Yahoo Finance Who Just Ramped Up Their Shares In Pharming Group NV. (AMS:PHARM)?
Pharming Group N.V., a specialty pharmaceutical company, develops and produces human therapeutic proteins for the treatment of rare diseases and unmet medical needs. Pharming Group’s insiders have invested more than 1 million shares in the small-cap stocks within the past three months. It is widely considered that insider buying stock in their own companies is potentially a bullish signal. A two-decade research published in The MIT Press (1998) showed that stocks following insider buying outperformed the market by 4.5%. However, it may not be sufficient to base your investment decision merely on these signals. I’ve analysed two possible reasons driving the insiders’ decision to ramp up their investment of late.
Check out our latest analysis for Pharming Group
Who Are The Insiders?
Over the past three months, more shares have been bought than sold by Pharming Group’s’ insiders. In total, individual insiders own over 22 million shares in the business, which makes up around 3.68% of total shares outstanding. The insider that recently bought more shares is Bruno Giannetti (management) .
Is Future Growth Outlook As Bullish?
On the surface, analysts’ revenue growth projection of 157.14% over the next three years provides a fantastic outlook for the business which is consistent with the signal company insiders are sending with their net buying activity. Delving deeper into the line items,Pharming Group is expected to experience an impressive double-digit top-line growth next year, which Insiders expecting earnings improvement may increase their holdings in the company now when the market has not fully accounted for the growth potential.
Did Stock Price Volatility Instigate Buying?
Alternatively, the timing of these insider transactions may have been driven by share price volatility. A correlation could mean directors are trading on market inefficiencies based on their belief of the company’s intrinsic value. Pharming Group’s shares ranged between €1.49 and €1.16 over the past three months. This suggests moderate volatility with a share price movement of 28.45%. Perhaps not a significant enough movement to warrant transactions, thus motivation may be a result of their belief in the company in the future or simply personal portfolio rebalancing.
Next Steps:
Pharming Group’s insider meaningful buying activity tells us the shares are currently in favour, which is fairly consistent with earnings growth expectations, though share price volatility was perhaps inconsequential to cash in on any mispricing. Although insider buying can be a useful prompt, following the lead of an insider, however, will never replace diligent research. I’ve compiled two key aspects you should further examine:
Financial Health: Does Pharming Group have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Pharming Group? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
