We recently published a list of 10 Small–Cap Stocks Insiders Are Selling Recently. In this article, we are going to take a look at where Intellia Therapeutics, Inc. (NASDAQ:NTLA) stands against other small–cap stocks insiders are selling recently.
Why are some investors focusing on stocks with smaller market capitalizations? Among some of the reasons are diversification of their portfolios, because small-cap stocks usually operate in different industries than large-cap companies. Another reason is the share price, which is often lower than that of companies with larger market capitalization (above $10 billion), making them more affordable.
Some investors’ strategy is finding nascent companies with strong growth potential, which can bring high returns once the companies have grown. Even though small-cap stocks often carry higher risks and are more prone to market volatility, they also offer investors more room for growth.
What are some ways to assess small-cap stocks that are worth investing in? While there’s no single simple or complicated rule that investors can follow to achieve secure results, some strategies can help. One strategy is to keep track of insider trading activity. Insiders or, in other words, people in high positions within companies, such as CEOs, CFOs, directors and other executives have valuable insights into the company’s strategic moves, plans, and initiatives. A CEO’s investment in a company’s stock can sometimes signal strong confidence in the company’s future.
Does this mean that it is a bad sign for the company when insiders sell their shares? Not necessarily; just like insider buying activity doesn’t always mean stock is heading for growth. When insiders are selling their shares, it can sometimes mean that the management is losing confidence. On the other hand, it also happens that large shareholders just want to trim their holdings to more appropriate position sizes based on the risk/reward. Insiders can also decide to sell their shares due to personal financial reasons that have nothing to do with the company.
While both insider selling and buying can be driven by various motives, it’s important to consider these moves within the broader context of the company’s fundamentals, industry trends, and overall market conditions.
To identify the 10 large-cap stocks insiders are selling recently, we considered only stocks with a market capitalization of between $250 million to $2 billion. We first used Insider Monkey’s insider trading stock screener and looked for stocks with at least two insiders selling over the last two months.
With each stock we note the number of recent insider sales and the company’s current market capitalization. But why is it important to follow insider activity? Our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds, focusing on insider trading and stock picks from hedge fund investor newsletters and conferences. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A lab scientist peering into a microscope focused on gene editing technology.
Intellia Therapeutics, Inc. (NASDAQ:NTLA)
Number of insiders selling: 8
Market capitalization: $1.032B
Intellia Therapeutics, Inc. (NASDAQ:NTLA) is a clinical-stage biotechnology company focused on developing novel, potentially curative therapeutics leveraging CRISPR-based technologies. The company is focused on developing new treatments for both in vivo and ex vivo applications. Its flagship program, NTLA-2011 is focused on treating transthyretin amyloidosis, which is currently an incurable disease. Intellia also has various other programs in its pipeline that are in different trial stages.
In January, eight insiders, including President and CEO, sold a total of approximately $833,916 worth of Intellia shares, at an average price of $11.92. The stock is currently trading at $9.64, having declined 17.32% year-to-date.
As many as 20 Wall Street analysts have an average “Strong Buy,” rating on Intellia stock, and the price target is $43.44, with the highest forecast of $91.00 and the lowest at $11.00, according to data from TipRanks. The average price forecast represents a 350.62% change from the last price of $9.64.
On January 27, Morgan Stanley downgraded Intellia Therapeutics stock from “Overweight” to “Equal Weight”, and also considerably lowered its price target – from $56 to $11. Morgan Stanley noted huge competition from alternative therapies that do not involve gene editing.
For the third quarter of 2024, Intellia reported collaboration revenue was $9.1 million compared to $12.0 during the third quarter of 2023. The $2.9 million decrease was mainly driven by a reduction in revenue related to the AvenCell license and collaboration agreement. Net loss for the quarter was $135.7 million, compared to $122.2 million during the third quarter of 2023.
Intellia Therapeutics (NASDAQ:NTLA) is also one of Cathie Wood’s Stock Portfolio: 2025 Stock Picks.
Overall, NTLA ranks 4th on our list of small–cap stocks insiders are selling recently. While we acknowledge the potential of NTLA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NTLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
