A biotech company with recent encouraging trial results and a public offering of shares prompted reactions from insiders and a beneficial owner. That included the largest insider purchase of the past week, but another health-care-related company and a specialty retailer also saw insiders stepping up to the buy window.
A well-known adage reminds us that corporate insiders and 10% owners really only buy shares of a company because they believe the stock price will rise and they want to profit from it. Thus, insider buying can be an encouraging signal for potential investors. This is all the more so during times of uncertainty in the markets, and even when markets are near all-time highs.
Remember that when the earnings-reporting season is in full swing, many insiders are prohibited from buying or selling shares. Below are some of the more notable insider purchases that were reported recently.
EyePoint Pharmaceuticals
- Buyer(s): 10% owner Cormorant Asset Management
- Total shares: nearly 1.92 million
- Price per share: $19.30 to $34.75
- Total cost: more than $41.8 million
Shares soared after EyePoint Pharmaceuticals Inc. (NASDAQ: EYPT) reported that its treatment for wet age-related macular degeneration met its primary and secondary endpoints in a Phase 2 trial. The share price was less than $7 before the news. This beneficial owner’s purchase came at about the same time two executives exercised options. Afterward, the company announced a public offering of shares, and a director sold a million shares. The stock hit a multiyear high of $24.16 and was last seen more than 479% higher year to date. Analysts on average recommend buying the shares, and their $39.75 consensus target suggests there is still room to run.
Shoe Carnival
- Buyer(s): Board chair Wayne Weaver
- Total shares: 206,500
- Price per share: $25.16
- Total cost: almost $5.2 million
This purchase of Shoe Carnival Inc. (NASDAQ: SCVL) shares raised Weaver’s stake to nearly 3.89 million. He is also a beneficial owner of the Indiana-based footwear purveyor. Shares are up about 13% since disappointing quarterly results were posted last month, and they were last seen trading for more than $27 apiece, above Weaver’s purchase price. However, the $27.33 consensus price target suggests analysts currently see little upside potential.
Pulse Biosciences
- Buyer(s): a director
- Total shares: over 510,100
- Price per share: $9.06 to $10.38
- Total cost: more than $4.7 million
This director began buying Pulse Biosciences Inc. (NASDAQ: PLSE) shares last month and has also exercised options. This California-based medical instrument maker also saw its chief executive and another officer buy some shares back in November, following the latest quarterly report. The share price is up about 109% since that report and recently hit a multiyear high of $11.08. The stock has pulled back to less than $10 since then, within the director’s purchase price range. (These 30 NASA inventions reshaped our world.)
Erasca
- Buyer(s): CEO Jonathan Lim and two directors
- Total shares: 1.04 million
- Price per share: $1.65 to $1.84
- Total cost: more than $1.7 million
With a stake of around 12.9 million shares, Lim is a beneficial owner of San Diego-based biotech Erasca Inc. (NASDAQ: ERAS), as well as its founder. He also bought 1.3 million shares earlier this year. The stock is down about 19% since the most recent earnings report and around 73% year to date. The consensus price target is up at $9.29, but the share price has not been that high since the summer of 2022. Yet, analysts on average recommend buying shares.
Akero Therapeutics
- Buyer(s): director
- Total shares: 100,000
- Price per share: $16.89 to $17.00
- Total cost: nearly $1.7 million
After buying 400,000 Akero Therapeutics Inc. (NASDAQ: AKRO) shares back in September, this director has returned to the buy window. Note that between then and now, a few officers sold some shares. The stock is a favorite of hedge funds, and shares have risen more than 25% in the past month. They were last seen changing hands at near $20 apiece, which is above the director’s latest purchase price range. The consensus target of $42.88 suggests over 120% upside potential in the next 12 months.
Citi Trends
- Buyer(s): 10% owner Fund 1 Investments
- Total shares: over 78,700
- Price per share: $23.58 to $23.79
- Total cost: more than $6.2 million
This beneficial owner has been indirectly buying Citi Trends Inc. (NASDAQ: CTRN) shares since early October. Just this week, an apparently nervous board of directors adopted a so-called poison pill to prevent a shareholder from acquiring a controlling interest. The shares traded above $90 about two years ago but were last seen changing hands near $22. That is below the purchase price range mentioned above, but it is also 22% or so higher than six months ago. For now, the consensus recommendation is to buy shares.
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