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Volatility and Weak Fundamentals Push T2 Biosystems (TTOO) Stock into Risky Territory

StockInvest.us, 7 months ago

T2 Biosystems Stock Analysis for T2 Biosystems, Inc. (TTOO)

Fundamental Analysis

T2 Biosystems (NASDAQ: TTOO) is currently experiencing significant volatility. On October 13, 2023, the stock's last closing price was $8.20, a significant drop from the year's high ($238), marking a 5.75% decrease in value from the previous trading day. The company's earnings per share (EPS) are -130.46, indicating that T2 Biosystems is currently not earning profit, while having a negative price to earnings (P/E) ratio of -0.06, implying poor valuation from the investors' perspective.

Recently, news emerged about a 1-for-100 reverse stock split and preliminary third-quarter earnings that are expected to show a 60% drop in revenues. Negative news of such magnitude can trigger selling pressure among investors, which might explain why the stock's price is plummeting.

Following this announcement, TTOO shares hit a 52-week low of $5.4 but managed to bounce back slightly. The substantial gap between price high ($10.46) and price low ($6.81) suggests high volatility. Despite the bearish trends, the discounted cash flow (DCF) is reported at around $9.28, which suggests the intrinsic value of the stock might be higher than its currently traded price.

Technical Analysis

The technical indicators for T2 Biosystems highlight the bearish sentiment engulfing the stock. The 14-day Relative Strength Index (RSI) stands at 43, suggesting the stock is nearing oversold conditions, which could lead to price correction or an upward price movement in the future.

T2 Biosystems The current price is below 50 and 200-day moving averages, confirming the bearish trend. The MACD (3-month) is also negative, reinforcing the ongoing bearish sentiment.

The ATR is close to 37.88, signalling the company shares are experiencing severe price changes. This typically translates into high risk for potential investors. Currently, the stock faces resistance at $8.7 and has support at $7.875.

Upcoming Week's Prediction

Given the data and the recent events surrounding T2 Biosystems, predicting the company's share price for the upcoming week is challenging, especially given the announced reverse stock split and lowered Q3 revenues. The negative news trend impacting the company and poor technical and fundamental indicators can lead to further downward pressure on prices. TTOO could see the support level of $7.875 tested in the coming days.

Final Evaluation

Based on the analysis, TTOO is currently a risky investment. Its weak fundamentals, highlighted by its negative EPS, its lower-than-expected revenues and the reverse stock split make it a high-risk asset. Moreover, the recent downward price trend and the bearish sentiment visible in the technical chart significantly increase the risk associated with this stock.

Thus, for the time being, T2 Biosystems, Inc. (TTOO) is categorized as a Sell. This assessment is contingent on the company's ability to deliver improved revenue performance in future quarters and demonstrate a capacity to revive investor confidence. Potential investors are recommended to wait for a sign of reversal before reconsidering this stock.

Check full T2 Biosystems forecast and analysis here.