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Did Changing Sentiment Drive Xeris Pharmaceuticals's (NASDAQ:XERS) Share Price Down By 38%?

Simply Wall St

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Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) shareholders should be happy to see the share price up 24% in the last quarter. But in truth the last year hasn't been good for the share price. In fact, the price has declined 38% in a year, falling short of the returns you could get by investing in an index fund.

Check out our latest analysis for Xeris Pharmaceuticals

Given that Xeris Pharmaceuticals didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last twelve months, Xeris Pharmaceuticals increased its revenue by 67%. That's well above most other pre-profit companies. Given the revenue growth, the share price drop of 38% seems quite harsh. Our sympathies to shareholders who are now underwater. On the bright side, if this company is moving profits in the right direction, top-line growth like that could be an opportunity. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

NasdaqGS:XERS Income Statement, July 18th 2019

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Xeris Pharmaceuticals

A Different Perspective

While Xeris Pharmaceuticals shareholders are down 38% for the year, the market itself is up 5.7%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. It's great to see a nice little 24% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Xeris Pharmaceuticals by clicking this link.

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 US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.