Strength Seen in Xoma (XOMA): Can Its 11.2% Jump Turn into More Strength?

Xoma (NASDAQ:XOMA) shares ended the last trading session 11.2% higher at $23.66. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 16.2% loss over the past four weeks.

The company signed an agreement with Affitech to purchase a future stream of commercial payment rights to Roche’s eye-disorder candidate, faricimab, for $6 million. A biologics license application seeking approval for the drug as a potential treatment for wet age-related macular degeneration and diabetic macular edema is under priority review with the FDA. A potential approval, that is expected early next year, should be beneficial for XOMA Corporation as the drug targets a market with high unmet need and low competition. The shares of XOMA Corporation are likely to have gained in anticipation of robust payments following potential approval for faricimab.

This drug developer is expected to post quarterly loss of $0.23 per share in its upcoming report, which represents a year-over-year change of -130%. Revenues are expected to be $3.33 million, up 494.6% 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 Xoma, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on XOMA 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 >>>>