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Denali Therapeutics (DNLI) Moves 5.8% Higher: Will This Strength Last?

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Denali Therapeutics Inc. (DNLI - Free Report) shares rallied 5.8% in the last trading session to close at $22.63. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 11.1% gain over the past four weeks.

Denali owns an impressive pipeline of targeted therapeutic candidates for neurodegenerative diseases and its recent pipeline progress has been encouraging. Investors are upbeat about the company’s progress with its candidates. The FDA recently selected experimental candidate DNL126 in support of clinical trials advancing the rare disease therapeutics (START) Pilot Program. The candidate is an investigational enzyme replacement therapy designed to cross the blood-brain barrier for the potential treatment of MPS IIIA (Sanfilippo syndrome type A).

This company is expected to post quarterly loss of $0.69 per share in its upcoming report, which represents a year-over-year change of -153.1%. Revenues are expected to be $24.23 million, down 91.8% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Denali Therapeutics, the consensus EPS estimate for the quarter has been revised 0.8% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on DNLI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Denali Therapeutics is a member of the Zacks Medical - Biomedical and Genetics industry. One other stock in the same industry, Spero Therapeutics, Inc. (SPRO - Free Report) , finished the last trading session 3% higher at $1.37. SPRO has returned -10.1% over the past month.

For Spero Therapeutics, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.35. This represents a change of -52.2% from what the company reported a year ago. Spero Therapeutics currently has a Zacks Rank of #3 (Hold).


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