Xencor Surges 10.5%: Is This an Indication of Further Gains?

Xencor XNCR shares rallied 10.5% in the last trading session to close at $21.13. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 19.8% gain over the past four weeks.

This jump in share price came after the company announced that it was floating a secondary issue of common stock, along with pre-funded warrants, to raise nearly $175 million in gross proceeds. Management intends to issue more than 6.6 million shares at $18 apiece, along with pre-funded warrants to buy an additional 3 million shares for $17.99 a warrant.

Xencor will likely use these funds to support its pipeline development. Last week, the company unveiled details on four new programs targeting autoimmune diseases.

This biotech developing antibodies for severe autoimmune/allergic diseases and cancer is expected to post quarterly loss of $1.01 per share in its upcoming report, which represents a year-over-year change of -152.5%. Revenues are expected to be $7.74 million, down 86.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Xencor, the consensus EPS estimate for the quarter has been revised 0.8% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on XNCR 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).

Xencor belongs to the Zacks Medical - Drugs industry. Another stock from the same industry, USANA Health Sciences USNA, closed the last trading session 0.2% lower at $37.28. Over the past month, USNA has returned -3%.

For USANA Health, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.49. This represents a change of -17% from what the company reported a year ago. USANA Health currently has a Zacks Rank of #4 (Sell).

To read this article on Zacks.com click here.