Sight Sciences stock prediction as shares spike 12% on positive TearCare data

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 21, 2021
  • Sight Sciences shares on Thursday spiked more than 12% on positive TearCare data.
  • The company reported meeting primary endpoints on its dry eye disease treatment TearCare.
  • SGHT shares have plummeted since going public in July.

On Thursday, Sight Sciences Inc. (NASDAQ:SGHT) shares rallied more than 12% after reporting positive TearCare data. SGHT is exploring how TearCare could be used for localized heat therapy in adult patients with evaporative dry eye disease due to meibomian gland dysfunction.

The company said:

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“[Its] OLYMPIA study designed to show non-inferiority of TearCare to LipiFlow, a competing system from Johnson & Johnson (NYSE:JNJ) for meibomian gland dysfunction met primary endpoints.”

Sight Sciences shares have plunged nearly 40% since hitting an all-time high of $42.57, shortly after going public.

Should you buy SGHT shares now?

From an investment perspective, Sight Sciences shares trade at a steep price-sales ratio of 29.38, making the stock less attractive to value investors. 

However, analysts expect the company’s earnings per share to grow by nearly 45% next year, recovering from this year’s forecast decline of 34%.

Therefore, with sales sequentially surging by more than 257% in the most recent quarterly, SGHT seems to be on the right track to profitability.

As a result, long term growth investors could find it as an attractive option for the portfolios.

Source – TradingView

The rebound could continue

Technically, although Sight Sciences shares appear to have spiked sharply, completing an upward breakout from the descending channel, the stock is far from reaching overbought conditions.

Therefore, given Thursday’s encouraging TearCare data, the current bull-run could continue for the foreseeable future. 

As a result, investors could target extended gains at about $28.38, or higher at $30.71. On the other hand, if the stock pulls back prematurely, it could find support at about $23.80, or lower at $21.23.

It may not be too late to buy

In summary, TearCare’s promising data is excellent news for SGHT shareholders. However, there is a lot to do before finally becoming a commercial product, where it will face competition from JNJ’s equivalent product.

Nonetheless, with shares yet to reach overbought conditions at the back of Thursday’s events, the current rally could continue before finding resistance at $28.38. As such, it may not be too late to buy SGHT.

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