Last week, Sirtex Medical Limited (ASX:SRX) shares fell as much as 52% when it was revealed the biotechnology business would not meet expectations.
What happened?
On Friday, Sirtex Medical shares plunged as much as 52% (from over $25 to below $13) when it released a statement to the market which set dose sales growth expectations at between 4% and 6% for the first half of this financial year. Last year, it achieved growth of 15%.
Worse still, operating profit is set to fall between 9% and 16%.
The company said an increase in competition in the Americas and issues in other key markets such as Europe, Middle East and Africa rippled through the results.
Are Sirtex Medical shares dirt cheap?
At face value, a seemingly modest decline in sales led to a massive selloff in the Sirtex Medical share price. The company also stated that it had implemented a range of strategic initiatives.
However, the credibility of management is now being called into question after the company's CEO sold around 27% of his shares in the business, just one month earlier, for tax reasons. At the very least, it seems investors should discount their valuation approach.
Nonetheless, at today's price of around $16, Sirtex Medical shares appear to trade at a much more compelling valuation.
Foolish takeaway
While no one likes to see their shares fall 52% in a day, many investors should now be running the ruler over Sirtex Medical shares, in my opinion.