Are Smart Investors Making the Right Decision? Terns Pharmaceuticals Inc. (TERN)

Terns Pharmaceuticals Inc. (NASDAQ: TERN) stock fell -1.23% on Wednesday to $5.61 against a previous-day closing price of $5.68. With 1.59 million shares changed hands, the volume of the stock remained heavier than its average volume of 0.16 million shares. The 52-week range on TERN shows that it touched its highest point at $8.28 and its lowest point at $1.45 during that stretch. It currently has a 1-year price target of $6.67.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of TERN was up-trending over the past week, with a rise of 14.02%, but this was down by -18.81% over a month. Three-month performance surged to 27.21% while six-month performance rose 269.08%. The stock lost -24.90% in the past year, while it has lost -20.65% so far this year. A look at the trailing 12-month EPS for TERN yields -2.10 with Next year EPS estimates of -2.09. For the next quarter, that number is -0.48. This implies an EPS growth rate of -71.00% for this year and -4.00% for next year.

Float and Shares Shorts:

At present, 38.51 million TERN shares are outstanding with a float of 35.95 million shares on hand for trading. On Oct 13, 2022, short shares totaled 0.43 million, which was 1.16% higher than short shares on Sep 14, 2022. In addition to Mr. Senthil Vel Sundaram as the firm’s CEO & Director, Dr. Erin Quirk M.D. serves as its Pres & Head of R&D.

Institutional Ownership:

Through their ownership of 84.99% of TERN’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 7.99% of TERN, in contrast to 34.03% held by mutual funds. Shares owned by individuals account for 3.10%. As the largest shareholder in TERN with 5.45% of the stake, Fairmount Funds Management LLC holds 2,050,000 shares worth 2,050,000. A second-largest stockholder of TERN, Deerfield Management Co. LP, holds 1,860,000 shares, controlling over 4.95% of the firm’s shares. BML Capital Management LLC is the third largest shareholder in TERN, holding 1,764,274 shares or 4.69% stake. With a 0.99% stake in TERN, the Vanguard Extended Market Index Fu is the largest stakeholder. A total of 372,657 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 0.51% of TERN stock, is the second-largest Mutual Fund holder. It holds 191,837 shares valued at 1.33 million. iShares Biotechnology ETF holds 0.34% of the stake in TERN, owning 129,313 shares worth 0.89 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for TERN since 4 analysts follow the stock currently. There are 2 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 2 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With TERN analysts setting a high price target of $9.00 and a low target of $6.00, the average target price over the next 12 months is $7.00. Based on these targets, TERN could surge 60.43% to reach the target high and rise by 6.95% to reach the target low. Reaching the average price target will result in a growth of 24.78% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. TERN will report FY 2022 earnings on 03/03/2023. Analysts have provided yearly estimates in a range of -$1.42 being high and -$2.07 being low. For TERN, this leads to a yearly average estimate of -$1.86. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Terns Pharmaceuticals Inc. surprised analysts by -$0.01 when it reported -$0.44 EPS against a consensus estimate of -$0.43. The surprise factor in the prior quarter was $0.04. Based on analyst estimates, the high estimate for the next quarter is -$0.31 and the low estimate is -$0.49. The average estimate for the next quarter is thus -$0.43.

Summary of Insider Activity:

Insiders traded TERN stock several times over the past three months with 1 Buys and 0 Sells. In these transactions, 600,000 shares were bought while 0 shares were sold. The number of buy transactions has increased to 16 while that of sell transactions has remained unmoved to 0 over the past year. The total number of shares bought during that period was 13,251,446 while 0 shares were sold.

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