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Insider Buying Sends Cassava Sciences Stock 25% Higher; Should You Follow?
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Insider Buying Sends Cassava Sciences Stock 25% Higher; Should You Follow?

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Despite the controversies surrounding its Alzheimer’s drug, corporate insiders are gobbling up SAVA stock. Shares are up 25% on the news.

Shares of Cassava Sciences (NASDAQ: SAVA) are up 25% today after two corporate insiders disclosed purchasing SAVA stock. Investors may be wondering whether to follow the insiders into the trade. Analysts seem to believe so, as they expect high upside potential.

As per regulatory filings filed yesterday, on August 12, Director Sanford Robertson bought 100,000 shares of Cassava for $20.69 per piece, totaling $2.07 million.

Similarly, Cassava’s CFO, Eric Schoen, bought 2,500 shares of the company at $19.95 per piece, totaling $49,875.

Notably, TipRanks’ Insider Trading Activity Tool, which provides a comprehensive list of daily insider transactions, shows that top corporate insiders at Cassava Sciences are becoming increasingly optimistic about SAVA stock. Including the latest stock purchases, corporate insiders have bought $2.1 million worth of SAVA stock in the last quarter.

Interestingly, TipRanks also provides a list of hot stocks with either a “Very Positive” or “Positive” insider confidence signal.

What Does Cassava Sciences Do?

Cassava Sciences is a clinical-stage biotechnology company with a focus on detecting and treating neurodegenerative diseases, such as Alzheimer’s disease.

On August 3, Cassava reported second quarter Fiscal 2022 results that fell short of expectations. The company’s diluted loss of $0.48 per share came in five cents wider than analysts’ estimates. Moreover, the loss was wider than the prior-year quarter’s loss of $0.13 per share, owing to higher research & development expenses.

Is Cassava a Good Stock to Buy?

Turning to Wall Street, SAVA stock has a Moderate Buy consensus rating based on three Buys and one Sell. The average Cassava Sciences price forecast of $69 implies a whopping 167.9% upside potential from current levels. Meanwhile, the stock has lost 41% so far this year.

Will Cassava’s Stock Momentum Continue?

It’s hard to know how long the company’s momentum will last. Still, corporate insiders are showing confidence in the company’s trajectory by buying shares in bulk. These insiders may have particular knowledge of what is actually going on with the company, which the average joe is unaware of.

However, TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Negative on Cassava Sciences, with 2.4% of portfolios tracked by TipRanks decreasing their exposure to SAVA stock over the past 30 days.

Cassava is also continuously hounded by controversies that may be hampering investor confidence. On July 27, Reuters reported that the U.S. Justice Department had opened a criminal investigation to verify if the company was manipulating clinical trial results of its Alzheimer’s drug, simufilam. The company has, however, denied the allegations.

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