Cempra, Inc. (NASDAQ: CEMP) shares fell in early trading yesterday lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.
Meanwhile, U.S. stocks edged lower Monday, with major indexes retreating from record levels.
The Dow Jones Industrial Average DJIA, -0.31% fell 48 points, or 0.2%, to 19,916, while the S&P 500 index SPX, -0.29% lost 5 points to 2,272, a drop of 0.2%. The Nasdaq Composite Index COMP, -0.03% rose 4 points to 5,529, a gain of about 0.1%.
Analysts at Vetr Inc. downgraded shares of Cempra, Inc. (NASDAQ: CEMP) from Strong-Buy to Buy in a research note to investors today. With a rating of Buy on the stock, the company has a 52-week high of $26.95. The one-year price target of $10.58 is above the opening price of $3.75, that has caused a fair amount of other analysts to report on the stock recently. Downgrades occur when analysts believe that the future prospects for the security have weakened from the original recommendation, usually caused by a considerable and major digression in the company’s operations, future direction or industry.
Shares of Cempra, Inc. (NASDAQ: CEMP) opened at $3.75 yesterday trading between $3.35 and $3.80, and last traded at $3.45, which is a decrease of $0.30 from the previous closing price.
Cempra, Inc. (NASDAQ: CEMP) now has a market cap of 180.71M.
Cempra, Inc. (NASDAQ: CEMP) Average Daily Trading Volume
The stock’s average daily volume is 2,989,720 shares out of a total float 49,231,000 and some 889,435 shares traded hands yesterday, 22 percent below the average. lower than normal. Look for trading volume to pick up in the coming days as swing traders often use swings in trading volume to identify heavy volume accumulation or distribution by institutional investors.
As with all potential breakouts, investors look for volume to be at least 40%-50% higher than normal on the breakout to show that fund managers and other professional investors are jumping in.
Institutional sponsorship is defined by ownership of a stock by mutual funds, banks, pension funds and other large institutions.
Institutional investors such as these have teams of analysts that research thousands of stocks, so it is good corroboration to see them taking a postion in a stock you’re researching.
Cempra, Inc. (NASDAQ: CEMP) Moving Averages
A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.
This is because the average acts like a floor (support), so the price bounces up off of it.
In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.
By tracking the activity of these professional investors—and the moving averages they affect—it allows for traders to make more effective decisions on trades.
Trades for Cempra, Inc. (NASDAQ: CEMP) have ranged from $2.55 – 26.95, and the stock now has a 50-day MA of $6.15 and 200-day MA of $16.46. Today’s last price is 87.20%% under the 52 week high of $26.95.
Earnings growth is a critical factor to consider when investing in stocks and investors look for companies that have been successful at growing their earnings by at least 25% for the past 3 years.
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