Well positioned to deliver growth? – Verastem Inc. (VSTM), Dynatrace Inc. (DT)

Verastem Inc. (NASDAQ: VSTM) shares are -1.49% down in the year-to-date (YTD) period and have moved 0.00% or $0.0 lower in the latest trading session. However, stock’s trailing 12-month performance remains nearly +7.32% lower. Comparatively, the stock is -71.73% down YTD and -25.00% over the trailing 3-month period. If we look at the shorter duration, its week performance is -7.04% and -6.38% over the month.

Analyst Recommendations

On May 10, 2019, Raymond James recommended the VSTM stock is a Mkt Perform, while earlier, BTIG Research had Downgrade the stock as a Neutral on June 20, 2019. 3 analysts offering the recommendations for the stock have a consensus rating of 2.20 to suggest that the VSTM stock is a “Moderate Buy. 0 of the 3 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 2 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $1.32. The forecasts give the Verastem Inc. stock a price target range of $5.00 on the higher side while at least one analyst think the stock could plunge to a low of $3.00. The two limits represent an upside potential of 73.6% or 56.0%.

Earnings Forecast

Analysts estimate the earnings to increase 6.70% in the current quarter to $0.04, up from the -$0.41 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.45, up 116.30% from -$2 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.1 and -$0.07. Wall Street estimates earnings per share to be at an average of -$0.29 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 6 over the last 12 months, while SEC filings reveal that there have been 2 insider sales over the same period. Insiders have purchases 1,268,970 shares while those sold by company executives and officers stand at 2,462,600. The last 3 months have seen insiders trade a total of 1,031,470 and 1,161,300 in purchases and sales respectively.

RA CAPITAL MANAGEMENT, L.P., a 10% Owner at the company, sold 1,301,300 shares worth $3.0 million at $2.31 per share on Apr 27. The 10% Owner had earlier sold another 1,161,300 VSTM shares valued at $2.22 million on Jun 25. The shares were sold at $1.91 per share.

Dynatrace Inc. (NYSE:DT), on the other hand, is trading around $43.63 with a market cap of $12.37B and analyst research firms have a positive stance on its shares. Analysts predict that the stock will reach $48.94 and spell out a more modest performance – a 10.85% return. Some analysts are even forecasting $0.48 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Dynatrace Inc. (DT) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

DT’s operating margin was negative on the trailing 12 months basis, remaining steady at -19.80%, while the operating expenses over the recent quarter were at $103.4 million. This represented a 33.51% of the company’s total revenues which amounted $155.51 million. With this in place, we can see that the company’s diluted EPS inclined $0.05 on the year-over-year period, shrinking to -$0.21 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $2.05 billion from $2.04 billion over the previous quarter. The cash flow from operating activities totaled $37.01 million, significantly higher than the $34.17 million reported in the year-ago quarter. The company’s free cash flow for the quarter was $32.59 million.

Insider activity

Insiders have transacted a total of 73 times at Dynatrace Inc. over the last 6 months, with insider purchases undertaken 4 times and accounting for 237,800 shares. Insider sales totaled 53,232,165 shares over the same period, with these deals completed in 69 transactions. Looking at these numbers, we realize that net purchases over that period are -65.0 shares. Insiders now hold a total of 5.47M shares after the latest sales, with -90.70% net shares purchased.

Major holders

Insiders own 0.90% of the company shares, while shares held by institutions stand at 92.40% with a share float percentage of 155.57M. Investors are also buoyed by the number of investors in a company, with Dynatrace Inc. having a total of 189 institutions that hold shares in the company. The top two institutional holders are Thoma Bravo, LP with over 116.49 million shares worth more than $4.73 billion. As of Jun 29, 2020, Thoma Bravo, LP held 41.45% of shares outstanding.

The other major institutional holder is Vanguard Group, Inc. (The), with the investment firm holding over 14.38 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $583.9 million and represent 5.12% of shares outstanding.