Sirtex Medical Limited (ASX: SRX) shares plunged as much as 60% on March 17 after the company's long-awaited clinical trial results came back less positive than expected.
Don't fret though, here are three reasons why Sirtex is still a great company to buy and why you shouldn't feel too bad for not selling at $39:
- No one saw it coming! A number of investment services, including the Motley Fool, acknowledged the risk with the clinical trials due mid-March but the vast majority opted to stay invested in the stock. So don't feel bad, even the best in the country didn't see it coming and most have remained invested.
- Professionals are buying again! Long-term significant shareholders have jumped back in or topped up their holdings, acknowledging that the share price fall was an overreaction, pushing the share price back above $20 after it hit $14.80 on the day.
- The result doesn't change Sirtex's core business! The primary endpoint of the study would have increased Sirtex's market but the result has no impact on its existing $200 million revenue business. In fact, the secondary endpoint proved that the existing business, the use of the radioactive SIR-spheres to aid liver cancer treatment, works.
Investors should note that while the headline results of the study were released by the company, the full results will not be known until the report is published in May. This could cause more volatility if the second endpoint result is not as rosy as expected.
