Can Natera Stock Rebound After A 14% Fall In A Week?

by Trefis Team
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The stock price of Natera (NASDAQ:NTRA), a clinical genetic testing company, has seen a large 14% drop in just five trading sessions. The decline is driven in part by the broader sell-off in high growth stocks, and profit booking at higher levels. Note that NTRA stock rallied 5x from $25 levels seen in March 2020 to $125 seen in mid-February 2021. The large rally can primarily be attributed to new tests being approved by the regulators. Just last month, the U.S. FDA granted Breakthrough Device Designations for the Signatera molecular residual disease (MRD) test. The company also reported strong revenue growth during Q4 2020 as well as for the full year 2020, led by an increase in total number of tests. But now that the stock has fallen 14% in just five days, will NTRA stock resume its downward trajectory over the coming weeks, or is a rise in the stock imminent? Using the recent trend (14% fall in a week) and six years of historical stock data, the Trefis AI engine finds that the stock will likely move 5% over the next one month (twenty-one trading days), outperforming the broader indices. 

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using historical stock data, returns for NTRA stock average around 6% in the next one-month (twenty-one trading days) period after experiencing a 5% fall in a week (five trading days). Notably, though, the stock is likely to beat S&P500 returns by 5% over the next month (twenty-one trading days).

But how would these numbers change if you are interested in holding NTRA 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 Natera 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 one day!

MACHINE LEARNING ENGINE – try it yourself:

IF NTRA stock moved by -5% over five trading days, THEN over the next twenty-one trading days, NTRA stock moves an average of 6%, which implies an excess return of 5% compared to the S&P500.

More importantly, there is 62% probability of a positive return over the next twenty-one trading days and a 58% probability of a positive excess return after a -5% change over five trading days, based on historical data.

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

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

Answer: Consider two situations,

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

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

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

NTRA stock fares better after Case 1, with an average return of 5.8% 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 5.3% 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 Natera 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 Natera 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!

You can try the engine to see what this table looks like for Natera 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.

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

While NTRA stock may see higher levels, 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 Pfizer vs Merck.

See all Trefis Price Estimates and Download Trefis Data here

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