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CytomX Therapeutics, Inc. (NASDAQ:CTMX) shareholders will doubtless be very grateful to see the share price up 36% in the last month. But that is small recompense for the exasperating returns over three years. Regrettably, the share price slid 56% in that period. So it's good to see it climbing back up. After all, could be that the fall was overdone.
On a more encouraging note the company has added US$44m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.
CytomX Therapeutics isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over three years, CytomX Therapeutics grew revenue at 4.7% per year. That's not a very high growth rate considering it doesn't make profits. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 16% during the period. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. Keep in mind it isn't unusual for good businesses to have a tough time or a couple of uninspiring years.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on CytomX Therapeutics' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Investors in CytomX Therapeutics had a tough year, with a total loss of 6.0%, against a market gain of about 34%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 7% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 4 warning signs for CytomX Therapeutics (1 is a bit unpleasant!) that you should be aware of before investing here.
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. 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.
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