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Rhythm Pharmaceuticals, Inc. (RYTM) Surges 42.2%: Is This an Indication of Further Gains?

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Rhythm Pharmaceuticals, Inc. (RYTM - Free Report) shares soared 42.2% in the last trading session to close at $6.67. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 48% gain over the past four weeks.

Rhythm’s shares have skyrocketed after management announced positive data from the phase II study, evaluating its lead product candidate, setmelanotide, for treating severe obesity and hyperphagia in people with hypothalamic obesity. Data from the study demonstrated that setmelanotide was well tolerated over a 16-week treatment period, achieving its endpoint of a 5% decline in BMI from baseline in evaluable patients. Setmelanotide also achieved a meaningful reduction in hunger scores.

This company is expected to post quarterly loss of $1.03 per share in its upcoming report, which represents a year-over-year change of -47.1%. Revenues are expected to be $2.9 million, up 974.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Rhythm Pharmaceuticals, Inc., the consensus EPS estimate for the quarter has been revised 11.6% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on RYTM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Rhythm Pharmaceuticals, Inc. is a member of the Zacks Medical - Biomedical and Genetics industry. One other stock in the same industry, Bristol Myers Squibb (BMY - Free Report) , finished the last trading session 0.7% lower at $75.01. BMY has returned 2.7% over the past month.

For Bristol Myers, the consensus EPS estimate for the upcoming report has changed -0.2% over the past month to $1.87. This represents a change of -3.1% from what the company reported a year ago. Bristol Myers currently has a Zacks Rank of #3 (Hold).


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