with no "hold", "sell", or "strong" suggestions either way.
Technical Analysis
The technical indicators provide mixed signals for TPST's performance. Its Relative Strength Index (RSI) is 68, suggesting that the stock may be approaching overbought territory. This typically means that the stock might be due for a reversal or a slowdown in its upward movement.
The Average True Range (ATR) is 19.62, representing a high level of volatility, consistent with the recent price movements exhibited by the shares of the company.
The shares recently traded significantly above both the 50-day moving average of $0.71 and the 200-day moving average of $1.44. This indicates a generally positive short-term trend. However, the MACD (3-month) of 0.001 suggests that this upward momentum might be slowing.
Prediction and Evaluation
Considering both the fundamental and technical factors, mixed signals persist. While major advancements in its oncological research are propelling the company forward, the high volatility coupled with negative earnings makes it a risky investment.
For the next trading day on October 13, 2023, TPST's stock price is likely to experience high volatility due to the stock's current circumstances; however, the direction will be influenced by overall market sentiment and perhaps any forthcoming company-specific news.
For the upcoming week, the price movement will be largely dependent on both broader market dynamics and company-specific developments, including the earnings announcement set for November 6, 2023.
Final Evaluation
In conclusion, TPST stock can be seen as a Hold on this point due to the high risk associated with its massive and recent price fluctuations notwithstanding the promising development trials. Its recent overbought status and mixed technical indicators support holding the stock rather than buying more of it or selling existing owned shares. An investor currently holding TPST shares might want to wait for clearer signals or news, while potential investors might consider observing the stock's trend in the upcoming days.
