Avid Bioservices (NASDAQ:CDMO investor one-year losses grow to 67% as the stock sheds US$88m this past week
Even the best stock pickers will make plenty of bad investments. And unfortunately for Avid Bioservices, Inc. (NASDAQ:CDMO) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 67% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 43% lower than three years ago). Shareholders have had an even rougher run lately, with the share price down 60% in the last 90 days.
With the stock having lost 22% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
See our latest analysis for Avid Bioservices
Avid Bioservices wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.
In the last twelve months, Avid Bioservices increased its revenue by 20%. That's definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 67% in that time. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.
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 we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. If you are thinking of buying or selling Avid Bioservices stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Avid Bioservices shareholders are down 67% for the year, but the market itself is up 10%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 1.3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
