Down 19% in 1 Day, Is Catalyst Pharmaceuticals a Smart Contrarian Buy?
In the last 30 days, shares of Catalyst Pharmaceuticals (NASDAQ: CPRX) are down by 31%, with the stock crashing by 19% on May 10 when the company reported its first-quarter earnings. As you might be guessing, the culprit for the tumble was the company's abysmal performance in Q1, which saw its revenue leap upward by 98% year over year, and its earnings per share balloon to the tune of 117%.
Of course, that's not an abysmal performance at all -- it's actually phenomenal. So why did this stock crash, and could it still be worth buying anyway? Let's start by examining the first question.
In truth, the reason for Catalyst's share price collapse is quite simple, even if it's a touch frustrating for those who plan to hold the stock for the long term, like myself. No, it didn't report that one of its clinical trials had whiffed or that regulators at the Food and Drug Administration had rebuffed one of its attempts at commercializing a new drug. It simply reported an excellent quarter's results when the crowd was anticipating that the results would be even more stellar.
Source Fool.com
