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Strength Seen in Reata Pharmaceuticals, Inc. (RETA): Can Its 3% Jump Turn into More Strength?

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Reata Pharmaceuticals, Inc. RETA shares ended the last trading session 3% higher at $103.09. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 6.2% gain over the past four weeks.

The FDA accepted the company’s new drug application for its lead pipeline candidate, bardoxolone methyl for the treatment of patients with chronic kidney disease caused by Alport syndrome. A potential approval to the NDA will boost the company’s prospect as bardoxolone methyl will become the company’s first commercial product as well as first approved therapy for Alport syndrome in the United States. This has boosted investor sentiments that drove Reata’s share price higher.

Price and Consensus

Price Consensus Chart for RETA
Price Consensus Chart for RETA

This company is expected to post quarterly loss of $2.18 per share in its upcoming report, which represents a year-over-year change of -144.9%. Revenues are expected to be $1.41 million, up 4.2% 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 Reata Pharmaceuticals, Inc., the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on RETA 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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