In the world of biotech, risk and reward walk hand in hand. Summit Therapeutics PLC, a player in the healthcare sector, specifically biotechnology, has been under the investor's microscope for its financial performance. With an enterprise value of $7.6B, the company's financial health seems to be in a precarious position. The net income from continuing operations shows a substantial loss of $614.9M, with an operating income reflecting a loss of $89.7M. The company's book value stands at 0.063, with a per-share value of 0.06X, painting a grim picture for potential investors. Furthermore, the negative quarterly revenue growth of 1.0% adds to the concerns. With 22.57M shares shorted, investors seem to be betting against the company. The fact that insiders own 88.14% of the shares, while institutions hold only 7.22%, raises questions about the company's confidence in its own prospects. Considering these factors, shorting Summit Therapeutics PLC could potentially be a profitable strategy. However, as with any investment, it is essential to thoroughly research and consider the inherent risks involved. Many investors are showing keen interest in the biotechnology sector, with Summit Therapeutics and Kezar Life seemingly heading in different directions. We will analyze the competitive dynamics between Summit and Kezar.
By comparing primary indicators of Summit Therapeutics and Kezar, we can assess the impact of market volatility on both companies' prices and determine if they can mitigate market risk when combined in a portfolio. Pair trading strategies can also be employed, such as matching a long position in Kezar with a short position in Summit Therapeutics. More information can be found in our pair correlation module.
Now, let's examine the assets. One method to evaluate Summit's asset utilization is by determining the profit generated per dollar of reported assets. Summit Therapeutics PLC has a negative asset utilization of -0.33%, losing $0.003327 for each dollar of assets. This poor asset utilization suggests the company is not effectively using its assets, indicating a discouraging performance per dollar spent on its assets.
Primary Takeaways
Summit Therapeutics PLC, a biotechnology company with a current valuation of $7.62B, has been operating at a significant loss, with an operating income of $89.7M loss. The company's high short ratio of 11.39 suggests that investors are betting on a decrease in its stock price, which could make shorting a potentially profitable strategy. However, with 88.14% of shares owned by insiders and a low probability of bankruptcy at 1.00%, there may be internal confidence in the company's future. Investors should also consider the company's substantial working capital of $169.31M and its cash and equivalents of $121.97M, which could provide some financial stability despite the negative income.
Investment perspective, in general, refers to a viewpoint or opinion regarding investment opportunity in Summit Therapeutics. It encompasses the assessment of an investment's potential risks and rewards, and expectations for its performance over time. Several factors influence the investment perspective on Summit Therapeutics, including investment goals, risk tolerance, time horizon, market conditions, and research and analysis. Investors have varying goals, such as capital preservation, income generation, or long-term growth. Risk tolerance plays a significant role in shaping an investor's perspective, with some being more risk-averse and others willing to take on higher risks for potential returns.
How important is Summit Therapeutics's Liquidity
Summit Therapeutics financial leverage refers to using borrowed capital as a funding source to finance Summit Therapeutics PLC ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Summit Therapeutics financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Summit Therapeutics' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Summit Therapeutics' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Summit Therapeutics's total debt and its cash.
How does Summit utilize its cash?
At this time, Summit Therapeutics' Total Cash From Operating Activities is comparatively stable compared to the past year. . To perform a cash flow analysis of Summit Therapeutics, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Summit Therapeutics is receiving and how much cash it distributes out in a given period. The Summit Therapeutics cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Summit Therapeutics Gross Profit
Summit Therapeutics Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Summit Therapeutics previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Summit Therapeutics Gross Profit growth over the last 10 years. Please check Summit Therapeutics' gross profit and other fundamental indicators for more details.
Breaking it down
Total Debt Breakdown
Let me now analyze Summit Therapeutics total debt. Based on the latest financial disclosure, Summit Therapeutics PLC has a Total Debt of 106.1 M. This is 96.14% lower than that of the Biotechnology sector and 67.33% lower than that of the Health Care industry. The total debt for all United States stocks is 98.0% higher than that of Summit Therapeutics.As for Kezar Life we see total debt of 18.93 M, which is 94.17% lower than that of the Health Care
Summit
106.1 Million
Sector
324.78 Million
Kezar
18.93 Million
106.1 M
Summit
324.8 M
Sector
Kezar
"Buy low, sell high" is a common adage in the investment world, but the question is whether shorting Kezar and Summit Therapeutics PLC could be a profitable strategy. With a high short percent of 27.08% and a negative beta of -1.13, Summit Therapeutics appears to be a risky bet. The company's high current ratio of 8.22X indicates a strong ability to meet its short-term obligations, but its significant net interest income loss of $6.1M and operating income loss of $89.7M paint a concerning financial picture. Furthermore, the company's high downside deviation of 8.95 and standard deviation of 34.59 suggest a high level of risk. Therefore, while shorting Summit Therapeutics could potentially yield profits, it comes with a high level of risk that investors should carefully consider..
Will Summit Therapeutics continue to go mental?
Summit Therapeutics PLC has shown remarkable market performance, with a recent variance of 1196.12. This figure indicates substantial price fluctuations, signaling high volatility. While this could yield high returns, it also carries increased risk. Investors should closely monitor this stock and consider their risk tolerance before making decisions. It remains uncertain whether Summit Therapeutics will continue its volatile trend or stabilize soon. The company has demonstrated above-average volatility over the chosen time period. Understanding market volatility trends can help investors time the market. Proper use of volatility indicators allows traders to gauge Summit Therapeutics' stock risk against market volatility during bullish and bearish trends. The heightened volatility of bear markets can directly affect Summit Therapeutics' stock price and stress investors as they see their shares' value decrease, often prompting portfolio rebalancing through the purchase of diverse financial instruments.
Our Takeaway on Summit Therapeutics Investment
Whereas some companies in the biotechnology industry are either recovering or due for a correction, Summit Therapeutics may not be performing as strong as the other in terms of long-term growth potentials. With a less-than optimistic outlook for your 90 days horizon, it may be a good time to exit some or all of your Summit Therapeutics holdings as it seems the potential growth was already fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Summit Therapeutics.
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Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management. View Profile
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