Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company Geron (Nasdaq: GERN ) has received a distressing two-star ranking. While one-star stocks have been the worst performers, our data has shown that two-star stocks still lag the market by a significant margin and should be approached with caution; conversely, highly rated stocks have outperformed the S&P.
With that in mind, let's take a closer look at Geron's business, and see what CAPS investors are saying about the stock right now.
Geron facts
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Headquarters (founded)
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Menlo Park, California (1990)
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Market Cap
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$561.3 million
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Industry
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Biotechnology
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TTM Revenue
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$6.95 million
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Management
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CEO Dr. Thomas Okarma (since 1999)
CFO David Greenwood (since 1995)
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Return on Equity (average, last three years)
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(21.3%)
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Competitors
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Bristol-Myers Squibb (NYSE: BMY )
GlaxoSmithKline (NYSE: GSK )
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CAPS members bearish on GERN also bearish on
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General Motors (NYSE: GM )
Overstock.com (Nasdaq: OSTK )
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CAPS members bullish on GERN also bullish on
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Suntech Power (NYSE: STP )
Google (Nasdaq: GOOG )
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Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.
Over on CAPS, fully 35 of the 151 All-Star members who have rated Geron -- some 23% -- believe the stock will underperform the S&P 500 going forward. These bears include tenmiles and zzlangerhans, both of whom are ranked in the top 1% of our community.
Just this past Friday, tenmiles addressed Geron's seemingly unsustainable price performance: "I hope the science works, but believe the stock is ahead of itself near term."
In a pitch from three weeks ago, zzlangerhans shares that bearishness and explains why the stock is flying dangerously high :
The premise that an Obama presidency increases the value of stem cell biotechs is faulty for two reasons. The first is that Obama can only control the availability of federal funds for stem cell research. There is no reason to expect any direct effect on availability of funds or credit for biotech companies. The second is that no matter how much additional money and resources might become available to these companies in the near future, science is not like politics. The winner isn't the one who raised the most money, it's the one with the right ideas. And Geron hasn't proven anything to anyone about having the right ideas. ... A fat slug of cash seems to be the only mark in their favor.
What do you think about Geron, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.
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