We recently published a list of 15 Worst 52-Week Low Stocks to Buy Now According to Short Sellers. In this article, we are going to take a look at where Coherus BioSciences, Inc. (NASDAQ:CHRS) stands against the other worst 52-week low stocks to buy now according to short sellers.
The U.S. Federal Reserve conducting a 50 basis point interest rate cut was the catalyst that stocks needed to bounce back from a period of stagnation. After weeks and months of uncertainty about what the Fed would do, certainty is slowly creeping into the market, helping bolster investor sentiments.
With the S&P 500 back to record highs, it’s the Nasdaq 100 that appears to be making the most significant moves, having gained more than 3% in the aftermath of the 50 basis point interest rate cut. The spike in the tech-heavy U.S. index is a clear indicator that tech stocks are well poised to edge higher after weeks of stagnation.
The interest rate cut is expected to positively impact short-term bank borrowing costs, making it easy for people and businesses to access cheap capital to fuel economic activity that has been slowing in recent months. Additionally, it should positively impact various consumer products like mortgages, auto loans, and credit cards.
While there were concerns that the U.S. economy was slowing due to disappointing employment data and a slowdown in the manufacturing sector, Fed Chair Jerome Powell reiterated that the 50 basis point cut was all about ‘recalibrating’ the economy.
Initially, there were concerns that the FED coming through with a 50 basis point would fuel fears about the health of the U.S. economy and consequently rattle stocks. However, that was not the case as stocks rallied, signaling that investors were optimistic about the economy and long-term outlook in the market.
Tom Porcelli, top U.S. economist at PGIM Fixed Income Policy, thinks the Fed policy was set up to handle much more inflation. Now that inflation is getting close to the target, the Fed can start to ease off on the tight money they’ve been applying. Consequently, the aggressive interest rate cut is not because we’re heading into a recession but because we want to keep the economic growth going.
While the focus will be on stocks that have been edging higher for the year, the focus is slowly shifting to stocks that have bottomed and that market participants are bearish on. Stocks that have been battered to 52-week lows are increasingly turning out to be bargains, especially on the monetary policy improving after months of uncertainty. Nevertheless, it is unclear whether stocks with high short interest rates will bounce back after coming under immense pressure over the past nine months.
With the Fed cutting interest rates with a bang, CNBC commentator and Fast Money host Jim Cramer believes investors should start paying attention to stocks well poised to benefit from a low interest rate environment. Some stocks to consider are companies providing products and services that depend on consumers’ purchasing power.
Our Methodology
We used the Finviz screener to find stocks that were trading near their 52-week lows and that had high short interest (at least 5%). We then picked the stocks with the highest short interest and ranked them in ascending order of this metric. We have also added the hedge fund sentiment for these stocks.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. 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 close-up of a biopharmaceutical technology device in a pristine laboratory.
Coherus BioSciences, Inc. (NASDAQ:CHRS)
52 Week Range: $1.01 – $4.47
Current Share Price: $1.13
Short % of Shares Outstanding: 21.83%
Number of Hedge Funds holding stakes as of Q2 2024: 16
Coherus BioSciences, Inc. (NASDAQ:CHRS) is a biopharmaceutical company that develops and commercializes cancer treatments. The company’s woes started early in the year after it announced a deal to divest one of its units, Sandoz, for $170 million. With the ale, the company secured much-needed financing for reducing debt and interest costs
Nevertheless, the sale also translated to losing a key revenue stream and long-term growth driver. The company had generated $40 million in sales from Cimeril products under the Sandoz unit, representing 40% growth in the third quarter of last year. The sale all but affirmed the financial challenges that Coherus faces, which has been one of the catalysts behind the high short interest of 21.83%
Coherus BioSciences, Inc. (NASDAQ:CHRS) delivered mixed second-quarter results, with revenues increasing to $65 million from $58.7 million a year ago. The company is still struggling to post a profit, having generated a net loss of 16.4 million, a significant improvement from a net loss of $32.8 million a year ago.
Analysts at UBS have downgraded the stock, citing concerns about Coherus BioSciences, Inc. (NASDAQ:CHRS)’s growth metrics. Of great concern is the fact that the company is struggling to monetize its core products, Yusimry and Cimerli. For instance, it has reduced the expected compound annual growth rate (CAGR) for revenues from 2024 to 2028, which has been revised to a decline of 4%.
The adjustments underline changing expectations about the company’s long-term prospects and performance. Coherus BioSciences, Inc. (NASDAQ:CHRS)’s largest investor in the second quarter of 2024 is David Rosen’s Rubric Capital Management, which owns 10.40 million shares worth $17.99 million. An Insider Monkey survey of 912 hedge funds for the same time period revealed that 16 funds had also invested in the firm.
Here is what Aristotle Small Cap Equity Strategy said about Coherus BioSciences, Inc. (NASDAQ:CHRS) in its fourth quarter 2023 investor letter:
“Coherus BioSciences, Inc. (NASDAQ:CHRS), a commercial-stage biopharmaceutical company engaged in the development and commercialization of biosimilar and immune-oncology therapeutics for major regulated markets, was removed from the portfolio. Despite the company’s efforts to grow and diversify its revenue base through a series of upcoming product launches, a variety of factors contributed to our decision to step away from our investment including a shift in company focus, competitive pricing pressures, and a recent C-suite departure.”
Overall CHRS ranks 1st on our list of worst 52-week low stocks to buy now according to short sellers. While we acknowledge the potential of CHRS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CHRS, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
