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Codexis (CDXS) Surges 12.4%: Is This an Indication of Further Gains?

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Codexis (CDXS) shares soared 12.4% in the last trading session to close at $26.14. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 16.9% loss over the past four weeks.

Last month the company announced that it has amended and extended the agreement with pharma giant Merck to license and supply an enzyme used in the manufacturing process for sitagliptin, which is the active pharmaceutical ingredient in the latter’s marketed diabetes drugs, Januvia and one of the active ingredients in Janumet. This might have been driving the rally.

This producer of custom industrial enzymes is expected to post quarterly loss of $0.13 per share in its upcoming report, which represents a year-over-year change of -30%. Revenues are expected to be $28.76 million, up 56.4% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Codexis, the consensus EPS estimate for the quarter has been revised 3.7% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on CDXS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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