Understanding the Recent Sell-Off in CRISPR Therapeutics (CRSP)

Tumbling to a price of $75.13 during today's morning trading session, shares of CRISPR Therapeutics are now -14.12% below their average target price of $87.48. Does this mean the stock will reverse course? Analysts are giving CRSP an average rating of buy and target prices ranging from 30.0 to 199.0 dollars per share.

The market is more pessimistic on CRISPR Therapeutics, because its short interest -- meaning the percentage of its shares that are being shorted on an expectation of a price decline -- is quite high at 19.0%. The float includes only shares that are available for public trading, and excludes preferred shares held by insiders.

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 CRISPR Therapeutics is to look at the percentage of institutions that are invested in the stock. In this case, 66.8% 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.

To sum up, CRISPR Therapeutics is probably the subject of negative market sentiment because of an analyst consensus of some upside potential, a buy rating, an unusually large proportion of its shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.

Here's a snapshot of some important facts to keep in mind about CRSP:

  • The stock has trailing 12 month earnings per share (EPS) of $-1.94

  • CRISPR Therapeutics has a trailing 12 month Price to Earnings (P/E) ratio of -38.7 compared to the S&P 500 average of 15.97

  • The company has a Price to Book (P/B) ratio of 3.19 in contrast to the S&P 500's average ratio of 2.95

  • CRISPR Therapeutics 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.