Cempra Inc. (CEMP) shares fall following downgrade at Cowen and Company

Cempra Inc. (NASDAQ: CEMP) shares fell on Monday Nov 21 with lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile, stocks were set to open higher this morning. The Dow Jones Industrial Average futures YMZ6, +0.20% was 10 points, or less than 0.1%, higher at 18,863, while S&P 500 index futures ESZ6, +0.44% rose 3.95 points, or 0.2%, at 2,184.75. Nasdaq-100 NQZ6, +0.74% added 12.25 points, or 0.2%, to 4,820.75.

Shares of Cempra Inc. (NASDAQ: CEMP) were downgraded by analysts at Cowen and Company in a note to their investors today. With a rating of Market Perform on the shares, the company has a 52-week high of $34.24. The one-year price target of $15.13 is higher than the opening price of $6.90, resulting a number of other analysts to report on the company in recent days. Downgrades happen when analysts believe that the future prospects for the security have dropped from the initial recommendation, often due to a material and fundamental change in the company’s actions, future outlook or industry.

Shares of Cempra Inc. (NASDAQ: CEMP) opened at $6.90 on Monday trading between $6.85 and $7.10, and last traded at $6.90, which represents a decrease of $0.35 per share or -4.83% over the previous closing price.

Cempra Inc. (NASDAQ: CEMP) currently has a market cap of 361.43M.

Cempra Inc. (NASDAQ: CEMP) Average Daily Trading Volume

The stock’s average daily volume is 1,857,130 shares out of a total float 49,251,000 and some 251,315 shares crossed the trading desk yesterday, below the average. Momentum traders often use upticks in trading volume to pinpoint heavy volume growth or distribution by institutional investors, so look for trading volume to pick up in the coming days.

However, a single day of significant buy side trading is not enough to affirm a trend. So market traders will continue to watch for institutional sponsorship as an indicator that financial institutions are moving forward.

Institutional sponsorship simply refers to ownership of a stock by mutual funds, banks, pension funds and other large institutions.

Professional investors such as these have substantial teams of analysts researching thousands of stocks. Thus, watching their interests is a good way to ensure you are buying the right stocks.

Cempra Inc. (NASDAQ: CEMP) Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By spotting trends, moving averages allow investors to make those trends work in their favor and increase the number of winning trades.

With that in mind, Cempra Inc. (NASDAQ: CEMP) now has a 50-day MA of $16.97 and 200-day MA of $19.10. It has traded in a 52-week range between $5.70 – 34.24 and today’s last price is 79.85%% lower than the 52 week high of $34.24.

Earnings growth is an important factor to consider when buying stocks and investors look for companies that have raised their earnings by at least 25% for 3 consecutive years.

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