Verastem (NASDAQ:VSTM) Stock Falls 15.9% on Disappointing Earnings

Verastem, Inc. (NASDAQ:VSTM) shares traded down 15.9% during trading on Friday following a dissappointing earnings announcement. The stock traded as low as $7.97 and last traded at $7.8860. 661,840 shares traded hands during mid-day trading, a decline of 74% from the average session volume of 2,565,993 shares. The stock had previously closed at $9.38.

The biopharmaceutical company reported ($0.74) earnings per share for the quarter, missing the consensus estimate of ($0.47) by ($0.27). The firm had revenue of $24.01 million during the quarter, compared to analyst estimates of $26.57 million. Verastem had a negative net margin of 231.59% and a negative return on equity of 467.49%.

Verastem News Roundup

Here are the key news stories impacting Verastem this week:

• Positive Sentiment: HC Wainwright raised its price target to $20 from $18 and reiterated a Buy rating, implying substantial upside from the cited $9.38 share price. HC Wainwright ratings
• Neutral Sentiment: CEO Dan Paterson sold 1,299 shares for about $12,470 under a pre-arranged Rule 10b5-1 plan. The sale was a small fraction of his holdings; he retained 651,413 shares. SEC filing
• Negative Sentiment: Verastem reported a third-quarter loss of $0.74 per share, wider than analysts’ roughly $0.47 estimate. Revenue of $24.0 million also missed expectations of about $26.6 million. Although the per-share loss improved from $1.35 a year earlier, the earnings and revenue shortfalls are the clearest near-term pressure on VSTM. Third-quarter results

Analysts Set New Price Targets

VSTM has been the subject of a number of recent research reports. Benchmark reiterated a “buy” rating on shares of Verastem in a research note on Friday, October 16th. BTIG Research lifted their price objective on shares of Verastem from $18.00 to $24.00 and gave the company a “buy” rating in a research note on Thursday, October 15th. Alliance Global Partners reaffirmed a “buy” rating on shares of Verastem in a report on Thursday, October 15th. Jefferies Financial Group reiterated a “buy” rating and set a $13.00 target price (up from $11.00) on shares of Verastem in a research note on Wednesday, October 14th. Finally, HC Wainwright increased their target price on shares of Verastem from $18.00 to $20.00 and gave the stock a “buy” rating in a research note on Friday. Eleven analysts have rated the stock with a Buy rating, one has issued a Hold rating and one has issued a Sell rating to the company. Based on data from MarketBeat.com, the company presently has an average rating of “Moderate Buy” and an average price target of $17.00.

Insiders Place Their Bets

In other Verastem news, CEO Dan Paterson sold 44,121 shares of the business’s stock in a transaction on Thursday, October 1st. The shares were sold at an average price of $8.00, for a total value of $352,968.00. Following the transaction, the chief executive officer directly owned 652,712 shares of the company’s stock, valued at approximately $5,221,696. The trade was a 6.33% decrease in their position. The sale was disclosed in a filing with the SEC, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders have sold 48,041 shares of company stock valued at $386,390. Company insiders own 1.94% of the company’s stock.

Institutional Inflows and Outflows

Large investors have recently added to or reduced their stakes in the company. Aries Wealth Management lifted its holdings in shares of Verastem by 6.5% in the 3rd quarter. Aries Wealth Management now owns 32,833 shares of the biopharmaceutical company’s stock valued at $264,000 after buying an additional 2,000 shares during the period. Simplicity Wealth LLC purchased a new stake in shares of Verastem in the third quarter valued at approximately $89,000. Royal Bank of Canada boosted its stake in shares of Verastem by 15.3% in the first quarter. Royal Bank of Canada now owns 110,729 shares of the biopharmaceutical company’s stock valued at $587,000 after buying an additional 14,683 shares in the last quarter. Commonwealth Equity Services LLC acquired a new position in Verastem during the third quarter worth $122,000. Finally, Bank of New York Mellon Corp grew its holdings in Verastem by 31.8% during the first quarter. Bank of New York Mellon Corp now owns 161,707 shares of the biopharmaceutical company’s stock worth $857,000 after acquiring an additional 39,018 shares during the period. 88.37% of the stock is owned by hedge funds and other institutional investors.

Verastem Price Performance

The stock has a fifty day moving average of $8.36 and a two-hundred day moving average of $6.24. The stock has a market cap of $719.34 million, a price-to-earnings ratio of -2.96 and a beta of 0.45. The company has a quick ratio of 2.22, a current ratio of 2.25 and a debt-to-equity ratio of 1.48.

About Verastem

Verastem, operating as Verastem Oncology, is a biopharmaceutical company focused on developing and commercializing targeted therapies for cancer. The company’s research is centered on tumors driven by abnormalities in the RAS/MAPK signaling pathway, which can promote cancer-cell growth and resistance to treatment.

Verastem’s leading product candidates include avutometinib, an oral RAF/MEK clamp designed to inhibit signaling within the RAS/MAPK pathway, and defactinib, an oral focal adhesion kinase inhibitor.