What’s Next For CRISPR Stock After An 11% Fall In A Week?

The stock price of CRISPR Therapeutics, a biotechnology gene editing company focused on developing gene-based medicines for human diseases, reached an all-time high of $210 in January of this year before a sell-off drove the stock price down over 40% to its current level of around $119. CRSP stock has fallen 11% over the last five days, as investors focused on value stocks, and shifted away from high-valuation companies, such as CRISPR. In fact, the stock prices of frontline pharmaceutical companies, including Pfizer PFE , Merck MRK , and Johnson & Johnson JNJ , have fared better over the recent past. But will the CRSP stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent?

According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for CRISPR stock average a little under 8% in the next one-month (twenty-one trading days) period after experiencing an 11% drop over the previous week (five trading days).

Furthermore, we think the outlook for gene-editing stocks is looking better. Some of the gene-editing stocks have done exceptionally well over the recent months. For instance, Intellia’s stock is up 3x year-to-date, as it has progressed in early clinical trials, validating that gene-editing technology works in humans and also that it remains safe. As more of these companies move candidates into clinical stages and provide readouts, we could see movements in stock prices.

Moreover, gene-editing companies could be ripe for buyouts. For instance, the management of Covid-19 vaccine maker - Moderna - has indicated that the company is interested in expanding into other areas, including gene editing. Considering that a majority of gene-editing stocks are small to mid-cap companies, they could easily be acquired by larger players such as Moderna. While companies such as Intellia and Editas may be more lucrative to any buyer, the overall momentum is likely to bode well for other stocks also, including CRSP. Our indicative theme of Gene Editing stocks has more details.

But how would these numbers change if you are interested in holding CRISPR stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test CRISPR stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF CRSP stock moved by -5% over five trading days, THEN over the next twenty-one trading days CRSP stock moves an average of 6.3%, with a 58% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of CRISPR Stock Movements:

Question 1: Is the average return for CRISPR stock higher after a drop?

Answer: Consider two situations,

Case 1: CRISPR stock drops by -5% or more in a week

Case 2: CRISPR stock rises by 5% or more in a week

Is the average return for CRISPR stock higher over the subsequent month after Case 1 or Case 2?

CRSP stock fares better after Case 2, with an average return of 6.3% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 6.4% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how CRISPR Therapeutics AG stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold CRISPR stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you - at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For CRSP stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for CRISPR Therapeutics AG after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks - although CRSP stock appears to be an exception to this general observation.

It’s pretty powerful to test the trend for yourself for CRISPR Therapeutics AG stock by changing the inputs in the charts above.

While CRSP stock may see more upside, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Abbott vs. Corcept.

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