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

Verastem, Inc. (NASDAQ:VSTM) dropped 15.9% during trading on Friday after the company announced weaker than expected quarterly earnings. The stock traded as low as $7.97 and last traded at $7.8860. Approximately 661,840 shares were traded during mid-day trading, a decline of 74% from the average daily volume of 2,565,993 shares. The stock had previously closed at $9.38.

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

Key Stories Impacting Verastem

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

Analyst Ratings Changes

Several brokerages recently weighed in on VSTM. Wall Street Zen raised shares of Verastem from a “sell” rating to a “hold” rating in a research note on Sunday, September 27th. Benchmark reiterated a “buy” rating on shares of Verastem in a report on Friday, October 16th. Mizuho boosted their price objective on shares of Verastem from $13.00 to $14.00 and gave the company an “outperform” rating in a research note on Friday, October 16th. Royal Bank Of Canada restated an “outperform” rating and set a $19.00 price objective (up from $14.00) on shares of Verastem in a report on Thursday, October 15th. Finally, Weiss Ratings downgraded Verastem from a “sell (d-)” rating to a “sell (e+)” rating in a report on Thursday, October 15th. Eleven analysts have rated the stock with a Buy rating, one has issued a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat.com, Verastem currently has a consensus rating of “Moderate Buy” and an average target price of $17.00.

Insider Transactions at Verastem

In other Verastem news, CEO Dan Paterson sold 44,121 shares of Verastem 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 completion of the transaction, the chief executive officer owned 652,712 shares of the company’s stock, valued at $5,221,696. The trade was a 6.33% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 48,041 shares of company stock worth $386,390 in the last quarter. Company insiders own 1.94% of the company’s stock.

Hedge Funds Weigh In On Verastem

Hedge funds and other institutional investors have recently modified their holdings of the company. AIGH Capital Management LLC bought a new position in shares of Verastem during the first quarter worth about $10,600,000. Opaleye Management Inc. bought a new stake in Verastem in the 2nd quarter valued at about $6,876,000. Exome Asset Management LLC lifted its position in Verastem by 58.5% in the 1st quarter. Exome Asset Management LLC now owns 636,700 shares of the biopharmaceutical company’s stock valued at $3,375,000 after purchasing an additional 234,957 shares during the last quarter. Bank of America Corp DE lifted its position in Verastem by 31.6% in the 1st quarter. Bank of America Corp DE now owns 416,985 shares of the biopharmaceutical company’s stock valued at $2,210,000 after purchasing an additional 100,123 shares during the last quarter. Finally, Hennion & Walsh Asset Management Inc. boosted its stake in Verastem by 157.2% during the 2nd quarter. Hennion & Walsh Asset Management Inc. now owns 569,195 shares of the biopharmaceutical company’s stock valued at $2,174,000 after purchasing an additional 347,872 shares during the period. Institutional investors and hedge funds own 88.37% of the company’s stock.

Verastem Price Performance

The company has a debt-to-equity ratio of 1.48, a quick ratio of 2.22 and a current ratio of 2.25. The stock has a market capitalization of $719.34 million, a price-to-earnings ratio of -2.96 and a beta of 0.45. The business’s 50 day simple moving average is $8.36 and its 200-day simple moving average is $6.24.

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.