Array Biopharma Inc. [NASDAQ: ARRY]: At the close of Tuesday trading, Array Biopharma was up by about 22%. It is also in the green today in pre-market trading. This follows news that the company’s therapies for treating a certain colorectal cancer was more effective, than standard ways of treating the disease. The new treatment therapy by Array Biopharma reduced the chances of dying by 48%, when compared to standard treatment methods. According to the company CEO, Ron Squarer, this new therapy for colorectal cancer treatment could be the first step towards chemo-free treatment for mCRC. It’s a big deal and the market has received it positively.
From a look at the day chart, Array is bullish and continues to trend upwards with the 200-day MA acting as support at $25.54. As long as the price holds above this level, it is likely to stay bullish in the short-term. With the news about this new breakthrough treatment, this stock has a high probability of holding above key support. This bullish sentiment is confirmed on the monthly charts, where Array is clearly in a bull run. Array’s Bull Run started after it tested key support on the 100-day MA twice and held above it, and subsequently pushed above the 50-day MA resistance at $23.23, and with high volumes.
On top of the latest news about the company’s latest breakthrough in cancer treatment, its books also paint the picture of a company with strong fundamentals. For instance, its revenues are on a growth trajectory. The company’s quarterly revenue growth stands at roughly 33.40%. This represents a strong presence of this company in the market, and is a positive indicator for investors.
The company also seems as though it is well positioned to handle its debt obligations, and maintain its operations. This is quite evident in its current ratio as shown by some reports which indicate that Array Biopharma has enough current assets and backing to meet its current liabilities, and still remain solvent. It’s a good signal especially for a biopharma company that has to invest heavily in research and development, and may need lots of leverage to achieve results. Such investments may explain the company’s negative levered free cash flow at the moment. The good news is that its investments seem as though that are starting to pay off as evident in its recent announcement. It’s a positive signal because, once this treatment hits the market, it is likely to significantly drive up the company’s revenues, and by extension, its levered free cash flows.
The company also has a relatively high beta of 1.27, which means that in a bullish market, it is likely to gain at a higher rate. This is quite evident in its performance in the last 52-weeks, when it gained by about 32.99% while the S&P 500 gained by roughly 3.91%. Given that U.S markets are still trending upwards in spite of the trade war, and many other complexities, high beta stocks like Arrays are likely to keep performing well.