Why Synta Pharmaceuticals Is Poised to Plunge

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company Synta Pharmaceuticals (NASDAQ: SNTA  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Synta and see what CAPS investors are saying about the stock right now.

Synta facts

Headquarters (founded)

Lexington, Mass. (2000)

Market Cap

$613.9 million

Industry

Biotechnology

Trailing-12-Month Revenue

$3.6 million

Management

Co-Founder/CEO Dr. Safi Bahcall
CFO Keith Ehrlich

Return on Capital (average, past 3 years)

(67%)

Cash/Debt

$55.1 million / $14.4 million

Competitors

Infinity Pharmaceuticals
Novartis

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 22% of the 37 All-Star members who have rated Synta believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, zzlangerhans, touched on the stock's seemingly unsustainable valuation:

Too much too soon for Synta, a stock enjoying the 2013 biopharma rocket effect. Ganetespib has proven very little so far, and certainly not enough to justify a [$650M] market cap. Management has been taking full advantage of the precipitous increase in stock value with dilutive financings to ensure that their salaries will be around for years even of ganetespib fails miserably. We shouldn't have much longer to wait with topline PFS and OS data from the phase II portion of the GALAXY trial of ganetespib in advanced NSCLC expected later this year. I'm expecting a heavy emphasis on subset analyses.

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