Tumbling to a price of $44.21 during today's afternoon trading session, shares of Revolution Medicines are now -39.44% below their average target price of $73.0. Does this mean the stock will reverse course? Analysts are giving RVMD an average rating of buy and target prices ranging from 62.0 to 87.0 dollars per share.
We can use Revolution Medicines'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 RVMD's short interest is 9.5%, 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.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Revolution Medicines, institutional investors own 95.2% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in RVMD, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
Overall, there is mixed market sentiment towards Revolution Medicines 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 RVMD:
-
It has trailing 12 month earnings per share (EPS) of $-3.66 per share
-
Revolution Medicines has a trailing 12 month Price to Earnings (P/E) ratio of -12.1 while the S&P 500 average is 29.3
-
The company has a Price to Book (P/B) ratio of 4.73 in contrast to the S&P 500's average ratio of 4.74
-
Revolution Medicines is a Health Care company, and the sector average P/E and P/B ratios are 26.07 and 3.53 respectively
