Nasdaq-Listed Companies

Is T2 Biosystems' (NASDAQ:TTOO) 114% Share Price Increase Well Justified?

Some T2 Biosystems, Inc. (NASDAQ:TTOO) shareholders are probably rather concerned to see the share price fall 65% over the last three months. Despite this, the stock is a strong performer over the last year, no doubt about that. Indeed, the share price is up an impressive 114% in that time. So it is important to view the recent reduction in price through that lense. Only time will tell if there is still too much optimism currently reflected in the share price.

Because T2 Biosystems made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year T2 Biosystems saw its revenue grow by 148%. That's a head and shoulders above most loss-making companies. Meanwhile, the market has paid attention, sending the share price soaring 114% in response. That sort of revenue growth is bound to attract attention, even if the company doesn't turn a profit. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growthNasdaqGM:TTOO Earnings and Revenue Growth May 12th 2021

Take a more thorough look at T2 Biosystems' financial health with this free report on its balance sheet.

A Different Perspective

It's good to see that T2 Biosystems has rewarded shareholders with a total shareholder return of 114% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 13% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand T2 Biosystems better, we need to consider many other factors. Case in point: We've spotted 5 warning signs for T2 Biosystems you should be aware of, and 2 of them make us uncomfortable.

But note: T2 Biosystems may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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