The job report came in strong for the last month, with non-farm payrolls increased by 372,000, topping the Dow Jones estimate of 250,000, while the unemployment rate stood at 3.6%. This underscores the strength of the U.S. economy, with the employment scenario remaining strong.
This is expected to stiffen the Federal Reserve’s resolve toward a three-quarter-point interest rate at its July meeting. Hence, while the job data is expected to lessen fears of an impending recession, it might further raise uncertainty regarding interest rates. Moreover, consumers cut spending adjusted for inflation for the first time this year in May, clouding the economic outlook.
Amid the market uncertainties, we think these under $5 stocks, Codiak BioSciences, Inc. (CDAK) and Olema Pharmaceuticals, Inc. (OLMA), might be best avoided now, given their weak fundamentals.
Codiak BioSciences, Inc. (CDAK)
CDAK is a clinical-stage biopharmaceutical company that develops exosome-based therapeutics for the treatment of several conditions. The company’s lead product candidates are exoSTING and exoIL-12 exosome therapeutic candidates for treating various solid tumors.
On July 5, CDAK partnered with Coalition for Epidemic Preparedness Innovations (CEPI) to develop vaccines that provide broad protection against SARS-CoV-2 (including its variants) and other Betacoronaviruses. CEPI is expected to provide seed funding to CDAK for this venture. However, the gains from this partnership might take some time to realize.
For the fiscal first quarter that ended March 31, CDAK’s total revenue decreased 3.7% year-over-year to $12.70 million. Loss from operations and net loss came in at $8.25 million and $8.03 million, respectively. Net loss per share attributable to common stockholders stood at $0.36.
The consensus EPS estimate of a negative $2.27 for the fiscal year 2022 indicates a 33.5% year-over-year decrease. Likewise, the consensus revenue estimate for the same year of $14.33 million reflects a decline of 37.5% from the prior year.
The stock has lost 82.3% over the past year and 71.4% year-to-date to close its last trading session at $3.19.
CDAK’s POWR Ratings reflect this bleak outlook. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. The stock has a Momentum grade of F, and a Stability grade of D. CDAK is ranked #60 in the 401-stock Biotech industry. The industry is rated F.
Click here to see the additional POWR Ratings for CDAK (Growth, Value, Sentiment, and Quality).
Olema Pharmaceuticals, Inc. (OLMA)
Clinical-stage biopharmaceutical company OLMA discovers, develops, and commercializes women’s cancer therapies. Its lead product candidate is the OP-1250, an estrogen receptor (ER) antagonist and a selective ER degrader.
On June 9, OLMA and Aurigene Discovery Technologies Limited announced an exclusive global license agreement for commercializing novel small molecule inhibitors of an undisclosed oncology target. Under this agreement, OLMA is expected to provide an upfront licensing payment of $8 million to Aurigene for rights and contribute funding during the research term.
OLMA’s loss from operations increased 50.5% year-over-year to $23.25 million in the fiscal first quarter that ended March 31. Net loss and net loss per share attributable to common stockholders came in at $23.03 million and $0.58, up 50.1% and 48.7% from the prior-year period.
Street EPS estimate for the quarter that ended June 2022 of a negative $0.65 indicates a 54.8% year-over-year decline.
Over the past year, OLMA’s stock has declined 81.9% and 48.4% year-to-date to close its last trading session at $4.83.
It’s no surprise that OLMA has an overall rating of D, which translates to Sell in our POWR Rating system. The stock has an F grade for Momentum and a D for Growth and Quality. It is ranked #285 in the Biotech industry.
To see the additional POWR Ratings for Value, Stability, and Sentiment for OLMA, click here.
CDAK shares were trading at $3.08 per share on Monday morning, down $0.11 (-3.45%). Year-to-date, CDAK has declined -72.35%, versus a -18.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
2 Stocks Trading Below $5. Should Investors Buy or Sell? StockNews.com
