Understanding Why BridgeBio Pharma Stock Is Sliding Today.

By Ken Smith • Monday, March 04 15:14 • Permanent Link

One of the standouts of today's afternoon trading session has been BridgeBio Pharma, which logged a -8.5% drop and underperformed the S&P 500 by -9.0%. The Pharmaceutical stock is now trading at $32.59 per share and is -30.99% below its average target price of $47.23. Analysts have set target prices ranging from $33.0 to 60.0 dollars per share, and have given the stock an average rating of buy.

We can use BridgeBio Pharma's short interest as a proxy for determining general market sentiment regarding the stock. The short interest is the percentage of the share float that represents short positions, meaning that the investor believes the stock will decline in the future. Since BBIO's short interest is 12.9%, the market sentiment is mixed on this stock.

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

Another way to gauge the sentiment on BridgeBio Pharma is to look at the percentage of institutions that are invested in the stock. In this case, 96.0% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.

If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.

Overall, there is mixed market sentiment towards BridgeBio Pharma because of an analyst consensus of strong upside potential, a buy rating, an above average percentage of its shares sold short, and a significant number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.

At a glance, here are some essential statistics you may want to know about BBIO:

It has trailing 12 month earnings per share (EPS) of $-3.95 per share
BridgeBio Pharma has a trailing 12 month Price to Earnings (P/E) ratio of -8.3 while the S&P 500 average is 15.97
BridgeBio Pharma is a Health Care company, and the sector average P/E and P/B ratios are 30.21 and 4.08 respectively

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.