Shares of Thermogenesis (NASDAQ:KOOL) jumped both in price and volume during the last hour of trading on Wednesday. The stock ended regular hours trading at $3.13, up more than 16%, but after-hours trading gave back almost 10%.
What's going on? For one, the stock seems over-sold. Thermogenesis announced lower than expected numbers in its second quarter financial report, due to an unexpected manufacturing problem, which created a backlog of orders for disposable bags used with the AutoXpress system.
The company could not deliver on GE Healthcare's (NYSE:GE) orders. But the problem seems to have been fixed, according to the company, and orders should be filled quick enough to reflect on the third quarter report.
The recent sell-off in the markets has also dampened investor optimism, as Thermogenesis stock has crashed from the $4-$5 price range all the way down to around $2.60 just recently.
The fact that more than 50% of outstanding shares were held by institutional investors also contributed to the sell-off, after some firms had a change of heart following the last quarterly report.
Things could turn around just as fast, however. On Monday, the company announced it has received three key patents for both its cord blood stem cell storage system, AutoXpress, and its surgical wound care unit, CryoSeal System.
Early on Wednesday, the stock received a buy recommendation from Maxim Group medical technology analyst Michael Tu with a price target of $5, more than 66% above the current price level. While that price target might seem a little too optimistic, consider the fact that Thermogenesis was hovering around $5 prior to its last quarterly report, only three months ago. The manufacturing problem has been fixed, so that large drop cannot be justified based on that issue alone.
Thermogenesis has historically been a relatively volatile stock, with a market cap of less than $200 million, and a large percentage of shares held by institutional investors, who tend to move in herds. If other firms follow Maxim's lead, the stock could easily bounce back to the $5 range, especially if the next quarterly report reflects the updated manufacturing issue. This is with a continued market downturn not withstanding, of course.
The late surge in trading on Wednesday could mean a couple of things; either the company is set to release great news on Thursday, or a large investor has decided to follow on Mr. Tu's recommendation and buy a 'few' shares.
Whatever the reason may be, research analysts usually utilize good timing when releasing their recommendations. So the next few days could prove very interesting for Thermogenesis investors.
Source: BioHealth Investor.com
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KOOL 1-yr chart