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Why Editas Medicine Stock Fell in July

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Operational performance

Editas Medicine’s (EDIT) general and administrative expenses are expected to rise 39.57% YoY (year-over-year) from $11.89 million to $16.60 million in the second quarter, and its research and development expenses are expected to increase 39.16% YoY from $17.32 million to $24.10 million in the second quarter.

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Bottom line

Editas Medicine is expected to have a net income of -$32.88 million in the second quarter compared to its net income of -$26.44 million in the second quarter of 2017.

This net income translates to a net income per share of -$0.67 in the second quarter of 2018 compared to a net income per share of -$0.65 in the second quarter of 2017.

Analysts’ recommendations

Five of the nine analysts covering Editas Medicine in July have given the stock “buy” ratings. Three have given it “hold” ratings, and one has given it a “strong sell” rating.  The mean rating for Editas is 2.67, and its target price is $45.2, implying an upside potential of 52.2% over the stock’s closing price of $29.7 on July 27.

In comparison, peers Stryker (SYK), Johnson & Johnson (JNJ), Gilead Sciences (GILD), and Bristol-Myers Squibb (BMY) have mean ratings of 2, 2.29, 2.07, and 2.55, respectively, and target prices of $183.61, $143.2, $86, and $57.56, respectively.

Price performance

In 2018, Editas stock has fluctuated quite a bit—from $34.32 on January 2 to a high of $45.02 on March 9 to a low of $30 on January 18. On July 27, the stock fell 5.83% below this level to close at $29.70, and it fell again by 4.28% when the market opened on July 30. 

In the last few trading sessions, shares of companies focused on CRISPR (clustered regularly-interspaced short palindromic repeats) technology have tumbled due to a recently published study demonstrating that the use of CRISPR tools for editing faulty DNA sequences can result in unintended deletions and rearrangements of genetic material.

Currently, Editas Medicine’s EV (enterprise value) is $1.45 billion, and its EV-to-revenue ratio is 85.23. Its price-to-sales ratio is 78.19, and its price-to-book ratio is 5.38.

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