The last three months have been tough on Altimmune, Inc. (NASDAQ:ALT) shareholders, who have seen the share price decline a rather worrying 49%. But that doesn’t change the fact that the returns over the last year have been spectacular. In fact, it is up 494% in that time. So we wouldn’t blame sellers for taking some profits. Of course, winners often do keep winning, so there may be more gains to come (if the business fundamentals stack up).
Check out our latest analysis for Altimmune
Because Altimmune made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn’t make profits, we’d generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Altimmune actually shrunk its revenue over the last year, with a reduction of 58%. This is in stark contrast to the splendorous stock price, which has rocketed 494% since this time a year ago. It’s pretty clear the market isn’t basing its valuation on fundamental metrics like revenue. Typically, when we see this in a biotech stock, it’s because investors are getting excited about an impending drug development milestone, such as clinical trial results. While this gain looks like speculative buying to us, sometimes speculation pays off.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on Altimmune
A Different Perspective
It’s nice to see that Altimmune shareholders have gained 494% (in total) over the last year. This recent result is much better than the 22% drop suffered by shareholders each year (on average) over the last three. It could well be that the business has turned around — or else regained the confidence of investors. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example – Altimmune has 3 warning signs (and 1 which can’t be ignored) we think you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected].
