TTOO stock price has recoiled: Is it safe to buy T2 Biosystems?

By:
on Aug 26, 2023
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  • T2 Biosystems share price has lost momentum and dropped by ~45% from the YTD high.
  • The stock has underperformed other big Covid-19 beneficiaries like Moderna and Novavax.
  • The outlook for the TTOO stock price is bearish for now.

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T2 Biosystems (NASDAQ: TTOO) stock price retreated in the past few weeks as the recent rebound lost momentum. After peaking at $0.6960 this month, the shares have pulled back by ~45% to $0.40, giving it a market cap of $117 million.

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Covid-19 stocks are rising

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T2 Biosystems share price declined as investors remain unconvinced about its overall recovery. This week’s decline happened even as other companies in the Covid-19 industry jumped. Moderna shares jumped by almost 10% while Novavax soared by 14% as the number of Covid cases and hospitalizations jumped.

T2 Biosystems was a smaller player in the COVID industry as it provided testing devices. In the most recent results showed how the decline of this testing has hurt the company. Its revenue was $2 million in the second quarter, down by 67% from the same period in 2022. The firm received record orders for the sepsis instrument order.

This decline was partially offset by a 7% increase in its sepsis test panel whose revenue came in at $1.3 million. T2 Biosystems’ losses continued rising, as the cost of product came in at $4.9 million. Its SG&A expenses dropped by 20% but still remained at over $6.3 milion. All this led to a net loss of $6.3 million, which is a bigger number for a company of its size.

T2 Biosystems’ future depends on its sepsis, bioterrorism, and Lyme disease products. For example, the firm expects that its sepsis and related product revenue will grow by more than 13% this year to $10.5 million.

While the firm has made a lot of progress in each field, there are concerns about whether it will succeed in them using its thin balance sheet. T2 ended the last quarter with $16.1 million in cash and $50.6 million in short-term borrowings.

TTOO stock price forecast

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The daily chart shows that the TTOO share price bottomed at $0.0575 in July this year as it struggled to comply with Nasdaq listing requirements. On the daily chart, the shares have remained above the 50-day and 25-day moving averages even as the bullish momentum faded.

The outlook for the TTOO stock, in my view, is bearish, with the next level to watch being at $0.20. This is in line with my last outlook for TTOO shares. This view will become invalid if the shares move above the year-to-date high of $0.6916.

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