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BRAZIL – November 4, 2020: The FibroGen logo is depicted on a smartphone in this picture illustration. [+] (Image courtesy of Rafael Henrique/SOPA Images/LightRocket/Getty Images)
Getty Images/SOPA Images/LightRocket
FibroGen (NASDAQ: FGEN), a biopharmaceutical company focused on immunology and oncology therapeutics, hit a 52-week high of $56 in February this year before a larger sell-off, especially after the US FDA requested an additional meeting before reviewing the company’s much-anticipated Roxadustat – a drug aimed at the treatment of anemia in chronic kidney disease patients. Furthermore, the business revealed in April that safety evaluations from a late-stage Roxadustat study were erroneous, pushing the stock even lower, to under $19. The stock of FGEN has dropped 6% in the last five trading days, and the company has experienced yet another setback. The FDA in the United States decided yesterday not to approve Roxadustat for the treatment of anemia in adults with chronic renal disease. [1] The drug was expected to generate $3 billion in peak sales, and the company’s current failure is a big setback. In after-hours trading, the stock of FGEN has dropped about 38% to around $15. Will FGEN stock continue to fall in the next weeks, or will it begin to recover?
According to the Trefis Machine Learning Engine, which uses ten years of historical data to identify trends in a company’s stock price, FGEN stock returns average 3 percent in the next one-month (twenty-one trading days) period after a 6 percent loss the previous week (five trading days). FGEN stock, on the other hand, is projected to hit an all-time low of under $16 as a result of today’s action.
However, in the rare cases where FGEN stock has had such a big drop, it has generally rebounded during the following month. According to our scenario for FibroGen’s stock returns, if FGEN stock moves -30 percent over five trading days, it will move an average of 13.8 percent over the next twenty-one trading days, with a solid 91 percent likelihood of a positive return over this period. While there are only a few data points to support these conclusions, a major negative move in FGEN stock will appeal to long-term investors. Roxadustat has previously been approved in China, Japan, and South Korea, and it has received a favourable opinion from the European Medicines Agency’s committee.
But how do these figures vary if you choose to hold FGEN stock for a shorter or longer period of time? On the Trefis Machine Learning Engine, you may test the response and many other combinations to see if FibroGen stock would rise following a decline. You can assess the likelihood of healing across time intervals of a quarter, a month, or even a single day!
MORE FOR YOU: FibroGen Stock Movements: Some Fun Scenarios, FAQs, and Making Sense of Them:
Question 1: Is FibroGen stock’s average return higher following a drop?
Consider the following two scenarios: Case 1: FibroGen’s stock drops by 5% or more in a week.
Case 2: FibroGen’s stock gains 5% or more in a week.
Is the average return on FibroGen shares after Case 1 or Case 2 higher in the following month?
After Case 1 (where the stock has just suffered a 5% loss over the previous week), FGEN stock performs better, with an average return of 3.2 percent over the next month (21 trading days) versus an average return of 1.6 percent for Case 2 (where the stock has just suffered a 5% loss over the previous week).
In comparison, the S&P 500 has an average return of 3.1 percent in Case 1 and barely 0.5 percent in Case 2, as shown in our dashboard that shows the average return for the S&P 500 after a decline or rise.
Use the Trefis machine learning engine to analyze how FibroGen stock will react following a given gain or loss over time.
Question 2: Does it pay to be patient?
Answer: If you buy and retain FibroGen stock, you may anticipate the near-term swings to fade away with time, and the long-term favorable trend to favor you – at least if the company is otherwise healthy.
Overall, facts and Trefis’ machine learning engine estimates show that patience pays off in most stocks!
The following table shows the returns for FGEN stock over the next N days after a -5 percent shift over the previous 5 trading days, as well as the returns for the S&P500:

Trefis Average Return FGEN
You can use the engine to examine how FibroGen’s table looks following a greater loss in the previous week, month, or quarter.
Question three: What about the average return if you wait a time following a rise?
Answer: As explained in the preceding question, the average return after a gain is lower than after a decrease. Surprisingly, most equities would be better avoided as short-term investments if they had gained in the previous few days.
By adjusting the variables in the charts above, you can test the trend for FibroGen stock for yourself.
While the price of FGEN stock is likely to plummet in the near term, the year 2020 has created a slew of pricing anomalies that could provide lucrative trading opportunities. For example, the stock valuation for Merck vs. Regeneron is very counter-intuitive.
Here you may find all of Trefis’ Featured Analyses and Trefis Data./nRead More

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