Reata Pharmaceuticals (NASDAQ: RETA) is soaring 54.02%, riding on the news of being acquired by Biogen Inc. (NASDAQ: BIIB) for $7.3 Billion. Reata had recently made strides in developing therapeutics to regulate cellular metabolism and inflammation caused by severe neurological diseases. Moreover, Reata’s FDA-approved SKYCLARYS is the pioneering approved treatment for Friedreich’s ataxia (FA) in the U.S. and Biogen wishes to leverage this innovation.
Reata Pharmaceuticals Inc. (RETA) Stock: Financial Analysis
Biogen offers to buy RETA Stocks for $172.50 per share in cash, representing a premium of about 58.9%. Hence, it takes the acquisition costs to $7.3 Billion. The Board of Directors of both companies seems to be happy with the deal and awaits a nod from the regulators.
If the regulators agree to the acquisition, experts argue it should close by the fourth quarter of 2023. The reason why RETA stock is soaring high is that around 5 Million shares were traded on July 28, 2023, which was a massive spike from its daily average of about 798,000.
Moreover, legal experts in the matter argue that the regulators might not be happy with the acquisition deal. Due to either of the following reasons, there are doubts if Reata Pharmaceuticals considered its shareholders during the agreement or not.
Many questions spring to mind like: Is the price set by Biogen fair? Did RETA shareholders receive complete information about the acquisition? Though nothing can be said for sure, regulators will see to it that the investors of both companies are keeping their fingers crossed. At press time, Pfizer Inc. (NYSE: PFE) is trading at $36.07 with a drop of 0.36%.
Reata Pharmaceuticals (NASDAQ: RETA): Financial Analysis
At press time, RETA stock is trading at $167.19 with a massive jump of 54.02%; previous close and open are at $108.55 and $164.69, respectively, creating a considerable gap. The 52-week range is from $18.47 to $167.24, indicating it’s very close to the upper limit. With a volume of 12.34 Million shares, the market cap is $6.278 Billion.
The trailing twelve-month (TTM) earnings per share (EPS) is negative $9.73, indicating weakness. Analysts placed a price target at $114.40 with a 31.6% downside and provided a 2.90 rating for moderate buy.
Reata recorded its last earnings on May 10, 2023, where the reported revenue of $195K surpassed the estimated value of $117.143K by 10.08%. As compared to the previous quarter, the revenue fell by 78.67%.
At the same time, the reported earnings of negative $3.14 per share failed to beat the expected value of minus $2.39 per share by 31.21%.
Compared to the previous quarter, earnings fell by 36.09%. Additionally, the negative earnings caused the share price to fall by 28.83%. Operating expenses gained 119.38% to $55.17 Million, while the operating margin plummeted by 21,613.35%. Net income fell by 51.25% to minus $116.12 Million, and the net profit margin stumbled by 637.06% to negative 59.55.
Gross profit (TTM) was negative $167.63 Million; at the same time, revenue (TTM) was $1.5 Million. The financial health of Reata Pharmaceuticals has not been good yet the share price rallied 51.88% in a week, 309.68% in six months, and 332.91% YTD.
Reata Pharmaceuticals Inc. (RETA) Stock: Candle Exploration
As Biogen offered to buy RETA shares at $172.50, with a premium of around 58%, the current gap is justified. Also, the share price tends to meet the tip and rally a little in such cases. If it is proven true, the price might try to enter the selling zone. However, it can consolidate around the selling zone if the price reverses.
The chances of price action breaking the selling zone to reach new highs would depend on regulators’ decision on the acquisition deal. If all goes well, investors can see new highs and any severe issue in the agreement could cause the price to move towards buying zone.
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The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto assets and stocks comes with a risk of financial loss.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/07/29/reata-pharmaceutical-inc-reta-stock-is-at-54-02-high-why/